An agreement between Bosnia and Herzegovina and the International Monetary Fund (IMF) on the new three-year credit arrangement worth one billion 50 million BAM is at the very least strange, believes the economic analyst Kadrija Hodžić.
According to this professor at the Faculty of Economics in Tuzla, the new three-year arrangement with the IMF leaves space for many doubts in interpretation of its end purpose and effects on BiH.
“In addition to usual fear that critics always have regarding the foreign indebtedness and related to the critical treatment of accelerated borrowing, especially for covering uncontrolled spending and observations of radical critics on “credit slavery”, here we have additional gaps in understanding the real purpose of this arrangement which we did not have earlier,” Hodžić said.
According to Hodžić, in the past fifteen days the BiH officials were “literally racing to explain the relation between the new IMF arrangement and recovery of the banking sector”.
“Governor of the Central Bank of BiH Senad Softić was assuring us that this program with IMF is reform-oriented and that it will lead to an improvement in the existing situation in economy and baking and finance sector in BiH. At the same time, Chairman of the Council of Ministers of BiH Denis Zvizdić was explaining how the agreement with IMF includes reforms, primarily more transparent and stronger control of all banks in BiH,” HOdžić said, adding that the Minister of Finance and Treasury of BiH Vjekoslav Bevanda even highlighted that situation in the banking sector is the primary condition for concluding the new credit arrangement with IMF.
Hodžić believes that such conditions by the IMF leave opened questions for national public, primarily because the IMF programs are intended for stabilization, referring to the short-term bridging of budget deficits and overall financial stability.
“Thus, those programs are not developmental or reform-oriented, but a stabilization precondition for implementation of reforms which bring developmental perspectives. Banking sector is not mentioned in a single one out of six significant fields in the Reform Agenda for BiH for the period from 2015 until 2018. Second, more important opened question, is the following: why would the IMF loan be used for improving the banking sector, when it is the best developed sector in BiH economy? Our financial sector is, all the more, bank-centric, it is the only sector with stable growth, banks are well-capitalized, while the growth of the other sectors, especially the real sector, is often uncertain and utterly unstable,” Hodžić stated.
Hodžić believes that IMF loans are favorable because they are given with a significantly lower interest rate that loans of commercial banks, and because they include the enforcement of financial discipline which weak governments, such as the one in BiH, cannot enforce themselves.
(Source: klix.ba)
