By Daria Sito-Sucic
SARAJEVO, April 29 (Reuters) - Bosnia and an International Monetary Fund (IMF) mission have agreed to extend talks on a stand-by deal until May 6 as they seek to lessen the impact of the global economic crisis on the Balkan country.
The IMF mission had been due to finalise its three-week talks with various layers of Bosnia's governments. The lender's board is expected to discuss and possibly approve the deal for Bosnia in the next two months.
The agency has stepped up its presence in the Balkans as nearly all states are entering recession and many seeking its help, although they had hoped the region could avoid the worldwide downturn.
"We are working on technical details and policies that need to be done in order to agree the stand-by arrangement," Prime Minister Nikola Spiric told a news conference on Wednesday.
Spiric, who is also chairman of the national Fiscal Council gathering Bosnia's top officials, declined to reveal the amount that Bosnia would ask for under the deal, saying it was too early to give final figures and that the situation was changing.
Central bank officials have said that Bosnia would ask for 400 million euro ($530 million) in IMF loans a year. There is a possibility of a two-year arrangement.
Costas Christou, the head of the IMF mission for Bosnia, said that discussions with Bosnian authorities were "very productive" and formed a "good basis" to continue over the next few days.
"This completes the first and the most substantive part of our work," Christou said. "We have made substantial progress towards the goal of reaching the final agreement."
Bosnia's two autonomous regions, which are joined in an uneasy alliance under a weak central government, had asked for IMF assistance after revenues dropped in the first quarter of 2009, as well as industrial production and exports.
Each region, the Muslim-Croat federation and the Serb Republic, as well as the central government, must cut expenditures and prove to the IMF they were able to pursue their policies and reforms, Spiric said.
"The IMF wants guarantees the policies will be implemented," he said, adding that the governments have prepared a set of measures to address the IMF requests.
"These will not be popular measures," Spiric told reporters. "We are aware of our responsibility, of effects of the global economic crisis and of the need to implement reforms."
Bosnia's governments will have to make budget savings of at least 696 million Bosnian marka ($473 million), the equivalent of an estimated consolidated budget deficit of three percent of GDP, officials said this week.
The National Fiscal Council has projected an economic contraction of 1.5 percent in 2009 and flat growth in 2010. The IMF's latest forecast for Bosnia this year was a 3 percent contraction of GDP. (Reporting by Daria Sito-Sucic; Editing by Patrick Graham By Daria Sito-Sucic
SARAJEVO, April 29 (Reuters) - Bosnia and an International Monetary Fund (IMF) mission have agreed to extend talks on a stand-by deal until May 6 as they seek to lessen the impact of the global economic crisis on the Balkan country.
The IMF mission had been due to finalise its three-week talks with various layers of Bosnia's governments. The lender's board is expected to discuss and possibly approve the deal for Bosnia in the next two months.
The agency has stepped up its presence in the Balkans as nearly all states are entering recession and many seeking its help, although they had hoped the region could avoid the worldwide downturn.
"We are working on technical details and policies that need to be done in order to agree the stand-by arrangement," Prime Minister Nikola Spiric told a news conference on Wednesday.
Spiric, who is also chairman of the national Fiscal Council gathering Bosnia's top officials, declined to reveal the amount that Bosnia would ask for under the deal, saying it was too early to give final figures and that the situation was changing.
Central bank officials have said that Bosnia would ask for 400 million euro ($530 million) in IMF loans a year. There is a possibility of a two-year arrangement.
Costas Christou, the head of the IMF mission for Bosnia, said that discussions with Bosnian authorities were "very productive" and formed a "good basis" to continue over the next few days.
"This completes the first and the most substantive part of our work," Christou said. "We have made substantial progress towards the goal of reaching the final agreement."
Bosnia's two autonomous regions, which are joined in an uneasy alliance under a weak central government, had asked for IMF assistance after revenues dropped in the first quarter of 2009, as well as industrial production and exports.
Each region, the Muslim-Croat federation and the Serb Republic, as well as the central government, must cut expenditures and prove to the IMF they were able to pursue their policies and reforms, Spiric said.
"The IMF wants guarantees the policies will be implemented," he said, adding that the governments have prepared a set of measures to address the IMF requests.
"These will not be popular measures," Spiric told reporters. "We are aware of our responsibility, of effects of the global economic crisis and of the need to implement reforms."
Bosnia's governments will have to make budget savings of at least 696 million Bosnian marka ($473 million), the equivalent of an estimated consolidated budget deficit of three percent of GDP, officials said this week.
The National Fiscal Council has projected an economic contraction of 1.5 percent in 2009 and flat growth in 2010. The IMF's latest forecast for Bosnia this year was a 3 percent contraction of GDP. (Reporting by Daria Sito-Sucic; Editing by Patrick Graham.

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