The IMF delegation lead by Costas Christou visited Bosnia from July 11 to 20 where it agreed with the country's authorities on an economic program that could be supported by an IMF’s Stand-By arrangement worth $500 million.
Stand-By arrangement is an IMF lending facility through which a member country can use IMF financing up to a specified amount to overcome short-term or cyclical balance of payments difficulties.
Christou said in a statement that consideration by the IMF Board, expected in September 2012, would follow the implementation of a number of measures over the next several weeks.
“Bosnia and Herzegovina’s economic program is designed to counter the effects of the worsening external environment and reduce domestic vulnerabilities,” Christou said.
“It aims to strengthen national economic policy coordination, maintain fiscal discipline, safeguard financial sector stability, and improve the business environment,” he added.
The IMF representative explained that Bosnian economy is facing renewed pressures and the recovery, which started in 2010, has stalled amid signs that the euro zone crisis is negatively affecting the country’s exports and capital inflows.
“With the softness in the economy, tax revenue collection has weakened and pressures on public finances increased,” Christou said.
Bosnia Prime Minister, Vjekoslav Bevanda, told journalists that a meeting of the state Fiscal Council and the IMF lasted from Wednesday until Thursday early morning. Bevanda did not elaborate what priorites have been set for the government during the meeting.
“The stand-by arrangement would last two years,” Bevanda said, “In any case that would not mean a new debt but restructuring of the existing debt and easing the overall financial situation primarily in the entities and cantons since it has no effect on the state level [budget].”
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