Denis Zvizdić BiH.jpg
Bosnian Council of Ministers Chairman Denis Zvizdic
Photograph: HINA / Almir RAZIĆ / FENA / mm

Bosnian Serb authorities on Thursday accused the International Monetary Fund (IMF), Bosnian Prime Minister Denis Zvizdic and the Prime Minister of the Federation of Bosnia and Herzegovina entity, Fadil Novalic, of deliberately stalling a loan agreement worth several hundred million euros in an effort to financially pressurise the Serb entity government into accepting the opening of Bosnia and Herzegovina's market to customs-free imports from Croatia.

The IMF's representative in Bosnia and Herzegovina, Francisco Parodi, confirmed earlier in the day that the IMF Executive Board had postponed its decision on approving a EUR 550 million loan to Bosnia and Herzegovina because not all representatives of the country's authorities had signed a letter of intent required for the credit arrangement.

Parodi did not name anyone but Bosnian Serb authorities claim that Zvizdic and Novalic have not signed the letter even though an agreement on the loan was reached in late May.

The IMF is using a financial blockade to exert pressure on Republika Srpska, the entity's Minister of Energy, Industries and Mining, Petar Djokic, said.

Republika Srpska (RS) Prime Minister Zeljka Cvijanovic said the planned arrangement with the IMF was good, expressing regret that it was being postponed. She noted, however, that the Serb entity had also prepared for such a scenario.

The RS government will compensate for those funds in some other way, Cvijanovic said.

The IMF loan was supposed to be a favourable loan, with a ten-year repayment period and an interest rate just above 1%. The money was to have been approved as support for reforms as well as for the entity budgets that chronically lack funding and are barely paying due obligations.

Djokic, too, confirmed that the Serb entity would now have to look for other sources of financing but he did not specify which.

The local media has reported that the only alternative to favourable IMF loans are those issued by commercial banks which are granted at much higher interest rates and constitute a type of debt bondage given that the borrowed money would be used to cover current expenses and patch budget holes.

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