Bosnia Mediator Slaps Interim Budget on Federation

Inzko said he had to act because the entity had failed to form a parliament almost four months after general elections, which meant that civil servants and some 370,000 pensioners in the Federation risked having their payments cut off.

Inzko said he had imposed without any interventions the decision on temporary financing prepared by the outgoing government of the Federation.

Approval of the outgoing government's decision by the Federation’s bicameral parliament was impossible because only the lower house has been formed so far.

The formation of an upper house has been delayed by obstructions caused by the two main Croatian parties, the Croatian Democratic Union, HDZ, and the Croatian Democratic Union, HDZ 1990.

The two parties are blocking formation of the parliament because, once formed, it is likely to be dominated by a political bloc led by the Social Democratic Party, SDP, which could exclude the Croats from a new government.

The situation is likely to remain unchanged until the SDP-led bloc and the two strongest Croat parties reach an agreement on the composition of a new Federation government.

While the formation of the new Federation parliament and government is on hold, the Federation cannot adopt a 2011 budget or undertake any major economic and social measures.

Inzko criticised local political leaders for their failure to reach an agreement on a government coalition.

"Almost four months have passed since the October elections and what voters are getting is stalemate, irresponsible politics, and all too often the price is being paid by the most vulnerable categories [of society]," Inzko said in a statement.

"Crucial topics are being put on hold by intransigence and self-interest," he added.

Under the 1995 Dayton peace agreement, which ended the 1992-95 war, Bosnia was divided into two entities, the Bosniak-Croat Federation and the Serb-dominated Republika Srpska.

Each has its own government, parliament and presidency, but the two are linked by central institutions.