Inflation in Bosnia and Herzegovina (BiH) is slowing down unexpectedly quickly. This is stated in the latest report published by the Central Bank of BiH.
On the other hand, a warning came from the International Monetary Fund (IMF): it is necessary to stop the growth of pensions and salaries in the public sector in order to strengthen fiscal sustainability.
According to data from entity statistics agencies, the inflationary pressure is slowly easing. In July, annual inflation of 5.2 percent was recorded in the Republika Srpska (RS), while it was 2.8 percent in the Federation of BiH (FBiH).
However, the authorities – both state and entity – received a letter from the IMF recommending savings in the public sector, as well as repealing decisions on increases from previous and this year.
“We will not reduce salaries. Their recommendation is to reduce salaries, pensions, and social benefits. We will not do that. At the very least, we will leave it at this year’s level, but we will make savings on some other things,” says the Minister of Finance of the RS and Zora Vidovic.
She noted that she has information that the position of the FBiH Government is that there should not be a salary reduction in that entity either, that pensions will be harmonized with the law in the coming period, and that salaries will be assessed on the basis of possibilities. The trade unions that are already on strike say: there must be no salary reduction!
The President of the Trade Union of the Administration of the RS, Bozo Maric, believes that the IMF report was “commissioned”. According to him, they did not say anything when 50 million was spent on the sports hall or half a million on software.
Entity authorities send reassuring messages. They say that the financial situation is stable, and all obligations will be settled.
“RS secured financing to close this fiscal year and that was our goal. In order to remain stable, RS will remain in terms of guarantees for current consumption,” said Milorad Dodik, president of RS.
Representatives of the opposition parties say, however, that the Government of the RS currently lacks part of the funds to close all obligations.
“They will try to supply the 500 million BAM that they lack by the end of the year by issuing treasury bills, short-term debts, in certain segments, and long-term debts. This year, one billion and two hundred million BAM in loan funds should be paid by the Government of the RS,” notes Vukota Govedarica, president of the SDS Deputies Caucus in the National Assembly of the RS (NARS).
Govedarica added that the policy of borrowing led to the fact that almost 200 million BAM were paid in interest this year alone, but that no arrangement with the IMF will be reached, and therefore the IMF cannot make any demands, only recommendations. Minister Vidovic says the same, noting that the arrangement will not come about at all due to political conditions, Biznis Info reports.
E.Dz.
