MODEL 'I'LL COME TO YOU' Amidžić plans payment without revenue: Fiscal chaos due to Viaduct case

Written by: A.Čorbo-Zećo

Bosnia and Herzegovina still has no adopted budget for the current year. The BiH Presidency returned the Draft Budget to the Council of Ministers with clear recommendations for amendments, but the Minister of Finance and Treasury of BiH, Srđan Amidžić (SNSD), together with other ministers, refuses to accept them.

At the center of the problem is the Viaduct case – an arbitration dispute that BiH is conducting before an international court, which costs the state an additional 9,000 KM in interest daily. The debt, which amounted to around 110 million KM at the end of March, has already grown by hundreds of thousands of marks.

Let us recall that back in 2017, the Council of Ministers of BiH and the Government of Republika Srpska signed an agreement by which the RS Government unconditionally committed to bearing all financial consequences related to this project. However, today the RS refuses to take responsibility for the debt it itself generated, and the Council of Ministers has not even considered the issue of its collection so far.

In the draft budget prepared by Minister Amidžić, the expenditure side includes planned payment of funds for compensation of damages based on the Viaduct case. However, the revenue side of that same budget does not foresee any revenue from Republika Srpska to cover this expense.

Such an approach creates serious consequences, primarily a fiscal risk for the state.

If Republika Srpska does not make the payment, and the state covers the cost from the budget, a direct burden is placed on the state treasury without any guarantee that those funds will be reimbursed. The budget thus becomes fiscally unbalanced.

A budget cannot contain expenditures without corresponding revenues unless a change to the Fiscal Framework is first made, which would allow for its formal increase. Such a change has not been made so far.

The Council of Ministers of BiH has not yet opened the issue of collecting damages from the RS, nor are there any signs of political will to put this issue on the agenda. In this way, space is created for long-term ignoring of this obligation, further undermining fiscal discipline and trust in state institutions.

In the absence of a formal budgetary obligation for the RS to pay the amount, there is a real danger that the debt will remain at the level of an informal obligation – a kind of “I’ll come to you,” without a clear legal or political basis for collection.

Due to all the above, it is necessary to urgently revise the existing draft budget. If payment of funds based on the arbitration ruling is planned, then it is necessary to simultaneously plan revenue from Republika Srpska as a source of financing. Without this, the budget remains legally and fiscally problematic. Any such change must be accompanied by an amendment to the Fiscal Framework and requires a political agreement within the Council of Ministers of BiH.

Otherwise, BiH risks not only additional financial burden but also a serious erosion of the institutional order and the rule of law.