Talks with the IMF Mission on the problem of financing BiH institutions

SARAJEVO, (Patria) - Deputy Chairman of the Council of Ministers of BiH and Minister of Finance and Treasury Vjekoslav Bevanda received the Head of the International Monetary Fund (IMF) Mission for BiH Martin Petri today, with whom he discussed the reform stalemate and the problems caused by the temporary financing of BiH institutions.

Minister Bevanda emphasized that the current political situation in BiH is once again in a state of crisis, although very important decisions in the area of investments and economic development were adopted at the beginning of the new mandate at the session of the Council of Ministers of BiH.

Discussing current events, Minister Bevanda emphasized that the crisis began after the decision of the Constitutional Court of BiH, which caused political reactions, and since February 14, 2020, all work has been hindered, even though BiH is facing the growing problem of illegal migrations and the threat of the coronavirus, and is still under temporary financing.
"Yesterday, we sent the Decision on temporary financing for the second quarter of this year to the General Secretariat of the Council of Ministers, as the current one expires on March 31. Only ten days ago did we receive the budget request from the BiH Presidency in order to finalize the draft budget for this year, and it will be technically closed in the coming days and sent for procedure," stated Minister Bevanda.

He added that the BiH Fiscal Council, immediately after the appointment of the new convocation of the Council of Ministers, adopted the Global Fiscal Framework for the three-year period, which was crucial for the preparation of the new budget, but that temporary financing has continued and is expected to be extended beyond March 31.

It was stated at the meeting that temporary financing carries risks and is not a safe step towards a new arrangement with the IMF, nor for other projects, because BiH institutions spent the entire year 2019 on temporary financing, which prevents investments and capital expenditures. The interlocutors agreed that a new program with the IMF would be an incentive for reforms and new investments.

It was pointed out that global economic growth forecasts are somewhat lower than planned due to the negative effects of the coronavirus outbreak and illegal migrations, while in BiH, economic forecasts are also negatively affected by frequent political crises.

The priorities in the potential future cooperation between BiH and the IMF were highlighted at the meeting, relating to the new deposit insurance law, the distribution of VAT revenues, and other obligations within the jurisdiction of the entity governments.