Economic experts warn: FBiH budget is entirely consumptive in nature

The economic measure to allocate funds from the budget to the Federal Employment Service to pay contributions for one year if an employer hires someone for a year is a "failed" measure, warns Dženan Đonlagić, a professor at the Faculty of Economics in Sarajevo and a DF representative in the House of Representatives of the FBiH Parliament, for the BH News Agency Patria.

Professor Đonlagić reminds that the Service has not yet implemented the old tranche, and the FBiH Government is pompously announcing a new 20 million KM these days!

The budget of the Federation of Bosnia and Herzegovina for the next year should amount to 2.5 billion KM, which is an increase compared to this year's federal budget of about 200 million KM.

From that money, the Federal Government will, as confirmed by the Minister of Finance Jelka Miličević, allocate 50 million KM for one-year financing of young people who are employed for the first time in a company or are self-employed. Economic analysts assess that this is not a good government plan, because past practice has shown that at most ten percent of these people remain employed after the government stops financing their jobs.

- This is another in a series of wrong measures under the guise of the Reform Agenda! The government is using the situation to put everything, absolutely everything, under the fig leaf of the Reform Agenda. Employment services have been dealing only with the mere registration of the unemployed for years. Such a measure is a "failed investment" because after a year, employers lay off these first-time employees, then hire new ones, and thus budget money is spent without reducing the unemployment rate – believes Professor Đonlagić.

Đonlagić: The government is using the situation to put everything, absolutely everything, under the fig leaf of the Reform Agenda

The proof of this, he says, is that BiH has had the highest unemployment rate in the region and the EU for many years.

- Such measures of "throwing away" budget money will not lead to the much-needed reform of the employment system. The new reform direction is solely to direct active employment policies towards genuine job seekers. This process should be the result of increasing budget items for capital expenditures, i.e., increasing public investments. Therefore, money should go into opening mass public works – warns Đonlagić.
Unfortunately, he adds, the budget policy of the FBiH Government is such that the federal budget is entirely consumptive in nature, instead of making a shift towards a capital (developmental) budget. And that this FBiH Government is not capable of making that shift is shown by the approved budget rebalance for 2015 and the determined Draft Budget for 2016!, writes Patria.