ECONOMY

Loans for Bosnia, finally

SARAJEVO – Bosnia’s Parliament adopted a long-delayed state budget for 2002 on Friday, removing a key obstacle to $165 million in loans from the World Bank and the International Monetary Fund (IMF). The move was hailed as a crucial step forward for the impoverished Balkan country, still dependent on foreign assistance following the 1992-95 war and struggling to reform its socialist-era economy. The upper house of Bosnia’s state Parliament approved a balanced budget of 492.8 Bosnian marka ($222.5 million), an increase of 40 percent from 2001. The lower house passed the budget earlier last week. It had been delayed for months because of Bosnian-Serb opposition to the budget setting aside 430,000 marka to finance a war-related legal suit against Serb-dominated Yugoslavia at the International Court of Justice in The Hague. In the end, that provision had to be thrown out to secure their support. Treasury Minister Ante Domazet said he believed Bosnia had now met all conditions for receiving the World Bank and IMF credits for social protection and other reform. «This is a significant step forward, which I hope will boost the confidence of both local and foreign investors,» he told reporters. The World Bank’s executive board approved late on Thursday a credit of $44 million for the development of Bosnia’s business environment. It is expected to approve another loan of $35 million in the coming months for social sector restructuring. But the agency said it may withhold payment if the IMF fails to approve a $86-million 15-month standby loan, expected to be discussed by its executive board in mid-June. The IMF had set approval of the budget as a condition for the loan. An international financial expert in Sarajevo said the parliamentary vote was a very positive development but that it was still too early to say whether approval of the IMF loan was now certain. «There are still several things to be done, like adoption of the customs administration law in the lower house of the federation Parliament,» the official told Reuters. «However, things are moving in the right direction.» The budget will be used mainly to service Bosnia’s foreign debt and to pay for state institutions. It will be financed by taxes, as well as by customs and excise duties. Postwar Bosnia consists of two autonomous entities, the Serb republic and a Muslim-Croat federation, with their own parliaments and governments. As most public spending takes place on the entity level, their budgets are much larger than the state budget. You sound rather pessimistic.