Cash-strapped Bosnian region sells 6-month T-bills at lower yield

SARAJEVO Tue May 6, 2014 7:59pm IST

SARAJEVO May 6 (Reuters) - Bosnia's cash-strapped autonomous Bosniak-Croat Federation on Tuesday raised 20 million Bosnian marka ($14.3 million) at an auction of six-month treasury bills, helping shore up its finances after the IMF withheld a loan payment.

The average weighted yield fell to 0.74 percent from 0.81 percent at the last sale of six-month paper, held in April. Investors bid for 47.4 million marka worth of T-bills against 20 million marka on offer, the finance ministry said.

The Federation had planned to issue 260 million marka worth of T-bills and 50 million marka worth of bonds this year to help cover its budget deficit, which it expects will come to 661 million marka due to loans it has extended for infrastructure projects by public companies.

It had expected to plug the rest of the gap of 350 million marka with funds from the International Monetary Fund and the World Bank. But the IMF in February froze the disbursement of funds under its 385 million euro ($534.32 million) standby deal over the failure of Bosnia's two regions, the Federation and the Serb Republic, to implement economic measures on which the loan deal depended.

So far in 2014 the Federation has raised 110 million marka from T-bills and has received one IMF loan tranche worth some 50 million euros, leaving it well behind schedule for the year.

Federation Prime Minister Nermin Niksic said on Tuesday the government would most likely revise its 2014 budget or cut its spending to secure budget liquidity if it fell short of IMF funds.

($1 = 1.402 Bosnian marka) ($1 = 0.7205 Euros) (Reporting by Maja Zuvela; Editing by Hugh Lawson)