Draft Budget of the FBiH for 2023 Approved at 6.7 Billion BAM

(Patria) - The Government of the Federation of BiH, at the proposal of the Federal Ministry of Finance, at today's session in Sarajevo, approved the Draft Budget of the FBiH for 2023 and the Draft Law on
budget execution, which will be sent to the parliamentary procedure under an urgent procedure. The proposed budget of the Federation of BiH for the next year amounts to 6,725,847,563 BAM, which is 1,128.2 million BAM higher than in 2022, or 20.1 percent.

As explained by the Federal Ministry of Finance, the structure of the proposed budget of the FBiH for 2023 is characterized by an increase in tax revenues, especially revenues from contributions for pension and disability insurance, and revenues from indirect taxes. On the other hand, an increase in the amount of budget expenditures, interest, and expenditures for the procurement of fixed assets is planned, with a decrease in capital transfers. Although the revised revenue projections are favorable and optimistic, it was emphasized that, along with a decrease in receipts from financial assets and borrowing, a significant amount of funds is foreseen for debt repayment compared to the previous fiscal year.

Total tax revenues projected in the FBiH Budget for 2023 amount to 4,843.6 million BAM and are 21.7 percent higher than in the previous year. This particularly applies to revenues collected from contributions for pension and disability insurance, which are planned in the amount of 2,683.1 million BAM, and revenues from indirect taxes from the single account, which are planned in the total amount of 2,077.2 million BAM. Non-tax revenues, current transfers, and donations are planned in the amount of 607.2 million BAM, which is 23.3 percent higher compared to the previous budget.

Receipts from financial assets and borrowing, and deferred revenues, are planned in the proposed FBiH budget in the total amount of 1,074.7 million BAM. Current transfers and other current expenditures are planned in the amount of 4,558.1 million BAM and are 22 percent higher compared to 2022. Viewed individually, the largest increase relates to the payment of pensions under several different legal bases, amounting to 665 million BAM.

Current transfers to individuals are planned in the amount of 3,777.4 million BAM and are 23 percent higher compared to the FBiH Budget for 2022. Thus, the most significant increase relates  to the transfer to the Federal Pension and Disability Insurance Institute, considering the expected rate of regular pension adjustments and the extraordinary increase in minimum pensions by 5 percent from November 2022. The amount of 2,686.5 million BAM is planned for pension payments, which is 536.5 million BAM higher compared to the previous year.

Furthermore, the transfer for persons with disabilities – non-war disabled persons, is planned in the amount of 160 million BAM, which is 18 million BAM higher compared to 2022. Then, 28 million BAM is planned for the Federal Ministry of Labour and Social Policy for the implementation of the Law on Foster Parents in the FBiH, which is an increase of 10.5 million BAM, while the transfer for the implementation of the Law on Material Support for Families with Children in the FBiH amounts to 106 million BAM and represents an increase of 56 million BAM compared to fiscal year 2022.

The Federal Ministry for Veterans and Disabled Veterans of the Liberation War also has a larger allocation of financial resources planned for the payment of pensions earned under the Law on Early Retirement under Favorable Conditions for Defenders of the Liberation War, in the amount of up to 22.2 million BAM. The current transfer for disability benefits is planned in the amount of 278 million BAM and is 6.3 million BAM higher. 

Agricultural incentives are planned in the amount of 160 million BAM, under the jurisdiction of the Federal Ministry of Agriculture, Water Management and Forestry, which is an increase in subsidies to private companies and entrepreneurs by 54 million BAM compared to the previous year. Within current transfers to other levels of government and funds, a new transfer is planned for the project - European Union Support to BiH to mitigate the negative socio-economic impact of the energy crisis, in the amount of 90.4 million BAM. The budget users responsible for the implementation of this assistance are the Federal Ministry of Development, Entrepreneurship and Crafts, the Federal Ministry of Physical Planning, and the Federal Ministry of Labour and Social Policy.

Two planned current transfers from the Federal Ministry of Health are also allocated, namely to the Health Insurance and Reinsurance Institute of the FBiH in the amount of 33.5 million BAM, which is an increase of 5 million BAM, and for the purpose of medically assisted reproduction in the amount of 10 million BAM.

The Government's support for housing credit lines through Union Bank aimed at young people, as well as subsidies to JP Elektroprivreda BiH for electricity cost subsidies for the most vulnerable population categories, has continued.

Among other things, subsidies to private companies and entrepreneurs are planned in the amount of 178 million BAM, which is 57.6 million BAM higher compared to the previous budget. Planned capital transfers in the FBiH Budget for 2023 amount to 269.7 million BAM.

Regarding the procurement of fixed assets in the form of rights, the Project for the Construction of the Palace of Justice of the Federation of BiH is also planned in the amount of 3.5 million BAM. Expenditures for debt repayment are planned in the amount of 1,122.5 million BAM and are 273.3 million higher compared to the amount in the previous budget. In addition to the above, a surplus achieved from the previous period in the amount of 200 million BAM is also planned.
In the budget explanation, the Federal Ministry of Finance stated, among other things, that the projections of revenues and receipts for 2023 were prepared in accordance with the projections of macroeconomic indicators for 2023, by the Directorate for Economic Planning of BiH and revenue projections from the Department for Macroeconomic Analysis of the Indirect Taxation Authority of BiH. 

The Federal Ministry of Finance, among other things, emphasized in its explanation that one of the principles and key priorities in planning budget funds for the next fiscal year was to ensure stability in the payment of pensions, veterans' and social benefits, and other payments provided for by the Budget of the Federation of BiH.