- Bosnia and Herzegovina
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The debt in the public sector in Bosnia grew in the first half of 2012, according to data from the Central Bank, as the country negotiates new loans with the International Monetary Fund, IMF.
According to the Public Interest Advocacy Centre, PAIC, the rapidly growing debt with commercial banks is going unchecked in Bosnia.
“The public sector debt with commercial banks grew to 1.5 billion KM [some 766 million euro] in May 2012,” PIAC said. “Around €453 million of the debt was incurred by the Federation entity and around €313 million is from the Republika Srpska.”
The debt with commercial banks doubled in the past four years, PIAC noted, growing from around €383 million to €766 million. Most of the public debt was incurred by public companies located in the Republika Srpska, rather than in the Bosniak-Croat Federation.
“The debt with commercial banks is not in the interest of citizens and their children, who will be paying off the debt for decades,” PIAC said in a press release on July 31.
The organization warned that commercial banks in Bosnia are also in debt, so the interest rates are extremely unfavourable when compared to loans from development banks.
They suggested that this type of debt be lowered as much as possible as it creates fertile grounds for corruption.
“A big part of corrupted activities stem from relations of government officials and commercial banks” PIAC said. “It should warn us that we have to pay attention to municipalities, cantons, entities, the state as well as public companies taking money from commercial banks.”
At the same time, the Bosnian government is trying to get more loans from the IMF, which announced recently an economic program that could be supported by an IMF’s Stand-By arrangement worth $500 million [€406 million].
The total foreign debt of Bosnia and Herzegovina at the end of the last year was around €3.3 billion, but with the internal debt, the amount totals to more than €7 billion.
Experts of the Bosnian Foreign Trade Chamber said recently that the country is still not over-burdened, but the debt has been rapidly growing over the past year, which could lead to extremely negative economic indicators.
The International Monetary Fund, IMF, announced a loan to Bosnia worth $500 million to be delivered within a Stand-By arrangement which should be approved in September.
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