The President of the Committee for Economic and Financial Policy of the Parliament of the Federation of Bosnia and Herzegovina (FBiH), Admir Cavalic (SBiH), commented on the plan to pay off the internal and external debt of the FBiH.
According to the debt repayment plan, FBiH will have to pay off 106 million BAM of internal debt and 671 million BAM of external debt this year. Already next year, it will have to pay off 71 million BAM of internal debt and 692 million BAM of external debt. Cavalic stated that this year and the next will be the most challenging in debt repayment.
How the repayment plan is determined
He was asked how the debt repayment plan is determined, i.e. what is taken into account when creating this plan.
“It mostly depends on two decision-makers. The first is the FBiH Government, which can determine the repayment period, first of all in the context of internal debt when issuing securities, and then also in the context of external debt during negotiations. Other decision-makers are external creditors, namely the World Bank (WB), the European Investment Bank (EIB), the International Monetary Fund (IMF), the European Bank for Reconstruction and Development (EBRD), the Paris Club, the European Commission, the Government of Spain, etc. These are some of the biggest external creditors,” he explained.
According to him, they give payment incentives and give the option of not having to pay within a certain period. He also pointed out when a problem can occur with repayment, and he pointed out that this problem happened to the Republika Srpska (RS).
“A problem can be when the pressure of external and internal debt gets out of control, i.e. that there is an exceptional repayment of the external debt in one year, and at the same time, one has to work on internal short-term borrowing in order to service current obligations. This is the problem in the RS this year”, he emphasized.
The question of the amount of the debt
He also commented on whether the FBiH debt is high. He doesn’t think it’s high, but he thinks it should stay at the current amount.
“It is not, but it should remain in this amount. Yesterday we had the Committee for Economic and Financial Policy of the FBiH Parliament. We concluded that it would be good for the new government to treat this issue in a domestic manner. We mentioned the Prime Minister of the RS, Radovan Viskovic (SNSD) who indirectly praised FBiH for debt management,” he said yesterday.
Proposals of the IMF
In the end, he commented on the IMF’s proposal that the FBiH reduce budget spending, a significant part of which falls on the salaries of employees in the public sector.
“The classic antidote to inflation is to slow down wage growth, however unconventional it may seem to us. This is done all over the world. The fact is that wages have grown in parts of the public sector, and I think it happened because of the Trade Union pressure. The IMF probably wants to give advice on how to limit or slow down wage growth in order to curb inflation,” Cavalic pointed out, Klix.ba reports.
E.Dz.
