FBiH Government Currently Finances Only Pensioners and Civil Servants, No Laws in Favor of the Economy

SARAJEVO, (Patria) – Analysts and non-governmental organizations believe that the FBiH Government is currently serving only two groups of people: pensioners and civil servants, while the entire real sector is neglected, leading to poor economic progress in the country.

The situation is the same or worse in the other BiH entity, RS. In both entities, authorities are taking out loans to pay salaries in public administration and pensions, creating an illusion of social peace but leading the country into greater debt bondage.

Statistical data show that there are about 400,000 pensioners in FBiH alone. According to data from the Agency for Statistics of BiH, in 2015, the number of employees in legal entities in BiH was 685,294, and almost every third employee is a civil servant, making BiH administration the largest but also the most inefficient in all of Europe.

Throughout 2017, federal authorities did not pass a single law that would boost the business of the real sector and create new jobs.

The report by the Centers for Civil Initiatives, a non-governmental organization monitoring the implementation of the Reform Agenda, states that a serious political crisis has almost completely blocked the implementation of this agenda, resulting in no or very modest results at the state and entity levels.

Almost every second worker, or approximately 45 percent of workers in FBiH, have a salary below 500 KM, while 73 percent of workers are in the zone of relative poverty with a salary below 800 KM (below-average salary).

Contrary to the declarative positions of governments in BiH, the percentage of employees in public administration in FBiH has decreased by 0.65 percent, and in RS by 1.03 percent, which in both cases is insignificant, as it does not indicate the success of government measures such as the moratorium on new employment in civil service or broader public administration.

At the end of last year, the Rulebook on the Application of the Income Tax Law came into effect in FBiH, taxing every meal allowance exceeding 8.5 KM per day, as well as holiday pay above 400 KM. The Economic and Social Council assessed this as a new blow to employers and employees, as the new levies on meal allowances were not accompanied by reductions in salary taxes, although the FBiH Government had announced this.

The initiative by SDP BiH Member of Parliament Saša Magazinović, who requested that businesses pay VAT to the state only after they collect payment for goods or services, instead of paying VAT upon issuing an invoice as is currently the case, also failed. The Indirect Taxation Authority rejected such a proposal with a brief explanation that the proposed system is unacceptable.