World Bulletin/News Desk

The International Monetary Fund is ready to double funding for Bosnia under its standby loan deal to help it cope with the effects of the worst flooding in living memory, an IMF official said on Friday.

The lender completed a 10-day visit to Bosnia on Friday to discuss further disbursements under its 380 million euro standby arrangement that was frozen in February after economic reforms stalled, as well as the damage inflicted by the recent flooding.

"We reached agreements with the authorities on a set of policies that would allow us to complete combined sixth and seventh reviews (under the deal)," Ron van Rooden, the head of the IMF visiting mission, told Reuters in an interview.

The mission will propose that next month the IMF Executive Board increase the funding for Bosnia from the originally planned 95 million euro to a total of 190 million euro ($260 million), Van Rooden said.

He expected the national parliament to pass several outstanding laws next week that would allow the IMF to unfreeze its loan deal: "Everything is up and running, we don't expect any major difficulties there.

"Given the natural disaster that happened, the impact it will no doubt have on the economy and government finances, we want to help the governments to make sure they can continue to function ... and provide the governments with additional financing," Van Rooden said.

He said the IMF would also cut its growth forecast for Bosnia to around 0.5 percent from 2 percent, and substantially revise its fiscal deficit target of 2 percent of GDP under the standby loan.

The heaviest rainfall in more than a century caused rivers in Bosnia, Serbia and Croatia to burst their banks, sweeping away roads, bridges and homes.

The European Bank for Reconstruction and Development said on Thursday the damage from flooding in Bosnia could amount to 1.3 billion euros, or 10 percent of GDP.