SARAJEVO (Reuters) – The International Monetary Fund has agreed to double its aid to Bosnia to combat the coronavirus crisis, but the loan will be approved only after the country’s two regions agree on how they will divide the funds, the IMF said on Thursday.
The Washington-based lender agreed last month to extend a 165 million euros ($179.26 million) loan to Bosnia under its Rapid Financing Instrument (RFI) to soften the blow of the novel virus on its health system and economy.
This week, the IMF Executive Board decided to increase the emergency assistance available to member countries and provide 330 million euros to Bosnia under RFI.
“Before the RFI can be approved, the authorities must first reach an agreement on how the RFI funds will be allocated between the two entities,” Andrew Jewell, the IMF Resident Representative in Bosnia, said in a statement.
“Failure to reach an agreement will result in postponement of the assistance,” Jewell warned, and urged the authorities to reach an agreement soon, because otherwise the Board could run out of time to consider Bosnia’s request amidst a great number of emergency assistance requests.
The country’s two rival ethnically-based regions, the Serb Republic and the Bosniak-Croat Federation, generally fail to agree on most issues and to coordinate their economic policies.
As of Thursday, Bosnia had reported 857 confirmed cases of the new coronavirus and 35 deaths. A lockdown introduced by the authorities to halt the spread of the disease but has gravely affected businesses and jobs.
Earlier this month, the IMF warned the authorities in Bosnia it would drop its RFI funds if they undermine the country’s currency arrangement, which the lender said has been a “pillar of stability” in the Balkan country since its 1992-95 war ended.
Since the outbreak of the epidemic, Bosnian Serb leaders, led by Milorad Dodik who represents Serbs on Bosnia’s tripartite inter-ethnic presidency, have pressured the central bank to cut the required reserve rate for commercial banks and redirect a surplus of its international reserves to the regions to help businesses.
The lender said such intervention would add a financial and currency crisis on top of the economic and humanitarian crisis that Bosnia now faces.
(Reporting by Daria Sito-Sucic; editing by Larry King)
