Bosnia may lose IMF cash over regional government row - official

SARAJEVO Wed Nov 28, 2012 6:45pm GMT

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SARAJEVO (Reuters) - An opposition boycott of one of Bosnia's regional governments may hurt the country's relationship with the IMF and leave public servants unpaid, the Bosniak-Croat federation prime minister warned on Wednesday.

Nermin Niksic said that he decided to use his authority and send a draft budget proposal for 2013 to the parliament even though it has not been confirmed by the government.

"I don't want to bring into question the arrangement with the IMF in any possible way," he told a news conference.

The federation government was scheduled to approve its budget on Wednesday but did not have a quorum because opposition ministers failed to show up after a row last week with Niksic over a mandate of the regional Development Bank's management.

Bosnia has a 405 million euro (327 million pounds) standby arrangement with the IMF to plug the budget gaps of its two autonomous regions, the Bosniak-Croat federation and the Serb Republic, which are linked via a weak central government.

"We have a government whose composition does not reflect a parliamentary majority," said Niksic, adding he would seek the replacement of ministers who obstructed the work of the government.

The International Monetary Fund released 60 million euros in September. Further disbursements depend on Bosnia keeping its economic programme on track.

The IMF however could not conclude its first review of the loan earlier this month, saying the Bosniak-Croat Federation needed to cancel plans for a law enabling early retirement to demobilised soldiers.

The governments need to adopt budgets for 2013 in early December so that the IMF's Executive Board can approve a new 60 million euro loan tranche on December 21.

Both regional governments, as well as the central government, have planned to meet the December 4 deadline for budget adoption in their respective parliaments.

Relations between ministers in the Bosniak-Croat federation government have worsened since the formation of a new parliament majority last summer, which was not followed with a government reshuffle due to procedural mistakes.

Niksic warned that if IMF cash was lost, public servants such as police officials and court officers, as well as welfare beneficiaries and pensioners, would get nothing.

The crisis in the federation has mirrored a similar crisis in the central government, whose reconstruction was completed only last week after several months of paralysis.

(Reporting By Daria Sito-Sucic; Editing by Ruth Pitchford)

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