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Bosnia's Federation and Republika Srpska entities adopted their 2013 budgets on December 4, meeting an IMF deadline and so enabling them to access the next chunk of an IMF loan.
The Bosniak-Croat Federation of Bosnia and Herzegovina has adopted a budget for 2013 for the entity of 1.13bn euro, which is almost 11 per cent more than the budget for 2012.
Prime Minister Nermin Niksic blamed the rise on an increase in interest rates on outstanding loans.
He told entity lawmakers that because the budget was adopted on time, Bosnia can access the next tranche of an IMF loan of 405 million euro spread over two years.
“By voting for this budget, you assured as much as 70 million euro for the Federation budget by the end of this year,” Niksic told MPs, adding that some 40 million euro will come from the IMF and 30 million in help from the European Commission.
The Republika Srpska parliament also adopted an entity budget for 2013 set at 994 million euro which is higher in comparison to this year's budget of 925 million euro, but lowered its budget expenditures by 58 million euro which included lowering salaries of budget users for 10 per cent.
Cuts caused harsh reactions among the opposition who accused the government of trying to pay off loans at the expense of those employed in the public sector.
However, the Republiks Srpska Prime Minister, Aleksandar Dzombic, denied that cuts in salaries would be used for debt repayment and emphasized funds would continue to be directed towards those least able to bear the burden of the economic crisis.
Along with the budget, the Republika Srpska parliament also adopted an economic policy, which aims to achieve maintain growth, employment, fiscal stability, social sustainability and more just social allocation of funds.
“Economic policy includes some difficult and painful moves, which in a mid-term would ensure stabilization and improvements of the economic environment in general,” Dzombic said.
By adopting their budgets before December 5, the two entities met the IMF deadline set before they will consider disbursing a loan of 405 million euro. The loan was approved on September 26.
Bosnia's two autonomous entities are already using cash from the loan but did not get the whole amount at once.
Instead the IMF at first gave them 60.8 million euro and said the rest will be spread out over two years, after successful quarterly reviews.
Two-thirds of the 405 million euro are to be transferred to the larger entity, the Federation of Bosnia and Herzegovina, and one-third to the Republika Srpska.
Bosnia and Herzegovina joined the IMF on December 1992.
Bosnia has teased another 400 million euro from the IMF – but as the cash will simply go on repaying the last IMF loan, it’s hard to see what is being achieved.
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