Bosnia's internal bickering blocks IMF coronavirus loan

SARAJEVO, April 21 (Reuters) - Bosnia’s central cabinet failed to formally approve borrowing from the International Monetary Fund (IMF) on Tuesday, just hours after the Washington-based lender signed off on a $361 million loan to help the country combat the coronavirus crisis.

Finance Minister Vjekoslav Bevanda said approval by the Bosniak (Bosnian Muslim) cabinet ministers had been held up by demands that it meet local requirements on borrowing, debt and guarantees by the state.

Bevanda called the demands unacceptable and said they could indefinitely delay the disbursement of funds approved under the IMF’s Rapid Financing Instrument, which could have been made available on Wednesday.

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

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

Under the latest distribution proposal, the Bosniak-Croat Federation is to allocate half of the IMF funds to the 10 cantons that belong to it.

But Bosnia’s Foreign Minister Bisera Turkovic said the proposal was not in line with what was written in a Letter of Intent sent to the IMF.

“The problem lies in how the decision will treat the position of cantons and their obligations to repay the loan,” Turkovic said.

There have been 1,342 confirmed coronavirus cases in Bosnia so far and 51 deaths. Like elsewhere, stay-at-home orders to halt the spread of the disease have hit businesses and jobs.

The IMF loan should provide support for spending on health and social assistance. The IMF said it expected Bosnian national output to decline 5% this year and then grow 3.5% in 2021. (Reporting by Maja Zuvela; Editing by Tom Brown)