Hard to fulfill the conditions for the IMF tranche

Hard to fulfill the conditions for the IMF tranche

After BiH optimistically announced that the International Monetary Fund and BiH had reached an agreement on the next tranche of the loan, after just a few days certain information reveals that it will not be so easy to achieve that.

According to last informations from Federation BiH Government, the International Monetary Fund will not approve a new tranche of loan until the responsible national institutions adopt the amendments to the Law on Excise Taxes in BiH. The next meeting of the Board of Executives of the IMF at which it should be discussed about the payment of the second tranche of the loan should be held in mid-December. Until then the Council of Ministers should prepare the proposal of amendments to the mentioned laws and the national Parliament should adopt those amendments. If that is done, the next tranche should be paid to the entity budgets at the beginning of next year.

“The IMF defined a list of 11 previous measures. Those measures must be fulfilled before the IMF discusses the next tranche. The most important and the only dubious measure is the one pertinent to amendments to the Law on Excise Taxes – exclusively the part that refers to the increase in excise taxes on fuel. So far, the IMF does not insist on increase in other excise taxes. When it comes to other 10 previous measures, they are undisputed, their fulfillment is relatively simple and is already in progress, such as the adoption of budgets on national and entity level”, the federal government stated.

BiH Minister of finance, Vjekoslav Bevanda, stated that these changes were supposed to be adopted a long time ago.

“We are all responsible for this issue. I hope that BiH Parliament will have enough and will and adopt this in time for the next tranche ofthe  loan which we need”, Bevanda said.

The deadline for these changes is the middle of December but many in BiH are not optimistic about it. The expert group, which should make a new proposal of amendments to the Law on Excise Taxes, still didn’t finish it’s part of the work. Representatives of ministry of finance and treasury and the ministry of foreign trade and economic relations, as well as indirect tax administration of BiH, are still not able to agree on the best solutions.

According to the procedure, the proposal they will be sent to the Board of Executives of the Indirect Taxation Authority for an expert opinion, then the BiH Council of Ministers should adopt it and then pass the parliamentary procedure, where it has to be adopted in both houses in the same form.

Although it is foreseen that the IMF pays the loan quarterly – every three months – the final term will depend on the fulfillment of obligations from the Letter of Intent.

Minister of Finance of BiH Federation, Jelka Milicevic, had stated earlier that it will be impossible to reach the deadline set by IMF and that this BiH entity is already trying to find other sources to fill the hole in budget.

RS Ministry of finance or Government still didn’t say what is their position on the matter. It goes without saying that this entity will have big problems replacing the income from the IMF loan./IBNA