SARAJEVO, March 24 (Reuters) - Bosnia will get a 74.5 million-euro ($80.51 million) loan from the World Bank to support the strained budgets of the country’s multiple governments and allow it to reform its bloated public sector, the bank said on Friday.
Bosnia, which comprises two autonomous regions linked by a weak central government, spends nearly 44 percent of its gross domestic product to finance a sprawling administration.
Under an European Union-sponsored reform programme, which is also supported by the World Bank and the International Monetary Fund, Bosnia has pledged to slim down its public sector and cut spending by 2.3 percent of GDP in the medium term.
“Tackling the legacy of an unwieldy and ineffective public sector is one of the most important aspects of the country’s reform agenda, which is designed to transform the economy in line with European Union criteria and to accelerate growth and job creation,” said Ellen Goldstein, the bank’s director for the Western Balkans.
Bosnia’s two regions, the Bosniak-Croat Federation and the Serb Republic, face financing problems after failing to meet the terms for further disbursement of IMF aid under its 533 million-euro loan deal for Bosnia.
The bank’s loan supporting fiscal reforms is part of its partnership programme for Bosnia, which envisages $750 million in lending for the period 2016-2020, depending on the scope and pace of reform implementation.
The bank’s active portfolio in Bosnia, supporting projects for transportation, employment, energy efficiency, local infrastructure, environment, forestry and water management, totals $497 million.
$1 = 0.9253 euros Reporting by Daria Sito-Sucic; Editing by Larry King