May 21, 2018 / 2:23 PM / a month ago

IMF urges Bosnia to speed up reforms to unlock fresh funds

SARAJEVO, May 21 (Reuters) - The International Monetary Fund called on Bosnia on Monday to speed up agreed reforms so the lender can conclude its second review of a loan programme and unlock 38 million euros ($45 million) in fresh aid.

“We urge the Bosnia-Herzegovina parliament to adopt the new law on deposit insurance,” Nadeem Ilahi, head of the IMF mission, said in a statement following a two-week visit to check progress.

Ilahi said progress on implementing reforms had been slower than expected, adding that further efforts were needed to create private sector jobs.

The lender’s executive board signed off in February on a review of Bosnia’s 553-million-euro loan programme and approved a disbursement of a 74.6-million-euro tranche after it met key requirements.

To receive the new loan tranche, Bosnia must pass a long-delayed deposit insurance law to help modernise its banking sector. The country’s autonomous Bosniak-Croat Federation must also submit to parliament a draft law on personal income tax and social security contributions, the IMF said.

Bosnia’s economic progress remained on track and all the programme’s fiscal targets have been met, with the combined budget surplus reaching 2 percent of national output in 2017 as authorities restrained overall spending, it added.

In February, the IMF cut Bosnia’s 2018 economic growth forecast to 3.2 percent from 3.5 percent, citing downside risks from domestic politics although macroeconomic conditions remain stable.

Bosnia has presidential and parliamentary elections in October. Campaigning with nationalist overtones in its two autonomous regions - the Federation and the Serb Republic - may slow down its economic development and EU ambitions, diplomats say. (Reporting by Maja Zuvela; Editing by Daria Sito-Sucic and Andrew Roche)

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