By Daria Sito-Sucic
SARAJEVO (Reuters) - The International Monetary Fund will consider a request by Bosnia's authorities to extend and enlarge the Balkan country's current stand-by loan arrangement, the head of the IMF mission in Bosnia told Reuters on Thursday.
"Given the track record of the authorities under the current stand-by arrangement, the IMF is happy to consider this request in November, when its mission visits," Ruben Atoyan said, adding that the decision would depend on the strength of the government's economic policies.
Atoyan said the IMF's Executive Board will approve on October 28 the disbursement of a new 48 million euro ($66 million) tranche to Bosnia under a 385 million euro deal concluded in September 2012, because the authorities have met its terms.
Bosnia is made up of two highly autonomous regions, the Federation dominated by Muslim Bosniaks and Croats, and the Serb Republic, dominated by Bosnian Serbs.
The Serb Republic government has adjusted its 2013 budget to reflect a 3.5 percent hike in pensions, so that the consolidated budget deficit target of 2 percent of output could be met, Atoyan explained.
In the Federation, the implementation of legislation cutting military pensions and including audits of beneficiaries was progressing at a good pace, he added.
Both of Bosnia's two regions badly need the IMF cash to cover deficits in their budgets. The IMF has earlier said they had to make sure that next year's budgets are robust enough to preserve the gains made in 2013.
The lender has forecast Bosnia's economic growth in 2013 at close to 1 percent, based on an increase in industrial output and exports. It sees gross domestic product (GDP) growth at 2 percent in 2014 and at 3.5 percent in 2015.
(Reporting by Daria Sito-Sucic; Editing by Zoran Radosavljevic/Ruth Pitchford)