Bosnian economists and businessmen presented the "Marshall Plan for Recovery"

SARAJevo, (Patria) - At the Business Council of the Faculty of Economics in Sarajevo, a professional consultative body composed of 37 eminent businessmen leading the largest companies in Bosnia and Herzegovina, this week presented the "Marshall Plan for BiH – First Phase Corona 2". This is a plan of reforms and macroeconomic measures by a group of authors consisting of Prof. Dr. Željko Šain, Prof. Dr. Aziz Šunje, Prof. Dr. Spaso Kuzman, ecc. dipl. Hrusto Tupeković, and msc. Muhamed Pilav. In essence, these are reforms that, through a fairer distribution of existing resources, achieve a multiple effect, multiply the economic development of the entire country, and raise the standard of all citizens.

The goal of the "Marshall Plan for BiH" is, as emphasized, "to transform the accumulated crisis in BiH into a real opportunity for economic revival that will meaningfully, continuously, and realistically increase GDP, living and working standards, and reduce economic migration". The timeframe for the implementation of the "Marshall Plan for BiH" is 2020 – 2025. The plan itself is quite detailed and contains calculations, projections, and simulations of various situations for the foreseen reforms.

The "Marshall Plan for BiH", with an exact approach, also proposes mechanisms for its implementation, responsible bodies and institutions that would oversee its application, as well as the dynamics of implementation according to international standards.

As such, the "Marshall Plan for BiH" appears as one of the possible solutions to the problems we currently face, as well as problems we have been carrying for 25 years.
  
The key change foreseen by the "Marshall Plan for BiH" is an increase in net salaries in the real sector by 30% to 90% and an increase in productivity. The increase in net salaries would be accompanied by a simultaneous reduction in taxes and contributions by 50%. Currently, taxes and contributions on net salaries are a total of 70%; under the "Marshall Plan for BiH", they would be reduced to 35%. The result of this reform would be an increase in the standard of living for workers and an increase in consumption, which would further boost production and development.

"The increase in salaries and consumption simultaneously completely cancels out the negative effect of a 2% VAT increase, which fully covers the cost of healthcare. A 2% VAT increase (from 17% to 19%) is essentially not an increase, but a replacement for a fairer tax. Salaries will increase by at least 300 KM, and the cost of VAT by a maximum of 20 KM. Pensioners' living costs will increase, and the plan foresees covering that cost," the authors state.

Furthermore, it is important to emphasize that the VAT increase would be invested in healthcare, not consumption. In this way, the healthcare sector would be long-term stable with significantly better quality, as well as necessary optimization and modernization.

The next sector that would benefit from the "Marshall Plan for BiH" is education. The goal is to produce educated, self-aware, innovative, and entrepreneurial young people from preschool (free kindergartens), primary, secondary, and university education to lifelong learning. The introduction of functional dual education is necessary.

A special goal is the care for human resources. So far, 500,000 young and educated people have left the country. This represents a loss of 500 billion KM in added value, as one young educated worker is worth at least one million KM.

Currently, there are 528,000 employed, 307,000 unemployed, and 423,000 pensioners in BiH. The system is unsustainable because the sum of the unemployed and pensioners is greater than the number of employed. Therefore, it is necessary to create conditions for the employment of at least 190,000 workers in the real sector. The increase in salaries will enable the cessation of further outflow of human resources from the country.

The "Marshall Plan for BiH" has recognized an opportunity in the agriculture and livestock sector as well, with the aim of sustainable development and increased food production from its own raw material base. Significant investments are foreseen with a focus on strategic raw materials: wheat, corn, and milk.

The "Marshall Plan for BiH" would also reduce the grey economy, as the measure of reducing taxes and contributions would significantly reduce undeclared work. Furthermore, there are no plans to reduce salaries or lay off employees in the public sector, which should become significantly more efficient.

The authors' approximate estimate is that Bosnia and Herzegovina would need to invest at least 15 billion KM to implement all necessary reforms and improve the environment for all sectors, especially the processing industry, construction, and land transport. The advantage of the "Marshall Plan for BiH" is that its implementation would secure 13 billion KM from existing resources (2.6 billion annually), and that in the first two years alone, it would be necessary to borrow two billion KM to ensure uninterrupted financing of budget obligations and reduce the economic damage from the pandemic.

The expected effects of the "Marshall Plan for BiH", according to the authors, are less emigration; real hope – optimism; greater competitiveness; foreign investment (strategic investors – domestic and foreign); better credit rating of BiH; replacement of income tax with consumption taxes; full productive employment; growth in personal consumption and private investment consumption; development of underdeveloped municipalities; 190,000 new workers in the processing industry, construction, transport, and other real sectors; a locomotive for tourism, energy, trade...

On the other hand, if this or a better reform plan is not implemented, the authors predict an accelerated and significant departure of young experts, entrepreneurs, and innovators; then an inevitable increase in the VAT rate to at least 25%; populism, nationalism, xenophobia; deglobalization: subsidies, tariffs, non-tariff barriers; factories without people – a global minus of 10% and continuous disruptions in supply chains. Likewise, an increase in poverty and a significant decline in living standards are quite likely; changes in consumer habits and consumption structure (decline in sales of many vital goods and services), pessimism and panic, a drop in private investments; an increase in savings, social unrest; withdrawal of savings from the country.

In order to monitor and coordinate the "Marshall Plan for BiH", it is necessary to establish a management body – an independent development agency at the level of BiH and its entities. For implementers, the authors propose entity economic institutes, project teams composed of domestic experts and internationally highly respected members, with international controlling and independent international auditing. The work of the Agency for the Implementation of the "Marshall Plan for BiH" would be financed by domestic and international donations.