The statement of Governor Senad Softić to the newspaper "Oslobođenje" - BiH needs additional funds 12/17/2020 Tweet The IMF program provides more security to investors, thus reducing risk, said the Governor of the Central Bank of BH The Governor of the Central Bank of BH, Senad Softić, told for Oslobođenje that BH needs additional funds, especially foreign ones, and that IMF loans are usually very favorable. Stability -This Extended Arrangement will be realized within 36 months, in phases, and will be repaid in 12 equal semi-annual installments. The interest rate is just over 1 percent. However, the IMF funds are not the only ones we need, although a significant loan of KM 1.5 billion is being negotiated with them, Softić pointed out, while explaining why we need an IMF loan. He added that IMF programs ensure macroeconomic stability. -Therefore, other creditors such as the World Bank, the European Bank for Reconstruction and Development, but also the EU and other institutions approve their programs easier and faster if we have a program with the IMF. And that is certainly a good thing, because, I repeat, next year we will really need additional international funds. He stressed that we need to admit that we implement the necessary reforms on our own with difficulties. -The IMF is asking us for reforms in its programs. These are mostly reforms that we should work out by ourselves, but we often find it difficult to agree on them and then implement them slowly. -In these negotiations, the IMF did not set any major demands such as a reduction in salaries or pensions. They are committed to stimulating consumption, and thus the economy in BH. They want to improve the single economic space and that is good. Furthermore, the program aims to improve the economic basis for economic recovery, such as better management of public finances, better public procurement process, etc., pointed out the Governor of the CBBH. He added that countries that have an IMF program are seen as more stable economies, thus reducing the risks and uncertainty faced by both domestic and foreign investors. -Economic growth does not like increased risks. The IMF program provides more security, or in other words, provides more security to investors, thus reducing risk. It is necessary to do everything to provide investors with as stable a framework as possible when the pandemic ends, said Softić. He also pointed out that budget deficits are worsening in the crisis because budget revenues are falling and expenditures are rising. Economic shock -The fact is that we at the Central Bank often speak out against excessive borrowing, and especially the irrational spending of budget funds. But, I repeat, we are not in normal times at the moment. The whole world is in economic shock. The economic profession largely agrees that in such circumstances, expansionary fiscal policy can significantly contribute to shock mitigation and faster recovery, Softić said.
