PARLIAMENT OF FBiH IMF OPPOSES CONVERSION OF LOANS FROM SWISS FRANCS TO CONVERTIBLE MARKS

SARAJevo, (Patria) - Today in Sarajevo, Andrew Jewell, Resident Representative of the International Monetary Fund in Bosnia and Herzegovina, made the following statement regarding the Bill on the conversion of loans with a Swiss franc (CHF) currency clause into convertible marks (KM) which is on the agenda of the Parliament of FBiH today under an urgent procedure.  

“The International Monetary Fund strongly opposes any attempts by the Parliament of the Federation of Bosnia and Herzegovina to allow the conversion of loans with a Swiss franc currency clause into convertible marks. It is not the role of Parliament to change contracts concluded by private sector agents. Such a measure, especially when applied retroactively, would introduce legal uncertainty and disrupt the functioning of the credit market in Bosnia and Herzegovina at the worst possible time when banks and their borrowers are facing the consequences of the crisis caused by the coronavirus. We understand that many borrowers are struggling to service their debts, but we believe that the correct way to resolve these difficulties is through the moratorium on loan repayment established by the Banking Agency of the Federation of BiH.

Imposing a mandatory conversion could lead to legal action by banks, which could again have potential consequences for the budget of the Government of the Federation of BiH. Within the framework of the previous Extended Fund Facility (EFF) of Bosnia and Herzegovina with the IMF, the authorities committed not to impose mandatory conversion of loans with a currency clause in any foreign currency into a domestic currency. We expect the authorities to continue to honor this commitment, especially in light of the expressed desire for a program that will succeed the EFF,” the IMF announced.