An IMF mission will start a 10-day visit to Bosnia on Wednesday to discuss whether to unfreeze a loan deal that was halted in September over politicians’ failure to implement agreed economic policies.
It is unclear however if the International Monetary Fund will be able to conclude the eighth review of its loan given that Bosnia has yet to form its multi-layered governments after an October general election, leaving 2015 budgets in limbo.
Bosnia’s two impoverished autonomous regions, the Serb Republic and the Federation dominated by Bosniaks and Croats, need the IMF cash to fill their respective budget gaps that have widened after historic floods in May.
The lender approved a two-year 380 million euro ($475 million) standby arrangement for Bosnia in September 2012, and last year enlarged it by around 150 million euros and extended it for another nine months to help avert social hardship.
In June, it doubled its typical aid tranche to about 191 million euros to help the country cope with damage from the flooding, estimated at around 2 billion euros.
But it held back from disbursing the next tranche of around 67 million euros in September, warning the governments to cut spending that was not related to addressing the impact of the floods.
So far, the IMF has disbursed around 478.5 million euros under its aid program to Bosnia totaling around 630 million euros. The program should end in June 2015.