Purchasing power is a measure of the quality of life of citizens in an economic sense. Financial stability enables citizens to live a dignified life and maintain a balance between personal and work life, which together affect well-being and overall life satisfaction.
The environment in which citizens of Bosnia and Herzegovina (BiH) live and work also has a significant impact on purchasing power. It is a unique country in terms of political structure, with 14 governments, 136 ministers and approximately 3.5 million inhabitants (according to the 2013 census).
The citizens of this country support five levels of government (municipality, city, canton, entity, state). The public sector is more attractive than the private sector because of the security and stability it provides, above all in the context of salary payments and compliance with legal norms. On the other hand, the private sector is less desirable, more dynamic and the main driver of the BiH economy, with the dominant role of filling the budget and creating jobs. It is the difference in conditions in the public and private sectors that affects the overall statistics and the standard that is imposed on the citizens of this country.
According to the data of the Federation of Independent Trade Unions of BiH, the consumer basket for September is 2,993.50 BAM. The average salary paid in the Federation of BiH for the month of July 2023 was 1,257.00 BAM (the latest data from the Federal Bureau of Statistics). The minimum wage according to the Federation of BiH (FBiH) Government Decision is 596.00 BAM. According to the data of the Federation of Trade Unions of the Republika Srpska (RS) – the trade union consumer basket for August 2023 is 2505.77 BAM.
Citizens’ debt – 11 billion BAM in commercial banks and one billion in microcredit organizations
According to the latest available data for August 2023, total household loans at commercial banks amounted to 11.54 billion BAM, according to data from the Central Bank of BiH. If we take the last available data on the number of inhabitants at the end of 2022, the indebtedness per inhabitant at the banks in BiH at the end of August 2023 amounted to 3,354 BAM.
Total loans to the population placed by banks at the end of August 2023 amounted to 11.54 billion BAM, and total loans that microcredit organizations placed to the population at the end of March 2023 (last available data) amounted to 1.11 billion BAM. Microcredit organizations provide loans under more favorable conditions, interest rates are much higher, and loan approval conditions are not as rigorous as in banks.
Non-purpose loans
Out of the total of 11.54 billion BAM loans placed to the population, non-purpose loans account for 8.44 billion BAM or 73.2%, while the remaining 3.10 billion BAM or 26.8% are home loans, loans for entrepreneurship, for the purchase of cars, loans by credit cards.
It can be concluded that citizens take non-purpose loans in order to maintain current consumption. And thus, society and each individual sinks deeper into debt repayment, rather than into investments that would bring them new sources of income. In addition to the financial crisis, the political one, which is also reflected in the excessive administrative apparatus, which is difficult to maintain financially, and which does not contribute to the economy, affects the overall quality of life, Forbes reports.
E.Dz.
