IMF loans Bosnia $361bn despite coronavirus spending row

Sarajevo has yet to approve plans to borrow the funds, but the loan has already been transferred, the central bank said.

Sarajevo buses - reuters
Centrotrans Eurolines buses remain parked at their company's headquarters in Sarajevo after Bosnia introduced a lockdown to limit the spread of coronavirus [Dado Ruvic/Reuters]

The International Monetary Fund transferred a $381 million loan to Bosnia on Thursday, the central bank said, even though the Balkan country’s government has yet to formally approve borrowing plans to help fight the coronavirus crisis.

Bosnia’s central cabinet said on Monday that Bosniak, or Bosnian Muslim, cabinet ministers had delayed approval of the plans over demands they meet local requirements on borrowing, debt and guarantees by the state.

On Tuesday, Finance Minister Vjekoslav Bevanda called the demands unacceptable and said they could indefinitely delay the disbursement of funds approved under the IMF’s Rapid Financing Instrument.

Bosnia’s two rival ethnically-based regions, the Republika Srpska entity and the Bosniak-Croat Federation, are generally at odds on most economic issues.

Inside Story: Are ethnic divisions deepening once again in the Balkans? [25:27]

Bosnian authorities had already agreed the federation would receive 62 percent of the IMF funds, with the Republika Srpska getting the remaining 38 percent. But each region should allocate 0.5 percent of its share to Bosnia’s neutral Brcko District.

The IMF loan is to support spending on health and social assistance. The lender said it expected Bosnian national output to decline five percent this year before rebounding by 3.5 percent in 2021.

There have been 1,431 confirmed coronavirus cases in Bosnia so far and 54 deaths. As in other countries, stay-at-home orders to halt the spread of the disease have hit businesses and jobs.

Source: Reuters