"The only logical thing for us to do is to part ways in peace, but conditions for that do not yet exist," Dodik said in Banja Luka on Saturday where he met with the entity's government to discuss what to do if the International Monetary Fund delayed payment of the next installment under the stand-by arrangement because of problems in the country's other entity known as the Bosniak-Croat Federation.

The implementation of the stand-by arrangement is questionable because the Federation authorities are required to pass a single law that would regulate the status of war veterans and military pensioners and no agreement on the matter has been reached yet.

Dodik said that this was yet another proof that Bosnia and Herzegovina was "an impossible state" that could not survive.

Republika Srpska's Finance Minister Zoran Tegeltija, who attended the meeting with Dodik, said that Republika Srpska would be in great trouble if the expected IMF funds did not come through. "We can't sit idly by. We will have to look for other investors," Tegeltija said.

Federation Prime Minister Nermin Niksic had said earlier that if the IMF's financial support in the amount of 150 million euros did not come through, all budgetary allocations would have to be cut by 30-40 per cent, including salaries, disability allowances and welfare benefits.

The Federation authorities have said they will try to formulate the new bill, on whose adoption the IMF insists, by April 12.