BiH: Financial experts oppose new IMF loan without a spending plan

BiH: Financial experts oppose new IMF loan without a spending plan

A group of financial experts from Bosnia and Herzegovina urged the International Monetary Fund (IMF) not to allocate the announced 1.5 billion BAM to BiH officials without a clear plan on how these funds would aid the economy. In an open letter to the Fund and its resident representative to BiH Andrew Jewell, they stressed that the loan would likely only be spent on current budget expenditure.

The IMF confirmed earlier that they were conducting talks with BiH authorities regarding the 1.5 billion BAM loan, one of the biggest loans in BiH history.

“We are writing to you as a group of experts deeply concerned by the announcements from the BiH authorities regarding the commencement of negotiations concerning the new IMF credit arrangement worth 1.5 billion BAM (some €750 million),” the letter notes.

The group underlines in the letter that, as progressive experts, they warned of the challenging times ahead and the economic crisis in the aftermath of the Covid-19 pandemic, adding that they urged authorities to act swiftly in order to save the economy and balance foreign debt.

“However, based on our previous experience in cooperation with the IMF, including the last 330 million euros approved through the Rapid Financing Instrument, we see that the money received is directed towards current budget spending, without any clear purpose and implementation of promised reforms, in the context of which the government did not even cut unnecessary expenses such as those for the procurement of official vehicles,” the experts write, adding that the Fund should take into account the previous government representatives’ unfulfilled promises when negotiating the conclusion of a new credit arrangement.

“We would like to point out that the support does not necessarily have to be directed to higher levels of government, but also to progressive local communities with concrete ideas and projects, where the money would be directed precisely to abolish certain parafiscal charges and fees for legal entities, for the digitalization of the public sector, restructuring public utility services, improving the health sector and activities leading to the more transparent work of institutions, control borrowing activities of public and state enterprises and general procurement in the public sector, and not towards current budget spending and financing of cumbersome and inefficient administration,” the experts stress.

According to the technocrats, the loan will significantly increase the country’s foreign debt, while a big portion of the public expects the money to be directed to new budget expenses and establishing social order before the upcoming general election.

The letter was signed by professors Dr. Svetlana Cenić, Dr. Drasko Aćimović, Zoran Pavlović, OECC, Admir Čavalić, D.Sc, and Faruk Hadžić, D.Sc. /ibna