ECONOMY

IMF sets Bosnia conditions

SARAJEVO – The restructuring of ailing companies would be key for Bosnia to reach a new loan agreement with the International Monetary Fund, a senior official of the lending body said. IMF official Peter Doyle made clear the fund was in no rush to start negotiations on a new standby arrangement with Bosnia after the payment of the last tranche of a $100 million loan in February. «There is no immediate pressure from the economy to reach an agreement; we have time to do it,» he told Reuters in an interview late on Tuesday. «It depends very much on the authorities’ side, how they want to proceed with the discussion and for how long they choose to proceed with the discussion,» he said at the end of a two-week visit to Bosnia. The IMF has agreed to two standby agreements with Bosnia since the 1992-95 war. But payments have often been delayed due to the authorities’ failure to carry out required reforms. Doyle said the IMF and local officials had singled out two areas as crucial for a new loan arrangement – the restructuring of companies and improving the country’s fiscal architecture. It was important to improve the performance of companies so that they become profitable and boosted jobs and exports, he said. Bosnia also needs to create state-level institutions responsible for tracking and designing an appropriate fiscal stance for the entire country, divided into a Serb Republic and a Muslim-Croat federation, he said. «The purpose of this mission was to explore these two very complicated and far-reaching issues,» Doyle said. The IMF could not proceed with any detailed negotiations on a new deal without reaching understanding on these issues, he added. “Once we have a meeting of minds at the basic level, then we can turn to thinking about more detailed issues that could form the basis of the negotiations,» he said. Bosnian Prime Minister Adnan Terzic said this week the government was ready to start talks on a new loan with the IMF, but that Sarajevo would seek more favorable conditions. Doyle said Bosnia had hoped to borrow under the IMF’s concessional Poverty Reduction Growth Strategy window, but that it was only eligible for standard commercial borrowing. «It was decided by the IMF board that because Bosnia was so far above GDP per capita limit for this program ($850), that they should not be eligible any longer for that facility,» Doyle said. Bosnia has GDP per capita of $1,300.