The Macro-Financial Assistance for Bosnia and HerzegovinaFebruary 19, 2013
Funding Scheme: 2013-02-19
European Union provided macro-financial assistance for Bosnia and Herzegovina in order to help the region to face economic crisis and boost its engagment on the more concrete accession’s reforms which anticipated by the union.
The European Union expects that the governments in BiH at state and entity level now use this assistance to support economic growth so as to improve living standards.
“This substantial support by the EU is an important political sign of trust from the EU Member States that Bosnia and Herzegovina is serious about its European Integration process. We are now expecting BiH politicians in return to fulfil their commitments in order to move forward in the accession process: We need to see functioning institutions at all levels, faster structural reforms and improvements in policy coordination. This means focusing on the public sector – reducing the size of government and expenditures – and making the business and investments environment better. This would lead to a more competitive economy, higher trade volumes and help reverse the trend of slowing economic recovery. This in turn should improve living conditions for all citizens of BiH”, Commissioner for Enlargement and European Neighbourhood Policy Štefan Füle said.
The second instalment of € 50 million for BiH can be disbursed after further conditions will have been fulfilled.
In November 2009, the Council of the European Union adopted a decision to make available to Bosnia and Herzegovina an EU macro-financial assistance (MFA) of up to €100 million in the form of a loan.
The loan is being released in two equal instalments of €50 million. The Memorandum of Understanding (MoU) defines the conditions for the disbursement of the assistance, namely a satisfactory track record in the implementation of the Stand-By Arrangement with the International Monetary Fund and the fulfilment of specific conditions related to each tranche.
The availability of the EU macro-financial assistance to Bosnia and Herzegovina was to expire in November 2012 and no disbursement was made as key conditions were not met. On 29 October 2012, however, the European Commission adopted a Decision to extend the availability period of the EU macro-financial assistance to Bosnia and Herzegovina by one additional year. This extension was motivated by the authorities’ recent steps improving public finance sustainability, the adoption of a new Stand-By-Arrangement by the IMF Board as well as the impact of the EU sovereign debt crisis on the economy.
The disbursement of the first instalment of €50 million was conditioned on the approval of the Global Framework of Fiscal Policies by the Fiscal Council and the tendering of the common Government Budget Management Information System. BiH has complied with these conditions.
The disbursement of the second instalment of €50 million is conditioned by eight further structural reform criteria and will not take place before at least three months after the release of the first instalment. It is imperative that the responsible institutions in Bosnia and Herzegovina work hard to fulfil the agreed conditions for the second instalment before this summer.
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