“The International Monetary Fund (IMF) believes that it is necessary to increase interest rates in Bosnia and Herzegovina (BiH) and that the Central Bank of BiH should take the first step in this direction with the aim of reducing the large difference that currently exists between interest rates in BiH and in the Eurozone,” it was said yesterday at the press conference in Sarajevo.
In BiH, inflation is decreasing, but it is still at an unpleasant level. It is expected that its average will be six percent. If inflation continues or is even worse than the IMF’s projections, it will be necessary to further increase the reduction of spending on the fiscal plan, and then we may come to a situation where those salary increases that have been adopted last year, will have to be abandoned.
In Sarajevo, the Resident Representative of the IMF in BiH, Andrew Jewell, and the head of the mission for BiH, who works at the IMF headquarters in Washington, Alina Iancu, spoke.
Jewell said that in recent days in Banja Luka and Sarajevo, they worked on something they call consultations and that there was no negotiation on the possible conclusion of a new arrangement between BiH and the IMF.
The head of the mission for BiH in Washington Iancu spoke about economic predictions, risks, as well as reforms.
She said that it is evident that the growth rate has decreased. She also added that inflation is also falling, but that it is still at an uncomfortably high level.
Emphasizing that there is a lot of uncertainty and risk, she pointed out “the sudden slowdown of economic activities in Europe, the rise of political tensions in BiH, and the realization of financial risks” as the three most significant ones.
In this regard, Iancu underlined that it is crucial to suppress inflation and that the fiscal instrument is the main means of fighting inflation. “In this sense, we call for a fiscal policy that will be less expansive, and this can be ensured by reducing current spending,” said Iancu.
Moreover, she stated that an increase in interest rates is necessary.
“We see the need to raise interest rates, in this sense, the Central Bank should take the first step in that direction with the aim of reducing the large difference that currently exists between interest rates in BiH and in the Eurozone,” stated Iancu.
E.Dz.
