Peštek: Writing off interest is a direct blow to the budget and responsible citizens

(Patria) - The proposed amendments to the Law on the Default Interest Rate, submitted by the Government of the Federation of Bosnia and Herzegovina, represent yet another attempt at short-term "patching" of the budget, while seriously undermining fiscal discipline, warns delegate in the House of Peoples of the Parliament of the Federation of Bosnia and Herzegovina, Enes Peštek (SBiH).

Peštek emphasizes that default interest represents a legal sanction for delays in settling public obligations and is a key mechanism for preserving financial discipline and equal treatment of all taxpayers.

- Reducing or writing it off directly weakens that mechanism and sends a message that failing to meet obligations pays off in the long run. Total debts based on public revenues in the Federation of Bosnia and Herzegovina exceed two billion BAM, while more than 30 percent of taxpayers are late with payments.

At the same time, more than 70 percent of regular taxpayers bear the burden of a system that, with these amendments, once again favors non-payers - says Peštek.

According to him, the proposed amendments, which entail a reduction or write-off of default interest, could mean a loss of budget revenues in the hundreds of millions of BAM, without a guarantee of a long-term effect.

- Previous experiences show that such measures yielded only short-term results, with an increase in collection of only 5 to 10 percent, without a lasting improvement in tax discipline.

The fiscal risk of this approach is reflected in a possible reduction of stable budget revenues, an increase in the budget deficit, and additional pressure on public debt, which already exceeds 20 percent of the GDP of the Federation of Bosnia and Herzegovina.

In the long run, this could jeopardize the financing of basic state functions, reduce investment capacity, and increase the need for new borrowing - Peštek pointed out.

He also notes that he is particularly concerned about the proposal of the law under an expedited procedure, which indicates a lack of transparent fiscal assessments and the continuous repetition of measures that encourage payment delays.

- Such an approach undermines legal certainty, demotivates regular taxpayers, and increases overall fiscal instability. The proposed Law on the Default Interest Rate weakens the basic mechanisms for collecting public revenues and systematically rewards irresponsibility - Peštek concludes.