The Board of Directors of the International Monetary Fund approved a 330 million euro loan in Washington to combat the pandemic of the coronary virus that Bosnia and Herzegovina sought in a letter of intent, is confirmed to Srna news agency by the Chairman of Council of Ministers Zoran Tegeltija.
“Funds are approved. The board of directors session is over and they unanimously supported the decision to approve BiH funds,” said Tegeltija, who is also chairman of the Fiscal Council.
IMF funds will be used to finance the remediation and mitigation of adverse economic consequences.
This decision has been formally addressed to Bosnian government representatives and members of the Fiscal Council.
SNSD leaders Milorad Dodik, HDZ BiH Dragan Covic and SDA Bakir Izetbegovic on April 11th met with EU and IMF officials and reached an agreement to unblock € 330 million from the IMF for BiH, according to which Republika Srpska was owed 38 percent and the Federation of Bosnia and Herzegovina 62 percent of loans.
Both entities will allocate half a percent for the Brcko District.
The RFI provides rapid and low-access financial assistance to member countries facing an urgent balance of payments need, without the need for a full-fledged economic program or reviews. It can provide support to meet a broad range of urgent needs, including those arising from commodity price shocks, natural disasters, conflict and post-conflict situations. Financial assistance under the RFI is provided in the form of outright purchases.
The near-term economic impact in BiH is expected to be substantial, generating a rapid deterioration of external accounts and urgent balance of payment needs. Economic growth is expected to decline by 5 percent in 2020 and recover to around 3.5 percent in 2021.
The RFI will support the authorities’ efforts to increase spending for containing COVID-19 human costs and mitigating its economic impact. The BIH governments are planning a significant fiscal expansion to ramp up health and social spending. This IMF financing will play a vital role in catalyzing emergency assistance from the international community, in particular the EU’s.
The IMF will continue to monitor Bosnia and Herzegovina’s situation closely and stands ready to provide policy advice.
Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, issued the following statement:
“Bosnia and Herzegovina’s economy has been suffering from the COVID-19 pandemic, which has created an urgent balance of payments need.
“Given the large and rapid deterioration of external accounts, the Rapid Financing Instrument will help provide support for scaling up priority spending on health and social assistance, while preserving debt sustainability.