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IMF Sees Bosnian Economy Expanding 1% Next Year After Stagnation

Oct. 5 (Bloomberg) -- Bosnia-Herzegovina’s economy will probably grow 1 percent in 2013 after stagnating this year, the International Monetary Fund said in a report today.

To unlock growth potential, the former Yugoslav republic should accelerate “the pace of structural reforms,” improve the business environment and the labor market, the Washington-based lender said a week after granting Bosnia a 403.5 million-euro (526.24 million) loan to counter the effects of a deteriorating global economy and to address domestic weaknesses.

The IMF supports Bosnia’s economic program, which “focuses on maintaining fiscal discipline, safeguarding the soundness of the financial sector and intensifying reforms to improve the business and investment environment,” according to the report.

Bosnia, divided into two entities, the Serb-dominated Republika Srpska and the Croat-Muslim Federation, has pledged to improve national policy coordination, strengthen the role of its Fiscal Council, continue fiscal consolidation, protect the currency-board regime and improve the resilience of the financial sector, the IMF said.

The IMF sees Bosnia narrowing its budget deficit to 2.3 percent of economic output in 2013 from 3 percent this year. The current-account deficit is expected to contract to 7.3 percent of gross domestic product next year from 7.6 percent this year.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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