Press Release: IMF Reaches Staff-Level Agreement with Bosnia and Herzegovina on a Stand-By Arrangement
July 20, 2012Press Release No. 12/267
July 20, 2012
An International Monetary Fund (IMF) mission, led by Costas Christou, visited Bosnia and Herzegovina (BiH) during July 11–20, 2012 to discuss with the country’s authorities an economic program that could be supported by an IMF’s Stand-By Arrangement. The mission team also held discussions on the 2012 Article IV Consultation. At the conclusion of the visit, Mr. Christou made the following statement:
“IMF staff and the BiH authorities have reached agreement, subject to approval by Management and the Executive Board, on an economic program that can be supported by a 24-month SDR 338.20 million (about US$500 million and 200 percent of quota) Stand-By Arrangement. Consideration by the Board, expected in September 2012, would follow the implementation of a number of measures over the next several weeks.
“After successfully weathering the initial effects of the global financial crisis, BiH’s economy is facing renewed pressures. The recovery, which started in 2010, has stalled amid signs that the euro zone crisis is negatively affecting the country’s exports and capital inflows. Domestic demand remains subdued, held back by fiscal restraint, stagnant wages and slow credit growth. With the softness in the economy, tax revenue collection has weakened and pressures on public finances increased. As downside risks are becoming more prominent, our long-standing projection of zero growth for 2012 may prove to be optimistic.
“BiH’s economic program is designed to counter the effects of the worsening external environment and reduce domestic vulnerabilities. It aims to strengthen national economic policy coordination, maintain fiscal discipline, safeguard financial sector stability, and improve the business environment.”