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IMF loan tranche to BiH in doubt?

By   /   21/02/2017  /   Comments Off on IMF loan tranche to BiH in doubt?

 

In the shadow of the political disputes in BiH the information about possible canceling of second tranche of International Monetary Fund loan was published.

This information was confirmed by RS Minister of Finance, Zoran Tegeltija, who said to media that IMF still didn’t schedule the session to review the fulfillment of conditions set for this tranche. He said that the date of session is uncertain since Federation BiH Government and BiH Council of Ministers didn’t do anything to complete these conditions.

The biggest problem for the next tranche of the IMF loan are changes to the Law on Excise Tax. These changes must be provided in excise duties on fuel and their increase by 15 pfennigs per liter.  IMF demands that 10 of these 15 pfennig should be used for the construction of highways in the state. The remaining 5 pfennig should be forwarded to construction and maintenance of roads of lower rank managed by Roads of FBiH and Roads of the RS. Also, there are several more conditions.

“Republic of Srpska finished this job and met all conditions, but other levels of government are late. Depending on when the Federation BiH and the institutions at the state level  meet the conditions,  the session of the Executive Board of the IMF will be scheduled. These documents are in the parliamentary procedure in the Federation, but the Council of Ministers failed to adopt the Law on Excise Tax and the Law on the Deposit Insurance Agency, so it is uncertain when the IMF will hold session of the Executive Board”, Tegeltija added.

Earlier the IMF office in BiH confirmed that there are problems in arrangement because the country’s authorities have failed to meet reform targets and that their conditions must be fulfilled.

On the session in September 2016 the IMF approved the loan to BiH worth 553,3 million euro. The purpose of the loan was to support reforms in the country economy, which are agreed in the Reform agenda. The first payment was planned as immediate tranche of 79 million euro and the rest in 11 tranches, which are subject to quarterly reviews.

According to IMF Executive Board decision, this financial institution expect that, with this money, cut public debt, improve business climate and secure financial sector stability. In order to incite these reforms, they set the conditions but BiH institutions failed to fulfill them. This situation, if IMF cancel the payment of second tranche, will cause financial problems in budgets since both entities and joint institutions put the tranche as income for budgets./IBNA

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