prijava
SARAJEVO, April 22 (FENA) - Andrew Jewell, the International Monetary Fund (IMF) Resident Representative in Bosnia
and Herzegovina, issued a statement in Sarajevo today saying that the banking sector in BiH plays a crucial role in helping the economy, and ultimately recover from, the COVID-19 crisis.
The Banking Agency of the Federation of Bosnia and Herzegovina (FBA) and the Banking Agency of Republika Srpska (BARS) have both announced targeted loan moratoria for households and businesses that have lost their income as a result of the pandemic. The IMF strongly encourages banks to continue to participate actively in these programs, stated the IMF in BiH.
However, as emphasized by the IMF’s Executive Board, the Fund is opposed to blanket moratoria that apply to all borrowers, regardless of their financial situation. Businesses and households that are able to pay should continue to pay their debts. This will ensure that banks can provide new credit to the economy. In addition, to incentivize banks to lend more, the authorities are considering loan guarantee schemes, where the government assumes a substantial part of the risk of new lending. This is the right way to stimulate additional credit to the economy while preserving the functioning of the financial sector.
The IMF is strongly opposed to any proposal that dictates to banks what interest rate they should charge on their loans. Banks, like other economic actors, are facing unprecedented challenges and are likely to lose money in 2020. To protect borrowers, FBA and BARS have already forbidden banks from increasing interest rates on outstanding loans and charging
additional fees during the moratorium period. Imposing a blanket moratorium and prescribing a below-market interest rate would add to banks’ losses, deplete their liquidity, and weaken the banking system.
The risk of negative spillovers to the financial sector is something we are watching closely. The global financial crisis originated in the financial sector and spread to the real economy. Now, it is the other way around, as the crisis has hit the real economy and risks spreading to the financial sector.
"We know from history that when that happens, the post-crisis recovery tends to be much slower. Following Monday’s approval of €333 million in emergency assistance to BiH, the IMF will turn its attention to negotiating a new, multiyear arrangement with the authorities. The independence of FBA, BARS, and the Central Bank of Bosnia and Herzegovina will be paramount in any new arrangement,” stated Jewell.
(FENA) S. R.
