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Bosnia Admitted to World Bank
Qualifies for $450 Million in Loans Despite
Outstanding Debts by Former Yugoslavia

(WASHINGTON, March 13—Reuters) The World Bank said on Wednesday it expects to lend war-torn Bosnia $450 million over the next four years after approving a plan to allow Bosnia to join the bank despite debts owed by the former Yugoslavia. Under the plan, Bosnia will assume its share of the Yugoslav debt and the arrears will be consolidated into a new 30-year loan from the International Bank for Reconstruction and Development (IBRD).

The World Bank normally does not participate in debt rescheduling agreements but in a statement it drew a parallel between Bosnia and Bangladesh, when it took responsibility for loans to Pakistan in its territory. Due to Bosnia's exceptional needs, a first wave of emergency projects would be financed from a $150 million trust fund approved on Feb. 23.

An initial $45 million supported by the trust fund will go to finance critical imports for agriculture, power and transport industries plus support for key government institutions and the poorest households. Once Bosnia clears its arrears it will be eligible for long-term financing at no interest from the International Development Association (IDA) because of its decline in gross domestic product per capita to $500 from a pre-war $1,900.

The bank said Bosnia was expected to borrow a large amount from IDA over the next three years but as its creditworthiness improves IDA lending will be phased down and loans from IBRD are expected to increase.

"Under the plan the World Bank Group expects... to make a positive net transfer of funds to Bosnia of about $450 million over the next four years — most of which will be on concessional terms," it said.

Close partnerships with other agencies and donors would be critical. The bank estimated Bosnia's reconstruction program needed $5.1 billion over the next three to four years. "This commitment from the World Bank Group should encourage the international donor community to join us in providing the substantial additional funding that is needed." World Bank President James Wolfensohn said in the statement.

Additional resources
Bosnia & Herzegovina Reconstruction at a Glance The World Bank

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