Authorities in FBiH are deceiving: If the law on conversion of "Swiss francs" is ever adopted, the arrangement with the IMF will fail

Yesterday's session of the House of Peoples of the FBiH Parliament was adjourned due to lack of quorum, and users of loans in Swiss francs who were awaiting the House's decision on the Proposal of the Law on conversion of loans in Swiss francs to KM were also denied a final decision, reports the Patria News Agency.

Around 6,000 citizens in FBiH were waiting for the end of their agony. The Bosniak Caucus expressed support for the law that corrects the injustice towards users of loans in Swiss francs, and support was also expected from the Croat Caucus, as well as from all others who supported citizens with this problem in the days and months behind us. However, the agony will not end, because the IMF also demands it.

Yesterday, delegates in the House of Peoples discussed this law. The vote should take place on September 15th at the continuation of the session, where the first item on the agenda is the ratification of the arrangement with the IMF.

The authorities in the Federation are clearly lying to both the citizens and the IMF itself, because these two things cannot go together.

- What can happen? Either they will first adopt the draft law and then confirm the Letter of Intent which states that they will not adopt it, or they will adopt the Letter of Intent which states that they will not adopt this law and then adopt it immediately afterwards. In any case, the point is that they are lying to both the IMF and these people to whom they promised a law that will amount to nothing. It is also listed as a continuous performance criterion, which means that the arrangement fails if they adopt this law at any moment – says our source from the FBiH Government.

The Letter of Intent states the following:

- Our financial sector has weathered the global financial crisis and the subsequent years of weak economic growth, as well as the floods in 2014, relatively well. Although the banking sector is liquid and adequately capitalized at the aggregate level, some sensitivities still persist. The shares of non-performing loans in total loans remain elevated, and the growth of new loans to the private sector is quite low. Some banks need to improve their capital positions and further restructure their balance sheets to ensure long-term sustainability. In such circumstances, we continue to closely monitor developments in the financial sector with the aim of protecting financial stability. We will not take any actions that jeopardize financial stability, including imposing an obligation to convert any foreign currency loans into domestic currency (continuous performance criterion). We are aware of the key importance of such a commitment for the success of the Extended Arrangement – it is stated in the Letter of Intent.

By the way, yesterday the Executive Board of the International Monetary Fund (IMF) approved a credit arrangement for the authorities in Bosnia and Herzegovina in the amount of EUR 553 million.

The first tranche in the amount of KM 154,155,170.11 is expected to be disbursed to our country on September 9, 2016, and as previously announced by the Council of Ministers of BiH, the Extended Arrangement will be approved in tranches over a period of three years.

Otherwise, the total external debt of BiH, as of the end of last year, amounts to 8.4 billion KM, while the internal debt amounts to approximately 3.5 billion KM. In translation, this would mean that the total debt of BiH amounts to 11.9 billion KM.