2014年-IMF国际货币组织全球_Bosnia_and_Herzegovina_Fifth_Review_Under_the_Stand_64页_1002kb

Bosnia and Herzegovina: Fifth Review Under the Stand-By Arrangement

Core Content Overview

This document outlines the fifth review of Bosnia and Herzegovina (BiH) under the IMF Stand-By Arrangement (SBA), along with requests for waivers of applicability, extension, and augmentation of the arrangement. It includes a Staff Report, a Press Release, and a Statement by the Executive Director, all prepared for the Executive Board's consideration. The review was delayed due to challenges in adopting the 2014 budget and the dismissal of the Federation finance minister, which was later suspended.

Key Information

Stand-By Arrangement (SBA)

• The SBA was approved in September 2012 with access to SDR 338.2 million (200% of quota).
• The fourth review was completed in October 2013, with SDR 211.375 million disbursed.
• SDR 42.275 million will become available after the completion of the fifth review.
• The authorities are requesting a nine-month extension and augmentation, increasing access by SDR 135.28 million (80% of quota), to address additional financing needs expected in late 2014.

Program Performance

• End-September 2013 performance criteria were met.
• End-December 2013 performance criteria on budget balances and domestic arrears are not yet available, and the authorities are requesting waivers of applicability for these.
• The 2013 overall budget deficit reached 2.2% of GDP, slightly above the 2% target (or 2.4% adjusted).
• The primary surplus for 2014 is targeted at 1.5% of GDP, excluding foreign-financed projects and the one-off TRANSCO dividend distribution.
• The general government overall balance is expected to improve from -2.2% in 2013 to -1.4% in 2014.

Economic Outlook and Risks

• A modest recovery in economic activity continues, with growth estimated at 1% in 2013 and projected to reach 2% in 2014, in line with European developments.
• Industrial production and exports have driven the recovery, with exports growing by 7% through September 2013.
• Unemployment remains high at 27.5%, despite economic activity gains.
• Inflation is subdued, with headline inflation at 0.2% in recent months and core inflation at -0.5%.
• Downside risks include political uncertainty and general elections in October 2014, which may delay policy implementation.
• External risks include slow European growth or financial stress, which could impact exports and capital flows.

Main Views and Recommendations

Staff Appraisal

• The staff supports the request for waivers of applicability of the end-December 2013 performance criteria.
• The staff recommends completing the fifth review to ensure continued policy support.
• The staff supports the extension and augmentation of the SBA to address additional financing needs in late 2014, particularly due to increased external debt service obligations and lower-than-expected revenue growth.

Key Policy Discussions

A. Fiscal Policy: Preserving Gains in Fiscal Consolidation

• The 2014 budgets aim to preserve fiscal consolidation gains and reduce public debt.
• The Federation and Republika Srpska (RS) have adopted budgets that target a primary surplus of 1.5% of GDP.
• The public sector wage bill is being contained, with no increase in employment and only legally mandated pension and social benefit increases.
• The RS partially reversed a 10% wage cut from 2013 by implementing a 5% wage increase, offset by savings elsewhere.
• The budgets include efforts to improve tax collection, such as:
  • Modernizing the Indirect Tax Authority (ITA).
  • Harmonizing excise rates on tobacco to match cigarette rates, effective March 2014.
  • Raising excise rates on fuel and channeling revenues to highway funds.
  • Considering further excise increases on alcohol and tobacco to fund health care reform.
  • Implementing a risk-based audit approach for VAT refunds.
  • Exchanging taxpayer information between tax agencies starting in January 2014.
  • Adopting new corporate income tax laws in both the Federation and RS to align with international practices.
  • Establishing a centralized database of social transfer beneficiaries by spring 2014 to improve social benefit control.

B. Financial Sector Policies: Safeguarding Financial Stability

• The banking sector is broadly stable but burdened by non-performing loans.
• Banking agencies have instructed supervised banks to hire reputable auditors for an asset quality review.
• One bank has already hired an auditor, while the remaining five expect to complete the process in the coming weeks.
• Deposit insurance coverage was increased to KM 50,000 (€25,000), effective January 1, 2014, to boost depositor confidence.
• The Standing Committee on Financial Stability (SCFS) has developed contingency plans for financial sector difficulties, which will also help strengthen the functioning of the SCFS.

C. Strengthening Competitiveness and Job Creation

• The privatization process will be restarted to improve economic governance and encourage private investment.
• The World Bank and EBRD will be consulted to prepare a detailed action plan for privatization, including candidates, timelines, and benchmarks for the next five years.
• Minority shares in state-owned enterprises will be disposed of to improve pension fund finances and facilitate restructuring.

D. Program Modalities

• The extension and augmentation of the SBA is requested to address additional financing needs.
• The increase in SDR access is SDR 135.28 million (80% of quota), to be used for debt service obligations and fiscal consolidation.
• The staff recommends the approval of the extension and augmentation to provide continuity in economic policies during the election period and government formation.

Summary of Structural Reforms

• The Federation adopted a new Law on Budgets, improving fiscal policy coordination, discipline, and reporting.
• The privatization process is expected to resume with assistance from the World Bank and EBRD.
• The new procurement law will align BiH with EU standards, to be adopted by BiH parliament by end-February 2014.
• The new pension law in the Federation aims to increase contributors and raise the retirement age, with legislative changes to be submitted by end-December 2014.
• Legal amendments are being prepared to ensure the stability of key institutions, including the Securities Commission.

Key Figures and Tables

• Figure 1 presents selected economic indicators for BiH from 2007 to 2014.
• Table 1 provides selected economic indicators for BiH from 2010 to 2018.
• Table 2 includes real sector developments for BiH from 2010 to 2018.
• Table 3 outlines balance of payments for BiH from 2010 to 2018.
• Table 4 and subsequent tables present fiscal balances and budget performance for the general government, Institutions of BiH, and entity central governments from 2010 to 2014.

Conclusion

The staff supports the waivers of applicability and the extension and augmentation of the SBA, recognizing the challenges posed by political uncertainty and the need for continued financial support. The authorities are committed to fiscal consolidation, structural reforms, and improving financial sector stability to ensure long-term economic sustainability.