Head of the International Monetary Fund's mission to Bosnia and Herzegovina Alina Iancu asked for an urgent meeting with prime minister Zoran Tegeltija to discuss the “implications of Republika Srpska's withdrawal from the Indirect Tax Authority.”

In a letter she sent to Tegeltija, the Chairman of Bosnia's Council of Ministers, Iancu expressed concern over the plans of Republika Srpska, the Serb-majority entity, to withdraw from the Indirect Tax Authority, which she stressed is “the most significant source of incomes” for Republika Srpska, as well as the Bosniak-Croat shared Federation (FBiH) entity and Brcko District.

“Leaving aside the problems we are not in the position to speak about, we believe that withdrawal of Republika Srpska from the Indirect Tax Authority would leave huge economic consequences for all,” reads the letter.

The news comes amidst political tensions that emerged after Serb member of Bosnia's Presidency Milorad Dodik announced withdrawal of the entity from the state institutions, as a response to international peace envoy's decision to impose a law banning genocide denial.

The IMF's chief in Bosnia said she would like to hear the stance of the Fiscal Council on the matter.

“We would like to specifically talk about how will the servicing of Bosnia's external debt be ensured, including the debt towards the IMF, in case of dismantling of the Indirect Tax Authority or if the institution is deprived of the VAT collection,” said the letter.

Iancu sent the same letter to entity prime ministers of FBiH Fadil Novalic, RS Radovan Viskovic as well as finance ministers in both entities, Bosnia's Central Bank Governor Senad Softic and Brcko District Mayor Esed Kadric.