IMF Nods Through €39 Million For Bosnia


By Elvira M. Jukic/BIRN

May 7, 2013

The IMF approved the money after Bosnia’s two entities, the Bosniak-Croat Federation of Bosnia and Herzegovina and the Serb-dominated Republika Srpska, made cuts to their budgets, among which the most important were cuts to war veterans’ pensions in the Federation.

The money will now be distributed to the Bosnia’s two entities, two-thirds going to the Federation and one-third to Republika Srpska.

So far, under the two-year arrangement, the IMF has laid out around 156 million euro to Bosnia of a total of nearly 400 million euro.

Minouche Shafik, the IMF’s Deputy Managing Director and Acting Chair, said that Bosnia’s continued progress under the program is testament to the authorities’ commitment to prudent policies in a challenging environment.

“Remaining within the spending envelopes in the 2013 budgets will be crucial to ensuring sustained fiscal consolidation, leaving no room for fiscal stimulus,” Shafik said.

“Nonetheless, a slightly slower pace of fiscal adjustment might be temporarily warranted should revenues disappoint in the event of weaker-than-expected growth,” she added.

Shafik also said that achieving medium-term fiscal sustainability will require moving ahead with fiscal structural reforms to generate savings, which the entities started through war-related benefit programs and should continue with cuts in administration and in reducing health care costs.

She added that reaching Bosnia’s growth potential will require further structural reforms to enhance competitiveness and create jobs.

“Improving the business environment and labour market flexibility are key to a thriving private sector and to making BiH an attractive place to invest,” she noted.

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