The draft law on debt, borrowing, and guarantees in the Federation of Bosnia and Herzegovina (FBiH), which is an act of the Government of the FBiH, has been accepted in the House of Representatives of the Parliament of the FBiH and will be considered under urgent procedure. The new borrowings of the FBiH being announced mean more freedom for external debt, without justification to state institutions. Are they beneficial, or is it about filling financial holes with new borrowings on the principle of Republika Srpska (RS)?
One of the key goals of the Law on Debt, Borrowing, and Guarantees in the FBiH, as well as the reason for its adoption, as stated in the Draft, is the stabilization of public finances, increasing the transparency of the borrowing and guarantee issuance process, harmonization with international standards. The essence is the free borrowing of the Federal Government in relation to the Parliament, that is, without the consent of state institutions. Economic difficulties in the country, as seen by surveyed citizens, are again being solved by politicians through new borrowing.
In order for this draft law to be voted on under urgent procedure, support came from 50 representatives in the second round of voting as part of the agenda of the session of the House of Representatives. Economists believe it could be harmful for the FBiH in the long run. Neither citizens nor parliamentarians see a real reason for borrowing, but they see that the FBiH is borrowing according to the same principle as RS.
“That law resembles a lot the situation we have in RS, where the Government, with the adoption of the law, made it possible not to have to ask the deputies, representatives of the people, citizens, the electorate about the level of borrowing and to justify it before those same members of the assemblies. That is obviously what the FBiH wants to do,” says Zoran Pavlovic, economic analyst.
“In terms of new kilometers of expressways, highways, some fiscal reform, some major infrastructural interventions. The only thing that can be seen is the maintenance of current budget spending, balancing the budget. Citizens cannot be satisfied with that, understanding that borrowing is taking place in parallel not only of these generations but also of future ones,” says Admir Cavalic, a representative in the Parliament of the FBiH and economic analyst.
When speaking about the level of indebtedness, economists claim – the FBiH is less indebted compared to RS.
“The FBiH is 18 to 20 percent indebted relative to GDP, far below RS, some other regional countries, etc. There is no alarm for panic,” says Admir Cavalic, a representative in the Parliament of the FBiH and economic analyst.
“There is still room to maneuver because the economy functions better than in RS. The only question is what is the basis and reason for borrowing,” says Zoran Pavlovic, economic analyst.
The Draft Law on Debt, Borrowing, and Guarantees in the FBiH will be voted on in the House of Peoples of the Parliament of the FBiH when it will be known whether there is a majority for its adoption.
