Public finance

Public finance

As international aid to Bosnia decreases, there is increasing concern about the sustainability of Bosnia's public finances. In recent times, attention has focused on the weight of public expenditure in Bosnia's diminished economy, on the size of public sector salaries, on Bosnia's creditworthiness and ability to service its foreign debt, and on the sustainability of its tax base. The question of how to respond to these pressures is likely to become a contested topic in Bosnian politics over the coming period. The planned introduction of a value-added tax is also likely to trigger a new debate on fiscal federalism – that is, on how resources and spending responsibilities are shared between different levels of government.

The primary source on Bosnian public finances is the World Bank's Public Expenditure and Institutional Review (PEIR) – a 175-page document released in 2002 examining Bosnia's overall fiscal framework, and providing detailed analysis of expenditure on social welfare, education and health. It also looks at institutional dimensions of public expenditure, including the budgetary process. The PEIR is accompanied by an equally extensive study Creating a Stable Decentralised Fiscal System, which considers the distribution of resources across different levels of government. A study on Potential Revenue Sources for the BH Institutions for the European Commission also contains an interesting discussion on fiscal federalism in Bosnia.

We have also included a number of other studies prepared by the World Bank: BiH: Towards Financial Sustainability and Creditworthiness from October 2001, which analyses Bosnia's future prospects of accessing international credit; the Country Procurement Assessment Report 2002; an Advisory Note on Municipal Borrowing from January 2000; and an earlier paper on fiscal federalism, Fiscal Federalism in BiH: The Dayton Challenge, from January 1997.

The USAID paper, Transformation of Payment Bureaux in Bosnia and Herzegovina: Functional Analysis and Strategic Implementation, was prepared before the payments bureaux were abolished, but provides useful historical context. We have also included some examples of recent reports of the three supreme audit institutions, at state and entity levels. Others reports by the supreme auditors are available online: BiH level, Republika Srpska and the Federation .

  1. Čaušević Fikret: International Support Policies to South-Eastern European Countries - Lessons (Not) Learned in BH, Chapter VI - Fiscal Structure in B-H and the Problems it Generates
  2. Bosnia and Herzegovina, Ministry of Finance and Treasury: Informacija o stanju vanjske zaduzenosti na dan 31.12.2003
  3. European Commission: Study on Potential Revenue Sources for the Institutions of Bosnia and Herzegovian, 2004
  4. Federation of Bosnia and Herzegovina: Public Investment Programme for the Federation of Bosnia and Herzegovina for the period 2004-2006
  5. Federation of Bosnia and Herzegovina Budget Audit Office: Public Report on Federation of BiH 2001 Budget Audit
  6. Federation of Bosnia and Herzegovina, Ministry of Finance: 2004 Budget Framework Paper - Medium Term Expenditure Framework 2004-2006, July 2003
  7. Glavna sluzba za reviziju javnog sektora Republike Srpske: Izvjestaj o obavljenoj reviziji finansijskih izvjestaja Ministarstva odbrane i Vojske Republike Srpske za period 01.01.-31.12.2002
  8. RTI: Advisory note on regulatory framework and institutional issues: Municipal borrowing in BiH, January 2000
  9. The Office for Auditing of Financial Operations of the Institutions of Bosnia and Herzegovina: Report on the Audit the Presidency of Bosnia and Herzegovina Year 2001
  10. The Supreme Office for the Republic of Srpska, Public Sector Auditing: Report on the Audit of Financial report of RS Ministry of defence and Army for period of 01.01.-31.12.2002
  11. USAID: Transformation of Payment Bureaus in Bosnia and Herzegovina: Functional Analysis and Strategic Implementation
  12. World Bank (WB): Bosnia and Herzegovina From Aid Dependency to Fiscal Self-Reliance, A Public Expenditure and Institutional Review, October 2002
  13. World Bank (WB): Bosnia and Herzegovina Country Procurement Assessment Report, June 2002
  14. World Bank (WB): Fiscal Federalism in BiH, The Dayton Challenge, January 1997
  15. World Bank (WB): Creating a Stable Decentralised Fiscal System (Main report)
  16. World Bank (WB): Bosnia and Herzegovina Towards Financial Sustainability and Creditworthiness, October 2001

This Resource Kit is also available in Bosnian/Croat/Serbian.