Authorities in Bosnia and Herzegovina avoid implementing reforms in the financial sector and cooperating with the International Monetary Fund (IMF) so they borrow funds from commercial banks which charge higher interest, IMF representative to Bosnia, Andrew Jewell, said in an interview published in the local media on Monday.

In December 2020 the IMF had terminated talks with Bosnian officials on a new 1.5 billion Bosnian marks (€790 million) credit line which was supposed to be approved to fund the financial stabilisation of the country which was seriously affected by the coronavirus pandemic.

In an interview for the Sarajevo-based Dnevni Avaz daily published on Monday, IMF’s representative in Bosnia, Andrew Jewell, confirmed that the reason for this was the IMF’s insistence on reforms which Bosnia’s authorities did not want to commit to.

“We could not reach an agreement with the authorities on the key reforms which are necessary for us to present the program to IMF’s Executive Board,” Jewell told Dnevni Avaz.

Jewell said that the reforms that the IMF insisted on are the same which the EU called for to bring Bosnia closer to the EU. However, separate levels of government in the country have their own criteria (for reforms) so the Bosniak-Croat FBiH half of the country was not ready to improve the program of credit guarantees, in a way that he IMF would consider efficient enough.

Meanwhile, authorities in the Serb entity RS which covers the other half of the country refused to take part in digitization projects, and are particularly opposed to the demand that a single register of accounts – which currently exists only at entity level – to be set up at the country level.

Jewell added that since the IMF financed Bosnia’s budgets it therefore wants to know how that money is spent.

In the case of Bosnia and Herzegovina, the IMF still expects the country’s authorities to publish integral data on how much money they have given to help alleviate the consequences of the pandemic and who the users of that funding are. It also insists on the reform of the current system of public procurement, seriously hampered by corruption and lack of transparency.

Jewell said that the IMF “does not understand the logic” of Bosnia’s authorities, because the reforms that need to be implemented “are not economically painful and would benefit everyone.”

“The IMF is ready to relaunch talks at any moment to help the country deal with the economic crisis caused by the pandemic. However, this will depend on the willingness of its politicians to cooperate,” Jewell added.

He said that the loans from commercial banks they were now resorting to in order to patch up budget holes were much more expensive, and that borrowing too much from commercial banks implied that less money would be left in the banking sector for the business sector and households.

“The key difference between the IMF and commercial banks is that banks loans do not depend on any reforms. The program supported by the IMF would help implement reforms that would increase economic growth in the medium term and bring Bosnia and Herzegovina closer to EU membership candidate status, Jewell said, warning that this would not happen if the local authorities continued to refuse reforms.