Borrowing of additional 400 million BAM in 2016?

In 2016, the Federation of BiH is planning to borrow 400 million BAM through the issuance of treasury bills on Sarajevo Stock Exchange. The data presented in the document of the Ministry of Finance of FBiH indicate that the largest debt will be in the second quarter of this year when is expected issuing of treasury bills and bonds in the amount of 160 million BAM.

In the first quarter of 2016, the planned debt amounts to 60 million BAM, the planned emission in the third quarter of 2016 is 80 million BAM and in the last quarter it amounts to 100 million BAM.

“When you are missing some money in your household budget, you can “go red” on your debit card. So does the state, through treasury bills, it can borrow money on short-term to cover a specific deficit in the budget. The entity government is the one who decides on the debt through the stock exchange,” explained Azra Zaimovic, Professor at the School of Economics and Business at University of Sarajevo.

According to her, the bonds are long-term means and a very good instrument for financing long-term capital investments.

Complete indebtedness through treasury bills should be paid by November 2017, given that the planned debt of 40 million BAM through the bonds should be returned on the 25^th of May 2021.

Financial institutions, banks and insurance companies mostly buy bonds and treasury bills. With the money from bonds, banks cover their costs or pay interest to those who keep their money in the banks.

(Source: akta.ba)