Bosnia & Herzegovina’s central bank said it is supporting the reforms included in the letter of intent that the country needs to approve and send to the International Monetary Fund (IMF) in order to get a new loan deal.

The statement was issued after a second attempt by Bosnian politicians to reach a compromise and send the letter of intent failed after being blocked by Milorad Dodik, the Serb member of Bosnia's tripartite presidency, and his Serb Alliance of Independent Social Democrats (SNSD). Dodik and the SNSD claimed it would harm the interests and independence of Republika Srpska.

Bosnia comprises two autonomous entities, Republika Srpska and the Muslim-Croat Federation, as well as the autonomous Brcko District.

The central bank said in a statement it supports all reforms concerning the financial sector as they would strengthen it. In particular, the central bank noted that inclusion of the bank accounts of individuals in a centralised registry along with the accounts of companies would improve the prevention of money laundering.

“The economic area of Bosnia & Herzegovina is one and banks, individuals and legal entities operate and execute financial transactions across the whole area of Bosnia & Herzegovina without any limitations. In order to lower the opportunities for illegal transactions, the upgrade of the single registry of accounts is of extraordinary significance,” the central bank noted.

It added that this would not limit the right of entities to have separate registries.

“We do not see in what way the upgrade of the single registry would harm anyone in Bosnia & Herzegovina,” the central bank also noted.

In September, Bosnia’s state-level Prime Minister Zoran Tegeltija said his country wants to sign a new agreement with the IMF. In November, Andrew Jewell, the IMF’s resident representative, said that the country could sign a new agreement with the IMF, worth €750mn, at the beginning of 2021.

Jewell previously said that Bosnia has started talks on a new deal with the IMF and the negotiations should be completed in December, which would allow the deal to be finalised at the end of January or in February.

The deal would focus on stabilisation of the economy hit by the coronavirus (COVID-19) pandemic, as well as on support for the mid-term socio-economic reform agenda, including reform of the public sector and better transparency and supervision of public companies.

At the beginning of June, Bosnian politicians unlocked a €330mn loan from the IMF, provided as part of the institution’s programme to help governments worldwide to tackle the coronavirus outbreak and its economic consequences.

However, subsequent political tensions again blocked the funds’ distribution. According to Jewell, the country has even started paying interest on the sum without using it. He called on the authorities to distribute the sum and use it.