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News 10 May 17

Debt-Ridden Bosnia Lavishes Cash on Political Parties

Bosnia's deficit-crippled budgets increasingly struggle to cover social benefits and pensions, yet they still put aside millions to generously subsidise the country's numerous political parties.

Danijel Kovacevic
Banja Luka
The national bank in Sarajevo. Photo: Janos Korom

While ordinary people and investors are emigrating because of Bosnia’s deepening political crisis and poor business environment, local political parties seem to be flourishing, thanks to steady and ample financial support from the state budget and from their membership fees.

“We [ordinary people] are sheep and we deserve to be sheared when we let them [politicians] do this to us,” Luka, a 32-year old commercial salesman from northern town of Doboj told BIRN, reflecting on recent news about the lavish budgetary support that political parties enjoy.

His reaction was triggered by last week's announcement by Bosnia's Central Election Commission, CIK, which in its latest report said that during the last year, political parties had been given some 13 million euros.

The two main sources of their income are Bosnia's controversial law which provides most budgetary support for the functioning of country's biggest parties, plus the parties' own membership fees.

But some parties earn additional income from other sources, such as donations or renting out their office space and other real estate.

The CIK report, published on April 28, was compiled from data provided by 96 out of the 149 registered parties.

The remaining 53 parties failed to submit their data, but the law does not envisage any penalties in such cases.

This means that parties in Bosnia have probably received more than 13 million euros. 

The main source of revenues for most of these parties is taxpayers' money channelled through state, entity and cantonal budgets.

Officially the ‘richest’ party in Bosnia is the Social Democratic Party, SDP, although it has lost much of its old popularity in the two last election cycles and is now not a part of any ruling coalition.

Nevertheless, it reported to have almost 2.4 million euros in its bank accounts.

Right behind the SDP is the ruling Bosniak Party of Democratic Action, SDA, which - despite the growing internal and public dissatisfaction with its leadership - has only a few dozen thousand less than the SDP in its accounts.

However, the SDA is the champion in terms of budgetary support, which makes up the major share - 1.7 million euros - of its overall revenues.

Both the SDP and SDA are from Bosnia's Federation entity, but the third on the list, and the first from Bosnia's Serb-dominated entity of Republika Srpska, is the Alliance of Independent Social Democrats, SNSD.

The SNSD, which rules in Republika Srpska, has reported its revenues at 1.3 million euros.

Most of that amount - around one million euros or some 80 per cent - the SNSD received from various budgets. It also reported receiving some 200,000 euros from membership fees and no donations.

After these first three parties follow the Union for Better Bosnia, SBB with one million euros, and the Serb Democratic Party, SDS and Croat Democratic Union, HDZ, with a few thousand euros fewer than a million.

According to the CIK, the parties' cumulative debt stands at some 3.5 million euros, although the report did not say what these debt were for.

The SDA is also the debt champion, reported to owe some 480,000 euros.

These large revenues stand in stark contradiction with Bosnia's worsening economic and social crisis; experts have been warning of the possible collapse of health, pension and/or social sectors as well as a possible liquidity crisis after Bosnia's latest IMF program was effectively blocked by constant political quarrels.

Some of Bosnia's media, experts and activists have been demanding an overhaul of the system of financing of political parties, but the parties themselves have ignored these calls.

"There would be no economic justification for such large public spending on political parties even in some much richer country then Bosnia and Herzegovina," Zoran Pavlovic, an economic analyst from Banja Luka, told BIRN.

"On the other hand, that speaks volumes about the attitude of political parties towards the citizens: at the moment when they are begging the IMF for money to make ends meet, and calling for general savings, they show no intentions of saving for themselves," Pavlovic said.

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