Member of the House of Representatives of the Parliamentary Assembly of Bosnia and Herzegovina, Saša Magazinović, and Faruk Hadžić, professor at the Sarajevo School of Science and Technology (SSST), held a press conference titled “A Mechanism to Prevent Drastic Fuel Price Increases – Amendments to the Law on Excise Duties.”
“Global developments, as we can see, are affecting our country as well. In such circumstances, responsible officials must take steps to ensure stability and the smooth functioning of daily life. One of the key elements of stability for citizens and the economy is the regular supply and price of petroleum products. During the COVID-19 pandemic, we proposed a law to abolish excise duties in order to reduce fuel prices by up to 0.50 BAM per liter. At the time, both the House of Representatives and the House of Peoples adopted the law. However, they failed to agree on the duration of the measure. The House of Representatives proposed six months, while the House of Peoples proposed one month. In the end, the harmonized text did not receive the required majority, and the consequences were significant,” Magazinović stated.
He emphasized that they are now proposing, in a timely manner, a law that would serve as a powerful tool for state intervention in regulating retail fuel prices.
“When we talk about rising fuel prices, we are not referring only to fuel itself, but to the increase in the prices of all goods and services that include fuel costs in their pricing calculations. What we are proposing today is a different model from the one during the COVID period. This model would grant the Council of Ministers the legal authority, in the event of market disruptions or other justified reasons, to temporarily abolish or reduce the excise duties on petroleum products defined by law. Such a decision could be adopted at any time, without the need for a new law or lengthy parliamentary procedures, for a maximum period of six months within one calendar year. In other words, this would be a permanent legal instrument available to the Council of Ministers to respond urgently in similar situations. The proposal is very simple, consisting of only two articles, and it meets the conditions for urgent parliamentary procedure,” Magazinović explained.
He added that this mechanism would make it possible to reduce or abolish excise duties quickly, lower fuel prices, and ease the financial pressure for a certain period.
“I sincerely hope that most, if not all, of my colleagues will recognize the importance of this moment. Based on previous experience, we have seen that intervention through excise duties has previously received broad support, and I hope this proposal will be supported as well,” Magazinović said.
Hadžić noted that current developments in the Middle East represent a key economic issue due to rising global oil and petroleum product prices.
“Let us recall that four years ago we discussed suspending excise duties for a certain period. Unfortunately, that measure was never implemented in practice. Today, we are facing consequences that are far more costly than they would have been at the time. According to current indicators, if we consider the oil price of around 70 US dollars per barrel before the outbreak of the conflict, we are already seeing an increase of approximately 18 to 20 percent. This is a serious rise that will inevitably affect Bosnia and Herzegovina in the coming period, unless the market stabilizes,” Hadžić said.
He explained that through this mechanism, the Council of Ministers of Bosnia and Herzegovina could offset up to 50 percent of the price increase and mitigate the impact even if oil prices were to reach 100 US dollars per barrel.
“We must understand that this would not completely stop inflation. If such escalation occurs on the global market, we will face imported inflation, not only through energy prices but also through other products, as we are a small open economy heavily dependent on food imports. However, this measure could significantly alleviate the impact we experienced four years ago, and we know how costly inflation has been so far. Without timely measures, we will ultimately pay at least five times more through various budget adjustments at different levels of government in Bosnia and Herzegovina,” Hadžić concluded.
He also warned that the measure would be effective if adopted promptly, but if delayed by six months, it might lose its purpose.
