Bosnia Entities Trim Budgets to Ease IMF Loan

The parliaments of Bosnia’s two entities, the Federation of Bosnia and Herzegovina and Republika Srpska, have rebalanced their budgets as a condition for a new stand-by arrangement with the IMF.After the House of Representatives in the Federation entity supported the entity government’s rebalanced 2012 budget on Thursday, Bosnia is awaiting approval of an IMF stand-by arrangement worth 500 million US dollars, which will go to the entities.Rebalanced budgets were previously adopted by the House of Peoples – the other chamber of the Federation parliament – and the National Assembly of Republika Srpska.

The new Federation budget now stands at 1,999 million KM [around 1 billion euro], after being enlarged by some 38.5 million euro.

Republika Srpska lowered its entity budget by 15 million KM [7.5 million euro] and it now totals 1,810 million KM [925.4 million euro].

The changes to the Federation budget reflected restrictions on public spending and tightening controls over the deficit, government officials said, but the new budget focused on assuring pay off of existing foreign debt.

Among other budget changes, the Federation entity government cut agriculture subsidies by 5 million euro, prompting farmers’ protests while parliament was in session.

The government of the Federation BiH said that both entities needed additional IMF money to stabilise their budgets.

The IMF gave the two entities a deadline of September 7 to adopt rebalanced budgets.

The Fund will now decide on September 24 whether to approve Bosnia’s new stand-by arrangement, worth 410 million euro, which will be used to cover budget deficits.

The Prime Minister of the Federation, Nermin Niksic, said that the rebalanced budget will present a picture of the real financial situation. However, opposition MPs criticized the government, saying it was incapable of organizing finances in the entity.

“The IMF is not doing this for us – but because of our stupidity,” Josip Peric, MP for the Croatian Party of Rights, said.

The Finance Minister in Republika Srpska, Zoran Tegeltija, said on Thursday that the new budget would not affect the least well off in society.

Of the 410 million euro from the IMF, one third will go to the Republika Srpska and the rest to the Federation.

Tegeltija said that the money would be used to support the budgets of the entities and support reform of the public sector.

Check Also

Serbia-Russia Gas Deal Seen Certain, But at What Price?

Serbia expects a “friendly price” for Russian gas when the country’s current supply deal expires …