The Republika Srpska intends to borrow 951 million marks in the long term this year. Debts are planned, on the domestic financial market of 141 million, and on the international market of as much as 810 million marks. This amount is sought to be secured mainly by issuing bonds and treasury bills. However, this has become very questionable, because the sanctions of the United States of America imposed on high-ranking officials in the Republika Srpska affected the reduced interest of investors in securities backed by the authorities in Bosnia and Herzegovina’s entity.
The Government of Republika Srpska continued to borrow unhindered this year by selling securities on the Banja Luka Stock Exchange. Admittedly, in the first four months, it borrowed 14 million more than was planned for the whole year.
“The Government of the Republika Srpska borrowed 155 million BAM on the Banja Luka Stock Exchange this year. The issue of treasury bills of the RS for 65 million BAM and the issue of bonds for 90 million BAM.”
Unlike the domestic one, when it comes to borrowing on the international financial market, things are much more complicated for the Republika Srpska.
JELENA TRIVIĆ, president of the People’s Front
“The Republika Srpska cannot independently enter the capital markets as it has done so far by borrowing on the London and Vienna Stock Exchanges. This type of borrowing is not possible for the Republika Srpska at this moment. No one will say openly that this is because of the sanctions, but it is the result of the entire work and behavior of RS officials and authorities.”
Although it will be more difficult to get money on the foreign financial market, this does not mean that it will be impossible, say economists. Another thing is at what price and with what guarantees. During its listing on the Vienna Stock Exchange, the Government of the Republic of Srpska guaranteed investors that in case of non-return of money, they can privatize any company in the RS in which the Government has a share of at least 51 percent of ownership.
ZORAN PAVLOVIĆ, economic analyst
“If we go to the international financial market, there will have to be guarantees like those in Vienna, and when you add 10 percent interest to that, I don’t think it will be a problem to sell the bonds.”
Despite the pessimistic forecasts of economists, Prime Minister Radovan Višković says that the Republika Srpska is economically more stable and stronger every day. As an example, he cites last year when RS borrowed 300 million marks less than the planned amount of 1.1 billion BAM.
RADOVAN VIŠKOVIĆ, Prime Minister of the Republika Srpska
“The Republika Srpska borrowed 800 million marks, and returned 1.15 billion marks of loans on various grounds. It means that we returned 350 million marks more than we borrowed from our own income.”
If there is anything good in the whole story, according to experts, it is that limited access to the capital market for the Government of Republika Srpska will limit its budget deficit and new borrowings. In other words, the Government of the RS will have to tighten its belt and take good care of each brand in order to fully honor all its obligations to budget users, as well as when it comes to paying off previous debts.
