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IMF in Bosnia to discuss new loan agreement, seek reforms

The International Monetary Fund (IMF) logo is seen at the IMF headquarters building in Washington, April 18, 2013. REUTERS/Yuri Gripas

SARAJEVO (Reuters) - The International Monetary Fund begins a two-week visit to Bosnia on Wednesday for a new round of talks on a new loan after authorities in the ethnically divided Balkan country failed to agree a package of reforms in June.

Bosnia's previous, 33-month aid programme worth around 630 million euros (456 million pounds), expired in June after the lender froze it in September 2014 over delays to reform.

The country's two autonomous regions, the Bosniak-Croat Federation and the Serb Republic, need IMF cash to secure their financing needs. Both regions are now trying to secure loans from commercial lenders to make up for the absence of the IMF cash to cover their budget gaps in 2015.

The lender has insisted that both regions needed to improve tax administration and tax collection and oversight of banks and business environment. They were also expected to reform their labour legislations, a measure that was implemented in the Federation but remains to be approved in the Serb Republic.

The total budget deficit in the two regions amounts to about 1 billion Bosnian marka ($565.6 million).

The measures sought by the IMF are part of a wider programme the European Union wants Bosnia to implement to further its bid to join the bloc, particularly on social welfare, pensions and health funds.

The Serb Republic was first opposed to the reform package, arguing it was not involved in its drafting, but approved it later after some technical changes were introduced.

Political bickering among the two regions has also halted a number of projects approved for Bosnia by the EU and the World Bank over the past several years.

(Reporting by Daria Sito-Sucic; Editing by Larry King)