Miraščić: Two funds and a law to help the economy, recovery in 18 to 24 months

SARAJEVO, (Patria) – Goran Miraščić, advisor to the Federal Prime Minister, said that the first set of economic measures intended to mitigate the economic shock includes the Fund for economic stabilization, the Fund at the Development Bank, and the Law on mitigating negative economic consequences.

“The shock that the economy is suffering for the last two months has not yet occurred. Now we have disruptions in supply chains, a drop in both supply and demand. We don't know how long all this will last, the projections used for the budget rebalance are for a period until the middle of this year, we have predicted a drop in budget revenues of about 469 million KM,” said Miraščić.

He explained that budget expenditures have increased by slightly more than 588 million KM.

“This relates to the establishment of the Fund for economic assistance, transfers to cantons of 200 million KM, 20 million for the Guarantee Fund at the Development Bank. Savings have been made on all transfers planned for this year. We have compensated the difference with 790 million in borrowing, sale of receivables, sale of bonds, treasury bills, 455 million through long-term borrowing. Regarding transfers to cantons, the Government will determine the decision on criteria, and it will most likely be based on the number of inhabitants,” he explained.

As for the Fund for economic stabilization, it will function such that all economic entities that have experienced a drop in turnover of 20 percent or more are entitled to a subsidy for the minimum wage of 409 KM and contributions.

For the Guarantee Fund at the Development Bank, the Government of FBiH will provide 100 million KM of its own funds.

“The small and medium-sized enterprise sector will face a drop in demand, have problems with exports, as well as with obtaining loans. The intention is to achieve credit potential not only for the small and medium-sized enterprise sector but also for others. Why is the guarantee important? It is a scheme where the Government guarantees through its funds, and the budget stands behind the Government,” explained Miraščić.
 
The first set of measures prepared by the Government for the economy envisages more than one billion KM.

“We expect that the cantons will use these 200 million KM for economic measures, but that they will be complementary to what the Government will do. The Federation has decided to bear the largest burden of these measures. This is only the first set of measures to get us through this period. When these bans are no longer in effect, we expect the economy to reawaken, but estimates are that it will take us 18 to 24 months to return to the period we had before the coronavirus appeared,” said Mirščić.   

He added that in the coming period, more investment and consumption will be needed for the economy to recover as quickly as possible, but within 18 to 24 months. He expressed his expectation that the Parliament of FBiH will adopt the Law on mitigating economic consequences as soon as possible.