Bosnian economists warn IMF against a loan solely for budget spending

NEWS 30.11.2020 09:28
Source: N1

In an open letter to the International Monetary Fund (IMF) and its resident representative Andrew Jewell, a group of Bosnian economy experts urged the Fund not to give the announced 1.5 billion Bosnian marks to Bosnian officials without a clear plan how these funds would aid the economy, stressing that they would likely only be spent on current budget spending.

“We write to you as a group of experts deeply concerned by announcements from Bosnian authorities regarding the start of negotiations concerning the new credit arrangement from the IMF worth 1.5 billion Bosnian marks (some €750 million),” the petter said.

In it, the group wrote that as progressive experts, they warned of the hard times ahead and the economic crisis caused by the Covid-19 pandemic, adding that they urged the authorities to act quickly in order to save the economy and balance the foreign debt.

“However, based on our previous experience in cooperation with the IMF, including the last 330 million euros approved through the Rapid Financing Instrument, we see that the money received is directed towards current budget spending, without any clear purpose and implementation of promised reforms, where the government even did not give up unnecessary expenses such as those for the procurement of official vehicles,” experts wrote, adding that the Fund should take into account the previous government representatives’ unfulfilled promises when negotiating the conclusion of a new credit arrangement.

“We would like to point out that the support does not necessarily have to be directed to higher levels of government, but also to progressive local communities, with concrete ideas and projects, where the money would be directed precisely to abolish certain parafiscal charges, abolish fees for legal entities, for digitalization of the public sector, restructuring of operations of public utility companies, improvement of the health sector, and activities leading to the more transparent work of institutions, control of borrowing of public and state enterprises and general procurement in the public sector, and not towards current budget spending and financing of cumbersome and inefficient administration,” experts wrote.

The letter was signed by the prof. dr. Svetlana Cenic, dr. Drasko Acimovic, Zoran Pavlovic, oecc. mr. sc. Admir Cavalic and mr. sc. Faruk Hadzic.

The IMF confirmed, earlier, that they are conducting talks with Bosnian authorities regarding a 1.5 billion mark loan, one of the biggest loans in Bosnian history.

According to experts, the loan will significantly increase the country's foreign debt and much of the public expects that the money will be spent on new budget expenses and buying of social order before the upcoming general election.