AGREEMENT BETWEEN BOSNIA & IMF TO ENABLE REFORMS

( Editorial: --> 6029 ) SARAJEVO, April 10 (Hina) - The head of the International Monetary Fund (IMF) mission in Bosnia-Herzegovina Scott Brown said that Bosnia could receive additional financial aid amounting to US$150 million via stand-by arrangements with the IMF. Speaking at a press conference in Sarajevo on Friday, Brown said the IMF managing board would consider the text of a Memorandum on Understanding, agreed on by the Council of Ministers of Bosnia- Herzegovina yesterday. Once the Memorandum is signed, its implementation would enable the macroeconomic and structural reforms which will include joint bodies of the Bosnian authorities and the governments of the two entities. The agreement on this document shows that it is possible to implement one economic strategy at the state level, Brown said. He recalled that the talks on conditions of cooperation between Bosnia and the IMF lasted long because of uncertainties as to which level the economic policy would be conducted on and whether that policy should be equal for the whole state. The key elements of the macroeconomic strategy in Bosnia- Herzegovina are a fixed currency rate, a budget which will cover social needs without resorting to internal loans and foreign financial assistance for the economic recovery which the country needs because of its still limited potential. The elements of the structural reform from the agreement between Bosnia and the IMF envisage changes in the area of customs and taxes, budgetary system, pension policy, banking, liberalisation of trade and stronger organisation of economic statistics. According to Brown, before the agreement goes into force, it will be necessary to formally establish all functions of the Central Bank and protect the institution from all financial risks during the liquidation of the National Bank, which has a deficit of about DM 20 million. The decision on winding up the National Bank of Bosnia-Herzegovina, a former institution of the republic, was adopted by the Bosnian Presidency on Thursday. The Governor of the Central Bank of Bosnia-Herzegovina, a New Zealander Peter Nicholl denied that the deficit registered in the National Bank could in any way jeopardise the stability of the new currency, the convertible mark, which is to be put into circulation during the next two months. In connection with this, Nicholl issued a statement saying the exchange rate of the new currency remained firmly tied with the German mark, with a proportion of 1:1. Every convertible mark will have a real basis in the German mark, Nicholls said in the statement. (hina) jn rm 101455 MET apr 98