ECONOMY

New WB loans for Bosnia

SARAJEVO – The World Bank launched yesterday its new four-year lending cycle for Bosnia, approving the first loan of about $200 million in funding for development projects, the head of the bank’s Bosnia mission said. The bank approved a $25 million loan for Bosnia’s road infrastructure and disbursed a $32 million loan that had been earlier pledged for the improvement of the business environment, Marco Mantovanelli told a news conference. Mantovanelli said the bank’s board of executive directors approved a new strategy last Friday, under which it would lend Bosnia a total of $400 million in fresh financing and through implementation of earlier approved funds. «We are talking about $400 million over the next four years of development projects with assistance from the World Bank,» Mantovanelli said. He added that more funds would be available pending reforms. Mantovanelli said that during the 2008-2011 lending cycle, the World Bank would switch from borrowing under soft IDA terms to more commercial, but still relatively cheap, borrowing under IBRD conditions. «This means that we recognize the progress made by the economy… and that the next country strategy would be a blend of interest-free and funds carrying some interest,» he said. Economic reforms in Bosnia have been hit over the past 18 months by a political deadlock in reforming the country’s ethnically separate police forces and the constitution, which is a part of the Dayton peace accords that ended the 1992-95 war. Under the Dayton deal, Bosnia is made up of two highly autonomous regions, the Muslim-Croat federation and the Serb Republic, whose rival politics often slow down the reforms necessary for European integration. The European Union initialed this month the first pre-membership agreement with Bosnia to reward an accord by the country’s leaders to proceed with reforms. «We want to link our assistance to reforms because the path to Europe will require some reforms and we are ready to be partners in that,» Mantovanelli said. He said the bank wanted to support growth and an environment conducive to growth so that Bosnia can continue to improve conditions for investments and job creation. «On the other hand, we want to continue to support the strengthening and efficiency of government spending,» Mantovanelli added, referring to high-budget expenditures to social beneficiaries, such as war invalids and ex-soldiers. The World Bank has committed about $1.2 billion in favorable loans to Bosnia since the war ended.