The Federation of Bosnia and Herzegovina recently collected 29.6 million BAM through treasury bills, while Republika Srpska went to the international market and borrowed 500 million euros at a higher interest rate.
At the same time, the Federation plans to borrow around 2.3 billion BAM this year, including the planned issuance of eurobonds worth 800 million euros.
In an interview for Novi dan (New Day), economist Igor Gavran explained what this means for citizens, as well as for budget stability, debt risk, and possible price increases.
Gavran points out that the Federation of Bosnia and Herzegovina is in a better position than Republika Srpska, where the situation is much more difficult.
However, he warns that the new borrowing is so large it cannot be serviced solely from public revenues, and that, most likely, new borrowing will be necessary.
“This is already the case in Republika Srpska, and I fear that the Federation may be heading in the same direction. Citizens will pay the price, one way or another. They may face poorer public services or lower pensions,” Gavran warns.
As an example, he cited Romania, which once boasted about repaying its entire foreign debt.
“They did repay their debt, but as a result, citizens were left hungry. Therefore, one way or another, citizens always bear the consequences,” he added.
Speaking about current economic trends, Gavran emphasized that prices have already increased, while infrastructure projects are being implemented very slowly.
“We do not have economic reforms and do not see concrete progress. If money continues to be spent in the same way, we will see only negative consequences,” Gavran said.
A particular issue is the lack of relevant data, considering that Bosnia and Herzegovina has not conducted a new population census since 2013, while in the meantime, a significant number of citizens have left the country.
“Because of this, all data are questionable. There is still capacity to repay debts, but only if money is used properly. If it is spent improperly, there will simply be less of it,” he warned.
In the end, Gavran offered suggestions to citizens in these circumstances. He believes that citizens should partially turn to producing their own food, but without exaggeration.
“There are reasons for concern, but not for panic. It is fine to have some supplies, but stockpiling hundreds of bags of flour is not normal,” Gavran said.
He added that the situation in the labor market is further strained, as employment in the public sector is often associated with political affiliation, while private companies are facing the threat of closure, N1 writes.
