The Mission Staff of the International Monetary Fund (IMF) led by Nadeem Ilahi visited Bosnia and Herzegovina (BiH) from 7th to 21st November to conduct talks on recent economic changes and medium-term perspectives under the Consultation in the Article IV for 2017, as well as policies for the first overview of the BiH economic program supported by the IMF Extended Fund Facility (EFF).
After the visit, Ilahi emphasized that the economy of BiH is experiencing a cyclical recovery, which is still slower than in the rest of Eastern Europe, adding that exports as well as foreign remittances are rising, and inflation growth is expected in 2017.
“Although macroeconomic stability has been maintained, the program’s main objective, boosting growth and job creation remains largely unresolved. Progress has been made in the preparation of 2018 fiscal budget plans for entities, and the IMF urges the authorities to finalize the budget preparation process of BiH institutions, timely and in accordance to the recommendations of the IMF staff, “ Ilahi said.
When it comes to the implementation of structural reforms, some progress has been made, Ilahi emphasized, especially at entity level, but the implementation of some of the key measures from the program is much slower than expected.
In the IMF Resident Representative’s statement, it is recalled that the previous measures for the first review of the program include the adoption of entity budgets for 2018, as well as the adoption of a legislative amendment of the Parliamentary Assembly of BiH which will increase fuel excise duties.
“This is necessary in order to unblock the largest portion of external financing available for key infrastructure investments. Constant delay in this regard has slowed economic recovery and has affected the prospects for faster growth and job creation, “ it is explained.
Also, the adoption of the new Deposit Insurance Act at the BiH Parliamentary Assembly is one of the conditions, given that the entity laws on banks and banking agencies have already been adopted, so the absence of this law delayed the modernization of the banking sector legislation in BiH.
One of the conditions is to initiate a closely due diligence process for telecommunications companies, BH Telecom and HT Mostar from the Federal Government.
“It is also necessary that the Governing Board of the Indirect Taxation Authority of BiH adopts quarterly coefficients for the allocation of indirect tax revenues and settling inter-entity debts. Fulfillment of listed criteria in the following weeks is crucial for program implementation. In this regard, IMF staff needs to provide assistance to the authorities, “ it was highlighted in the statement of the IMF Resident Representative Office in BiH.