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New Credit Arrangement with IMF announced: Salvation or Purchase of Social Peace?

At the end of the month, new negotiations with the International Monetary Fund (IMF) and new credit borrowings will follow. The money could reach Bosnia and Herzegovina only after the elections. In relation to politicians, experts are clear – another 40 percent of total GDP allows for additional borrowing, but that does not apply to the real sector. They warn – a new loan for next year will mean the purchase of social peace, because we are just beginning to feel the most severe consequences of the crisis caused by the coronavirus pandemic, BHRT writes.

Due to the new wave of coronavirus infection, BH authorities could resort to another loan after the election. Zoran Tegeltija, the Chairman of the Council of Ministers of BiH states: “I have always advocated that BiH has an arrangement with the IMF, because when you have it, you can withdraw funds in the form of loans, but you can also have an arrangement in which you do not take funds, but have them guaranteed, if needed.”

According to the Federal Prime Minister Fadil Novalic, the Federation of BiH has satisfactory liquidity of banks, but they do not want to borrow on the domestic market. The reason: through the guarantee fund, he says, that money should be redirected to the economy.

Novalic added that the IMF’s new arrangement could be around one billion marks, when the maturity is looked at, it could only be there in April or May. In order to maintain, first of all, budget expenditures according to social benefits, pension fund, veterans’ semi-salaries, the disabled, etc.

Svetlana Cenic, economic analyst stated: “The IMF is always in support of budgets, the signatories are the entities and the state, after the distribution, and how that money will be spent is up to the domestic authorities. In our country, that distribution is a catastrophe, poor distribution of funds, bad targeting – let there be money for salaries and cars “.

The IMF conditions the continuation of reform processes, first with the reconstruction of the judiciary. We have already seen that the money taken earlier is not in the right way aimed at economic recovery. Tragically, the IMF predicts that the worst is yet to come. Now the IMF predicts that BiH the economy fell 6.5 percent. In spring forecasts, the IMF predicted the economy would fall by five percent.

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