IMF leaves, tranche of 90 million marks blocked!

The International Monetary Fund (IMF) mission has left Bosnia and Herzegovina with unfinished business, meaning the sixth review of the credit arrangement was not successfully concluded, bh. news agency Patria (NAP) has learned. This will certainly, as NAP has learned, mean a delay in the seventh tranche of the loan, which was supposed to amount to nearly 100 million marks and was foreseen for the end of the first quarter.

IMF representatives stayed in BiH in the past few days and held multiple negotiations with BiH authorities, especially entity authorities, but without success. An agreement on structural issues, specifically reform laws, was not reached, NAP reports.

As we learn from sources within this institution, the biggest problem was the Government of Republika Srpska, which strongly opposed changes to legislation in favor of employers, but also failed to meet some budgetary requirements set by the IMF. The fundamental problem lies in the deadline for amending regulations governing collective agreements and the rights of employers and workers, which had previously passed.

The IMF believes that, although financial progress is visible, reforms must go hand in hand with it, and they have taken a firm stance. However, the Government of RS could not commit to implementing these reforms, and a new letter of intent necessary for the seventh tranche was not agreed upon. However, not all is lost.

- Negotiations have been interrupted, or rather, the IMF has given BiH more time. When the authorities are ready, they can approach them and very quickly conclude this sixth review and unblock the tranche. But, the IMF will not give up on the demands for reforms, because that is the essence of the arrangement. Otherwise, this would just be patching budget holes – a source told us.

The total value of the two-year credit arrangement with the IMF is around 1.2 billion marks, and BiH has already used half of these funds so far.