The International Monetary Fund staff reached a preliminary agreement for a $500 million loan to Bosnia-Herzegovina, which is feeling the effects of the euro region’s debt crisis.
The two-year loan still has to be approved by the IMF’s board in September after the country implements “a number of measures” in coming weeks, the fund’s mission chief Costas Christou said in an e-mailed statement.
“The recovery, which started in 2010, has stalled amid signs that the euro zone crisis is negatively affecting the country’s exports and capital inflows,” Christou said. “Domestic demand remains subdued, held back by fiscal restraint, stagnant wages and slow credit growth.”
Christou said the IMF’s forecast of zero growth this year may be optimistic. European policy makers today received another vote of no-confidence in their efforts to stem economic turmoil as the euro fell to its lowest in more than two years following final approval for a bailout of Spanish banks.
The IMF said Bosnia’s economic program “aims to strengthen national economic policy coordination, maintain fiscal discipline, safeguard financial sector stability, and improve the business environment.”
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