The International Monetary Fund on Thursday warned that lending to Bosnia-Herzegovina could be interrupted after local lawmakers failed to adopt tax and deposit insurance measures supported by the Fund. The Fund in September approved a three-year $600 million aid package to support economic reforms, with an $85 million instalment immediately available.
Gerry Rice, a Fund spokesman, said Sarajevo's decision on Wednesday would probably hinder progress. "In our view this decision will have negative implications for Bosnia and its economy and indeed that's why both reforms are key elements of the authorities program which is supported by the IMF," Rice told reporters. "We now expect a significant delay in completion of the first review of the program." Planned loan disbursals may be delayed as a result.
"We remain fully committed to support Bosnia in its reform efforts," said Rice. "The program remains in place and our staff is standing ready to assist the Bosnian authorities in the implementation of the reforms." In a separate statement issued earlier Thursday, Nadeem Ilahi, the IMF's chief of mission in Bosnia-Herzegovina, said Bosnian authorities had made "good progress" on IMF-supported reforms such as fiscal discipline, financial stability and improving the business environment. "The authorities need more time to make further progress in a number of key areas of their program, such as securing financing for key infrastructure project, modernising banking sector legislations and improving corporate governance of state-owned enterprises," Ilahi said.
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