Life and budgets on credit. Namely, the authorities of almost all levels in Bosnia and Herzegovina are planning large debts in 2024 in order to be able to regularly settle their obligations. Of course, entities are leading the way. The total debt of the Federation of BiH is 6.5 billion marks, which is 22 percent of its GDP, and that of the RS is 6.1 billion, which is about 40 percent of GDP. This year, the government of the RS will take on an additional debt of 1.2 billion marks. However, in this entity they say that they are not over-indebted.
Everyone wished for and invoked economic ruin – however, it did not happen. In 2023, one billion and 50 million marks were successfully returned, and we borrowed about 700 marks, says Entity Prime Minister Radovan Višković (SNSD): “No matter how much some people run behind our backs, we will manage to do everything we have done and in 2023, the RS is stable and liquid”.
In 2024, the RS plans to take on long-term debt for more than one billion marks, and for the long term.
“Out of that, 141 million marks were spent on the domestic market, and 810 million marks on the foreign market. In order for the necessary financial resources to be secured in a timely manner, it is necessary for the NSRS to make a decision on long-term debt”, explains RS Finance Minister Zora Vidović (SNSD).
Opposition representatives say that the trend has continued where, in addition to indirect taxes, the Government relies mostly on borrowing, regardless of the fact that interest rates increase every year. They warn that, instead of debt, it is necessary to turn to investments that will ensure new contributions.
“As for long-term and short-term debt, it is 1.2 billion. With guarantees, it is approaching almost two billion”, says Mirjana Orašanin, SDS representative in the entity assembly.
Economic analysts remind that formal and informal sanctions were often mentioned in the last statements of entity officials, and that the Government of RS will probably avoid European stock markets.
“The idea is to go to some new markets that can handle that level of debt. Middle Eastern countries and China are mentioned. For all those banks or stock exchanges, it is so little that it is not worth mentioning. The question is whether it will be attractive because of the projected interest rate,” economic analyst Zoran Pavlović points out.
As he states, the law defined that the interest on borrowing on the international market should be up to 7.5 percent, increased by the Euribor percentage, and that at the moment it exceeds more than 10 percent, and that for such interest there is always speculative capital that will be ready for bond purchases.
