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

SARAJEVO (Reuters) - Bosnia's national parliament passed a long-delayed law on Friday that should unlock about 1 billion euros ($1.18 billion) of funding from the International Monetary Fund, the European Union 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 favour. 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-euro aid deal approved last year, had prompted the Washington-based lender to freeze further loan disbursements. [ID: L8N1NR4SN]

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 programme is part of a wider reform package devised by the European Union to guide Bosnia towards faster integration with the bloc.

The passage of the law will unblock 220 million euros approved by the European Bank for Reconstruction and Development (EBRD) for infrastructure projects in Bosnia plus another 250 million euros 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 euros of loans for infrastructure in Bosnia conditional on the passage of the law.

($1 = 0.8477 euros)

(Reporting by Daria Sito-Sucic; Editing by Catherine Evans)