What is it that the Republika Srpska (RS), as an entity in Bosnia and Herzegovina (BiH), could give as a guarantee to receive money from China to maintain financial stability, and how capable would it be to repay the debt without becoming dependent on China?
That’s mostly how economic analysts react, after the President of the RS, Milorad Dodik, announced that China could accept bonds of RS as financial guarantee instruments.
It is also assessed that this is another Dodik’s step towards the East, after the RS terminated cooperation with the diplomats of Great Britain and the United States (U.S.) due to alleged “interference in relations in BiH“.
Dodik: We cannot remain closed
On March 31st, Dodik stated that he “has assurances” that China has decided to accept RS bonds as guarantee and financing instruments.
“Usually, everyone is focused on the West, but since two days ago, we have assurances that the Chinese state and authorities have decided to accept RS bonds as guarantee and financing instruments,” said Dodik yesterday.
“Obviously, our choice must be both sides, we cannot remain closed,” Dodik pointed out.
Dodik did not provide details about the value of the bonds, under what conditions they would be issued, and what would be the guarantee for the value of the bonds.
Some of the 22 countries to which China gave bailout loans – including Argentina, Belarus, Ecuador, Egypt, Laos, Mongolia, Pakistan, Suriname, Sri Lanka, Turkey, Ukraine and Venezuela – also received IMF assistance.
However, the Financial Times points out, there are major differences between the IMF program and Chinese aid.
One is that Chinese money is not cheap – the study notes that a typical IMF bailout loan comes with an interest rate of two percent, while the average interest rate related to a Chinese bailout loan is five percent, Slobodna Evropa reports.
E.Dz.
