The Government of Republika Srpska (RS) has given approval for the Second Programmatic Development Policy Loan for the health sector, in the amount of 28.4 million euros (more than 55 million BAM). According to media reports, this is a loan from the World Bank – the International Bank for Reconstruction and Development(IBRD), and the funds are intended to support the RS budget following implemented reforms in the health system aimed at improving the financial sustainability of the health system and the quality of health services. RS is the end user and debtor, and the funds will be disbursed in a single tranche, no later than June 30th, 2026. Repayment, capital further states, will last for 18 years, with a grace period of five years. The installment will be paid semi-annually – every March 15th and September 15th – in euros.
This loan makes up 40 percent of the total debt of Bosnia and Herzegovina (BiH) to the World Bank, which amounts to 71 million euros. The interest rate is the reference rate, with the addition of a variable margin determined by the World Bank. This is a standard structure for IBRD loans, but in conditions of global uncertainty and possible interest rate increases, the variable margin can become a significant fiscal risk in the medium term.
The funds from the loan, it can be concluded from the offer, are not intended for patching up budget holes, and will not be available without the prior fulfillment of clearly defined reform goals, and therefore it should be viewed in two ways, as a potential reform and an additional debt. The main question is – with what pace and quality will it be implemented. Because, if the promised goals are not fulfilled, the loan could serve as funds for short-term budget needs without lasting improvements in the sector, Capital writes.
