IMF Executive Board Approves US$361 Million in Emergency Support to Bosnia and Herzegovina to Address the COVID-19 Pandemic
April 20, 2020
- Pandemic impact expected to be substantial and generate rapid external accounts deterioration;
- Economy expected to decline 5 percent in 2020 and recover to 3.5 percent in 2021
- Rapid Financing Instrument will help provide support for scaling up priority spending on health and social assistance, while preserving debt sustainability.
Washington, DC – April 20, 2020. The
Executive Board of the International Monetary Fund (IMF) today approved SDR
265.2 million (about US$361 million or €333 million, 100 percent of its SDR
quota) in emergency assistance for Bosnia and Herzegovina (BiH) under the
Rapid Financing Instrument
(RFI). It will help the country meet an urgent balance-of-payments need due
to the global outbreak of the COVID-19 pandemic.
The RFI provides rapid and low-access financial assistance to member
countries facing an urgent balance of payments need, without the need for a
full-fledged economic program or reviews. It can provide support to meet a
broad range of urgent needs, including those arising from commodity price
shocks, natural disasters, conflict and post-conflict situations. Financial
assistance under the RFI is provided in the form of outright purchases.
The near-term economic impact in BiH is expected to be substantial,
generating a rapid deterioration of external accounts and urgent balance of
payment needs. Economic growth is expected to decline by 5 percent in 2020
and recover to around 3.5 percent in 2021.
The RFI will support the authorities’ efforts to increase spending for
containing COVID‑19 human costs and mitigating its economic impact. The BIH
governments are planning a significant fiscal expansion to ramp up health
and social spending. This IMF financing will play a vital role in
catalyzing emergency assistance from the international community, in
particular the EU’s.
The IMF will continue to monitor Bosnia and Herzegovina’s situation closely
and stands ready to provide policy advice.
Following the Executive Board discussion, Mr. Tao Zhang, Deputy Managing
Director and Acting Chair, issued the following statement:
“Bosnia and Herzegovina’s economy has been suffering from the COVID-19
pandemic, which has created an urgent balance of payments need.
“Given the large and rapid deterioration of external accounts, the Rapid
Financing Instrument will help provide support for scaling up priority
spending on health and social assistance, while preserving debt
“To properly address the medical emergency and large output contraction, a
fiscal expansion is needed. In the short run, to mitigate the health and
economic impact of the pandemic, the priority is to increase health-related
spending, expand unemployment and social benefits, and provide support to
firms for maintaining employment. The authorities have committed to return
to a fiscal stance that stabilizes debt once the situation normalizes.
“Preserving the currency board arrangement and raising the resilience of
the banking system play a crucial role for restoring external and internal
balances. High frequency monitoring of the banks, including their liquidity
positions and asset quality, is crucial at this juncture.
“Donor and other IFI emergency assistance is needed to close the remaining
balance of payments gap.”
IMF Lending Tracker (emergency financing request approved by the IMF
IMF Executive Board calendar
IMF Communications Department
PRESS OFFICER: Andreas Adriano AAdriano@imf.org
Phone: +1 202 623-7100Email: MEDIA@IMF.org