316 MILLION Schmidt allocated funds to entities based on Viaduct debt, but FBiH will collect claims if damaged

(Patria) - Of the 316 million KM currently in a special account of the Central Bank of BiH from road toll revenues, which have been undistributed since 2018, 120 million KM will be allocated to the Ministry of Finance and Treasury for the settlement of Viaduct's claims from a lawsuit they won. The Management Board of the Indirect Taxation Authority of BiH has not yet determined the methodology for distributing this revenue between the entities, meaning it has not been agreed upon in the Management Board because the FBiH Minister of Finance, Toni Kraljević, refuses to accept the proposed percentage, considering that FBiH has been damaged.

Although the decision of the High Representative Christian Schmidt does not specify the ratio of fund distribution, the High Representative stated that an equivalent amount of reserve is transferred to the FBiH Budget. Thus, also 120 million KM.

What remains controversial in Schmidt's decision is that it does not specify the portion belonging to Brčko District. Until now, money was distributed in the ratio of 59:39:2 (FBiH:RS:BD). Of the 316 million KM, 39 percent is 123,240,000 KM, meaning Schmidt did not follow the previous percentages. In this case, it would mean that the FBiH entity has been damaged because, according to the ratio, 186,440,000 KM should have been paid, and Schmidt determined that 120 million KM should be paid.

Schmidt specified in the published decision:

"It is assumed that this portion of funds represents the Republic of Srpska's share in the settlement reserve. Therefore, the principle of 'whoever incurred the debt should also pay it off' is the basic principle used in this Decision, ensuring that the debt of RS is not unfairly transferred to the state. RS accepted these financial obligations in 2017, as signed by the then Prime Minister of RS, Željka Cvijanović, but did not fulfill its obligations; on the contrary, it allowed this debt to increase over the years. The High Representative's decision further ensures that the budgetary expenditures of RS, such as salaries and pensions, will not be used to settle the debt with Viaduct," the Decision states.

In his video address, Schmidt stated that part of the settlement will be realized using the assumed share of the Republic of Srpska.

"This share is not intended for the budgetary expenditures of RS and has no impact on the budgetary stability of RS. It will not affect any payments or services for the citizens of RS. The funds will be transferred to the Ministry of Finance and Treasury, and the Ministry can make the payment to Viaduct. Or, if there are other considerations or indications that it should be done through some new negotiations, as I have heard, it can be done that way. Great, that's their business, but the state is not paying for it, the Republic of Srpska is," Schmidt stated.

Given that this is an assumed portion of accumulated funds, Schmidt specifies in the decision:

"After the Management Board adopts the methodology for the distribution of road toll revenues in accordance with the Law on the Indirect Taxation System in Bosnia and Herzegovina (“Official Gazette of BiH”, no. 55/04, 34/07, 49/09 and 91/17), the necessary settlements between the entities and Brčko District of Bosnia and Herzegovina will be made, taking into account the amounts paid in accordance with paragraph 7 of this Decision. In the event that, due to the execution of the ICSID Decision, a larger amount has been paid from the settlement reserve than what would be due to the Republic of Srpska after the final settlement based on the road toll revenue distribution methodology adopted by the Management Board, funds collected from road toll revenues will not be distributed to the Republic of Srpska until any claims of the Federation of Bosnia and Herzegovina and Brčko District of Bosnia and Herzegovina are fully settled, which the Indirect Taxation Administration is obliged to implement regardless of additional orders or instructions from competent authorities," it is stated.

Therefore, only after the methodology is determined and adopted by the Management Board of the ITA will it be clear whether FBiH has been damaged and what portion of the money still belongs to it.