Bosnia passes delayed law to unlock $1.1bn of IMF, EU funds

(L to R) Macedonia's Prime Minister Zoran Zaev, Serbia's Prime Minister Ana Brnabic, Montenegro's President Filip Vujanovic, Chief Executive Officer of the World Bank Kristalina Georgieva, Bulgarian Prime Minister Boyko Borisov, Bosnia and Herzegovina's Minister of Foreign Trade and Economic Relations Marko Sarovic, Albania's Prime Minister Edi Rama and Kosovo President Hasim Taci pose for a photo during a summit to support regional integration in the Western Balkans region in Sofia, in this December 7, 2017 photo. (AFP)
Updated 15 December 2017
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Bosnia passes delayed law to unlock $1.1bn of IMF, EU funds

SARAJEVO: Bosnia’s national Parliament passed a long-delayed law on Friday that should unlock about €1 billion ($1.18 billion) of funding from the International Monetary Fund, the EU and other international lenders. The law raising road-toll fees and excise taxes on bio-fuel was passed by 22 votes to 20 by the 42-seat Parliament.
Opposition parties voted against, saying it would raise other costs for citizens. They had blocked a previous draft law last year that would have increased excise taxes on fuel to pay for road-building, demanding more transparency in the allocation of monies raised so that the government could not channel them into general budget spending.
Addressing the opposition concerns, the government made changes to the legislation lifting road-toll fees and excise taxes just on bio-fuel and bio-liquid, and clarifying that proceeds will be used exclusively for road construction.
EU Enlargement Commissioner Johannes Hahn praised the adoption of the law in a tweet as a “critical step to secure infrastructure investment and international aid.”
“I applaud those who voted in favor. They have shown courage and commitment to move their country forward on the EU path,” he wrote.
The failure to pass the law, which was among key conditions set for Bosnia by the IMF under a €553 million aid deal approved last year, had prompted the Washington-based lender to freeze further loan disbursements. The IMF sees the law as a pre-condition for the launch of large-scale infrastructure projects that would boost growth and create new jobs in the impoverished Balkan country.
Its program is part of a wider reform package devised by the EU to guide Bosnia toward faster integration with the bloc.
The passage of the law will unblock €220 million approved by the European Bank for Reconstruction and Development (EBRD) for infrastructure projects in Bosnia plus another €250 million of loans from the same lender.
The EBRD considers proceeds from increased road tolls as a safeguard for repayment of the debts. The European Commission has also made its €250 million of loans for infrastructure in Bosnia conditional on the passage of the law.
— REUTERS


India names Modi demonetization backer as cenbank head

Visitors are seen standing next to a logo of the Reserve Bank of India (RBI) at the bank's head office in Mumbai on December 5, 2018. (AFP)
Updated 12 December 2018
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India names Modi demonetization backer as cenbank head

  • Das — a high-profile backer of Modi’s controversial 2016 move to scrap high-value currency notes, known as demonetization

MUMBAI: Ex-finance ministry official Shaktikanta Das took charge of the Reserve Bank of India on Tuesday, in a swift appointment expected to ease a dispute with the government as it pushes for looser credit rules ahead of a general election.
The announcement by Prime Minister Narendra Modi’s administration came just a day after Urjit Patel resigned from the post, following months of clashes between the two institutions over lending curbs and how to deploy the central bank’s surplus reserves.
Pressure on the RBI to take immediate steps to boost the economy, including a transfer of the excess reserves to the government, could well rise after Modi’s ruling Bharatiya Janata Party (BJP) suffered likely election losses in three key states on Tuesday.
Das — a high-profile backer of Modi’s controversial 2016 move to scrap high-value currency notes, known as demonetization — will serve a three-year term as governor, effective immediately.
RBI watchers said they expected the 61-year-old, who retired last year as secretary of the department of economic affairs having previously served on the RBI’s board, to put relations between the Mumbai-based bank and the finance ministry in New Delhi on a stabler footing.
Investors will also look closely at his ability to hold up against outside influences after recent efforts by the Modi government to gain greater control over the central bank’s regulatory powers.
“The incoming governor will have to work hard to prove that he has his own independent mind,” said Deepak Jasani, head of retail research at Hdfc Securities.
Investors said any openly political appointee with little macro-economic experience, would not sit well with financial markets that already sold off following the BJP’s election setbacks.
But Ashish Vaidya, executive director and head of trading at DBS Bank in Mumbai, said he expected India’s debt and currency markets to react positively.
“He is a bureaucrat...We expect the RBI to take a pragmatic approach under him, be pro-growth and change its stance going ahead given that inflation has come off sharply,” he said.
Finance Minister Arun Jaitley told Reuters partner ANI that the government acknowledged the bank’s independence.
“Government will fully support the RBI and coordinate with it in areas where consultations of government are required to make sure India’s economy benefits from both government policy decisions and areas which fall within domain of the RBI,” ANI tweeted, quoting Jaitley.

SWIFT APPOINTMENT
Pronab Sen, India’s former chief statistician, said he was surprised by the speed of Das’s appointment.
“If you have a situation where a position as important as the governor of the RBI is filled within 24 hours of the resignation of the incumbent, that will raise eyebrows,” Sen told Reuters.
“People are going to say, clearly this guy had already been identified. And, the situation was created where Urjit Patel had to quit.”
Das — widely seen as a contender for the top RBI job after Raghuram Rajan’s term ended in 2016 — did not answer calls from Reuters to his mobile phone.
RBI officials who have worked with him closely said Das was likely to be more inclusive in the decision-making process than Patel.
“He has a balanced approach and is good at consensus building,” said a former deputy governor. .”..We have had our fair share of differences. But he has always been solution-centric rather than festering on those differences.”
Das worked in the finance ministry under both Modi’s government and the previous coalition led by the main opposition Congress party and was also involved in drafting the Insolvency and Bankruptcy code aimed at protecting small investors.
He came under fire for his pro-demonetization stance and was the most vocal bureaucrat at the time Modi withdrew the high-value bank notes to fight tax evasion.
Das last year criticized the methodology of global rating agencies and sought a sovereign rating upgrade for India.