Novalić: This is an attempt to cushion the initial blow to the economy, we are preparing a second package of measures

SARAJEVO, (Patria) - Prime Minister of FBiH Fadil Novalić explained the proposal for amendments and supplements to the FBiH budget for 2020.

“The coronavirus pandemic has hit the entire world, disrupting economic flows and causing supply chain disruptions globally. We had crises in 2008 and 2009. And at the beginning of the last century, we had the Great Depression crisis. This crisis is unique, and the way out of it threatens to become a recession,” Novalić stated.

He added that the FBiH Government, aware of the situation, immediately paid 10 million to clinical centers and the Federal Civil Protection Administration for the procurement of necessary equipment.

“We are on the right track. Estimates indicate that the economic decline could be between 3.2 and 5 percent. These are estimates from the World Bank and the IMF. We are aware of the limited role of the Central Bank of BiH and can immediately forget about monetary policy. Our policy is based on fiscal elements and investments. We made a decision to control the prices of essential goods and oil, which was very positive,” he emphasized.

According to him, after the projections, the Government began the budget amendment procedure.

“Everyone was ordered to reduce funds and for ministries to transfer funds. We faced a decrease in revenue and the establishment of a fund to help the economy. The proposal for amendments and supplements to the budget amounts to 5.5 billion KM, which is an increase of 11 percent,” says Novalić.

He adds that they made projections based on the expected decline in revenue.

“The Government will carefully monitor revenues in the coming period. During the peak of the pandemic, it is unknown when the situation will normalize, so it is difficult to make projections. Due to the need for significant funds to support the economy, funds have been reduced in certain items to achieve savings,” Novalić points out.

According to him, if measures to reduce income were to be taken, labor legislation would have to be amended.

“Given the reduced costs, federal bodies will have to make efforts to ensure functionality. Acting on the Government's conclusion, all ministries have reduced their transfers. On the revenue side, a reallocation has been made to secure 150 million for the economy,” Novalić states.

“The most significant part relates to 500 million for economic assistance through the implementation of the law to mitigate economic consequences. The result of the IMF's Letter of Intent is the transfer to cantons as assistance for the recovery from the crisis. Given the state of emergency, defined fiscal rules do not apply. The need for financing has significantly increased, which has been met through domestic and foreign borrowing. The external borrowing plan includes funds from the IMF. The rebalance established borrowing from the World Bank of 55 million. Domestic borrowing includes the sale of company losses, as well as the issuance of bonds and treasury bills,” said Novalić.

He adds that the economic assistance measures represent the first passive package of measures, aimed at cushioning the initial blow to the economy.

“We are preparing a second package to return to the pre-pandemic economic growth level as quickly as possible,” Novalić stated and called on the representatives to support the rebalance and other laws.