SARAJEVO, Aug 7 (Hina) - The failure to implement necessary economic reforms and wide-spread corruption continue to threaten stability in Bosnia-Herzegovina and serious consequences of such a situation could become visible very soon,
the heads of World Bank and International Monetary Fund missions to Bosnia-Herzegovina, Joseph Ingram and Bruno de Schaetzen respectively, told reporters in Sarajevo on Monday. The two officials said the governments of Bosnia's two entities could in the next couple of months face a situation which could be described as a form of bankruptcy. By all indications, the two governments will as of the beginning of autumn not be able to secure funds for the payment of wages and pensions because there will be no money in the entities' budgets for that purpose. According to de Schaetzen, the Serb entity's budget will have a deficit of some 200 million convertible marks (KM), whereas
SARAJEVO, Aug 7 (Hina) - The failure to implement necessary
economic reforms and wide-spread corruption continue to threaten
stability in Bosnia-Herzegovina and serious consequences of such a
situation could become visible very soon, the heads of World Bank
and International Monetary Fund missions to Bosnia-Herzegovina,
Joseph Ingram and Bruno de Schaetzen respectively, told reporters
in Sarajevo on Monday.
The two officials said the governments of Bosnia's two entities
could in the next couple of months face a situation which could be
described as a form of bankruptcy.
By all indications, the two governments will as of the beginning of
autumn not be able to secure funds for the payment of wages and
pensions because there will be no money in the entities' budgets for
that purpose.
According to de Schaetzen, the Serb entity's budget will have a
deficit of some 200 million convertible marks (KM), whereas the
Federation will face a deficit of some KM140 million.
A major financial crisis is in the offing and if urgent and decisive
measures are not taken the situation will soon become worse,
probably before the upcoming elections, World Bank's Ingram said.
Answering a reporter's question, Ingram said he believed the
situation he was talking about could be compared to bankruptcy.
According to Ingram, the current situation had been caused
primarily by the failure to conduct the legal reforms which had been
urged for a long time, particularly in the area of labour and
pension legislation. The entities' authorities have been warned
about the measures which they need to take immediately, he said.
Ingram believes the entities' authorities have made two major
mistakes - their plan of budgetary revenues was unrealistic and
they have failed to take measures which could secure the filling of
the budgets.
Measures which could prevent mass tax evasion and smuggling are at
the top of a list of priorities which was presented by the
international community to BH authorities, de Schaetzen said.
According to data from the CAFAO (the European Union's office for
assistance in implementing customs and tax policy), Bosnia-
Herzegovina loses about DM500 million annually due to the smuggling
of tobacco alone, de Schaetzen said.
This causes a DM300-350 million deficit in the budget of Republika
Srpska, whereas the Federation budget is left without the remaining
amount.
Reducing the number of border crossings is one of the measures which
could help prevent smuggling.
The World Bank intends to help the two entities with some US$300
million in the next three years, of which about US$130 million would
be intended for the so-called structural reforms.
However, Ingram warns that those funds will not be activated unless
the necessary legal reforms, including a decisive fight against
corruption, are implemented.
He added that local authorities were starting to show understanding
for international requests, a visible proof being the arrest of
some persons who until yesterday were untouchable.
Ingram also announced that a study on the origins and strongholds of
corruption in Bosnia-Herzegovina would be completed and presented
to the public very soon, most probably before the November
elections.
(hina) rml