The IMF published the supplement to the letter this week after approving based on it in late January a EUR 154mn enlargement of
In the supplemented letter to the IMF the Bosnian authorities detail their strategy on further reducing fiscal and financial risks and fostering the economic growth and job creation.
Here are some of the highlights in the three areas - fiscal sustainability, financial sector safeguarding and private sector support:
- Excises on fine-cut tobacco will be raised to become fully equivalent with those on cigarettes effective
- Raise excise rates on fuel products and channel the additional revenues directly to the entity highway funds. This will help generate additional and much-needed resources for highway construction. Similarly, excises on alcohol and tobacco are planned to further increase and the additional revenues to go to the health care system, and initiate comprehensive health care reform with the assistance of the
- Introduce a risk-based approach for the selection of VAT refunds for audit - one of the key elements of the strategy to strengthen the control of VAT refunds and credits.
- Adopt a new corporate income tax law in the Federation - aiming to broaden the tax base and clarify the tax treatment of depreciation and banks' loan loss provisioning. The new draft law will be submitted to the Federation parliament in early 2014, and its adoption is expected by
- The privatisation process in the Federation - the government together with the EBRD and the
- Prepare new banking laws in both entities, with a view to bringing them fully in line with EU legislation and the requirements of Basel II, and to expanding the tool-kit for dealing with problem banks and clarifying the procedures for doing so. The draft laws should be submitted to the respective parliaments by
- Non-performing loans (NPLs) continuing to increase. New laws will be prepared with the IMF help that regulate asset management companies (structural benchmarks for end-June 2014) and clarify the tax treatment of loan sales as needed. In addition, a voluntary out-of-court restructuring system will be established in the first half of 2014, to promote the return of operationally viable companies to sustainable debt servicing.
- Job creation and growth remain key objectives. Besides reviewing the labour laws,
Thus, the newly proposed structural benchmarks include:
1. Raise the excises on fine-cut tobacco to be fully equivalent with those on cigarettes -
2. Adopt by the BiH (
3 Adopt by the Federation parliament a new law on Single Registry of Beneficiaries of Cash Payments without Contribution -
4 Submit to the Federation parliament the amendments to the relevant legislation to implement the Federation pension reform strategy.
Here are the structural benchmarks
1. Amend legislation in the
2. Adopt by the Federation parliament a new labour law to facilitate job creation (
3. Adopt by the
4. Hire reputable external auditors to conduct thorough asset quality reviews of the banks that have been under intensified monitoring by the Banking Agencies in 2013 (not met).
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