IMF program at risk due to poor implementation
Overview:
Bosnia won Staff-level agreement on a US$1.5 billion IMF program at the beginning of May. It has yet to implement fully the required fiscal adjustment measures agreed, therefore risking a delay in securing Executive Board approval and the initial disbursement. The tranche would be helpful in rebuilding foreign exchange reserve levels. But it would have a more significant impact in restoring confidence to the banking sector and encouraging other foreign investor and IFI investment. The recent announcement that the leading foreign banks in Bosnia remain committed to their investments is clearly also positive in this regard. The political situation remains extremely complex with some progress being made on constitutional reform but the international community strongly criticising the use of nationalist rhetoric.