Government adopts rebalanced FBiH Budget, 11.2 percent higher than 2020 budget

SARAJEVO, (Patria) - In order to create conditions for the implementation of the Law on Mitigating Negative Economic Consequences caused by the coronavirus, and to secure funds for economic aid, the Government of the Federation of Bosnia and Herzegovina, at today's session in Sarajevo, adopted and sent to the FBiH Parliament under urgent procedure the Proposal for Amendments and Supplements to the Budget of Bosnia and Herzegovina for 2020 in the amount of 5,508,930,679 KM, which is about 11.2 percent higher than the FBiH Budget for this year.

When preparing projections of tax and contribution revenues, the Federal Ministry of Finance took into account that the measures undertaken and to be undertaken by the Government of FBiH, as well as by other levels of government, will have a positive effect and slow down the further decline in revenues. In this context, profit tax revenues are reduced by 21 percent, pension and disability insurance contributions are lower by 15.2 percent, while the estimated decline in net revenues from indirect taxes is 16.7 percent, all of which implies a decline in tax revenues in absolute terms of up to 493 million KM.

The collection of these revenues will be closely monitored in the coming period, and in case of further deterioration, corrective measures prescribed by law will be taken.

Total expenditures and outlays in the Amendments and Supplements to the Budget of the Federation of Bosnia and Herzegovina for 2020 amount to 5,508,930,679 KM. This is an increase of 11.2 percent compared to the Budget of the Federation of Bosnia and Herzegovina for 2020.

With the Amendments and Supplements to the FBiH Budget for 2020, the Federal Government aims to ensure savings by limiting budget spending, increasing budget discipline, reducing current and capital transfers, reconstruction and investment, and repaying domestic loans.

Regarding savings, special emphasis is placed on the operating costs of administrative bodies, which have been significantly reduced due to the COVID-19 pandemic (travel, as well as costs of procurement of materials, fuel, contracted services, etc.).

The goal is to redirect funds to economic entities to mitigate the consequences caused by the COVID-19 pandemic.

The most significant aspect is the planned 500 million KM in the Fund for Economic Stabilization. The funds are planned under the Federal Ministry of Finance and will be used for the implementation of the Law on Mitigating Negative Economic Consequences, which is expected to be adopted along with the Budget rebalancing.

Also planned are 20 million KM for the establishment of a Guarantee Fund at the Development Bank of FBiH, which, together with the remaining 80 million KM allocated to this bank from commission business, will create a potential of 100 million KM, enabling guarantees in the amount of 500 million KM.

In accordance with the Amendments and Supplements to the FBiH Budget for 2020, the Government today also adopted the Proposal for the Law on its Execution.

Among the novelties are two new items in Article 23, which stipulate that funds determined under the economic code of current transfers to other levels of government and funds - the Fund for Economic Stabilization, will be used for the implementation of the Law on Mitigating Negative Economic Consequences, and funds for capital transfers to financial institutions - the Guarantee Fund at the Development Bank of FBiH, will be used based on decisions made by the Government.

Several transfers have been deleted from the Law, such as subsidies to private companies and entrepreneurs for linking work experience, capital transfers to public enterprises, as well as to associations of citizens in the field of culture, for the implementation of the Bologna Process and for the Student Loan Fund. Also, the transfer for tourism development in FBiH has been deleted.

At the same time, new transfers have been added, such as transfers for quarantine costs in FBiH, and to lower levels of government for the procurement of equipment to combat COVID-19.

The Federal Government also sent to the FBiH Parliament the Proposal for a Decision on Approving the Amendments and Supplements to the Financial Plan of the Health Insurance and Reinsurance Institute of FBiH for 2020, the Amendments and Supplements to the Financial Plan of the Federal Solidarity Fund for 2020 (Annex I), and the Decision on the Method of Execution of the Rebalanced Financial Plan of the Health Insurance and Reinsurance Institute of FBiH for 2020.