Government boasts of millions from the EU, but has no budget line for these revenues: Fiscal framework has 'cemented' Bosnia and Herzegovina!

Written by: A. Čorbo-Zećo

Does the European Commission know that Bosnia and Herzegovina has a Global Fiscal Framework that limits the Budget of BiH institutions? This is an important question that must be answered, because it is still unclear whether the Reform Agenda of Bosnia and Herzegovina, submitted in April 2024, has been approved!

Based on the elements of the Reform Agenda, which must be measurable, it is clear that the European Commission disburses funds to the country, participants in the Growth Plan, twice a year based on these elements.

The Global Fiscal Framework for the period 2024-2026, available on the Ministry of Finance website, includes a projection of the state budget for the next three years, which is fixed at around 1.3 billion BAM.

The Fiscal Framework was adopted in January 2024, while the Growth Plan was presented in November 2023, meaning that the drafters of the Fiscal Framework already knew then that Bosnia and Herzegovina would receive approximately 1 billion euros or 2 billion BAM over the next four years, or an average of about 500 million BAM annually, but they did not take this into account when adopting the Global Fiscal Framework.



For example, Nermin Nikšić, as a member of the Fiscal Council, knew this, publicly boasting that the adoption of the state budget would open space for EU funds from the Growth Plan. How?

Through some David Copperfield magic or via an account in the Cayman Islands.

What is actually the problem?

Simply put, there is no code, place, or indication in the Budget of Bosnia and Herzegovina where those 500 million BAM annually will be received, or since these are revenues, the Budget should be larger than 1.3 billion BAM (say 1.8 billion BAM), as it is currently limited by the Fiscal Framework based on the Law on the Fiscal Council of Bosnia and Herzegovina.

Thus, we have a legal obligation that limits the budget and, parallel to that, possible additional revenues that are not planned. How does the Council of Ministers intend to receive those 500 million BAM annually on the revenue side, and parallel to that, since these are earmarked funds for specific areas, where will they be planned on the expenditure side (for example, financing infrastructure)? This simply does not exist in the budget!?

Also, a question for the Council of Ministers that must be answered is whether the Reform Agenda was ever approved by the European Commission, because its approval activates funds from the Growth Plan.



If the Reform Agenda has been approved by the European Commission, why does the public still not know this, and why does the Parliamentary Assembly of Bosnia and Herzegovina, which will need to implement elements of the Reform Agenda through the adoption of reform laws, not have this submitted Reform Agenda? Or, if the Reform Agenda has not yet been approved by the European Commission, what is the problem?
 
Was the Reform Agenda even written in a bureaucratically measurable way, as required by the Brussels administration?

The EU Delegation to Bosnia and Herzegovina is already saying that it has approved 70 million euros or 140 million BAM as an incentive to start implementing the Growth Plan. Where are these funds planned on the revenue side, and why is the Budget not larger by that additional 140 million BAM? Why does the EU Delegation say nothing about this, or will they again send Viber messages, as they did during the adoption of the Law on the HJPC, when they sent messages to adopt that law, which actually blocked the work of the HJPC? Clearly hypocrisy or partisan politics, but the question is in whose interest – for or against the interests of the state of Bosnia and Herzegovina.

Finally, what is the purpose of the Global Fiscal Framework? The answer is simple: when you look, for example, at the distribution of funds from indirect taxes (which are about 9 billion BAM from the Global Fiscal Framework, meaning the state budget should be at least 10 billion BAM), but those funds go to the entities, or the Global Fiscal Framework serves to weaken the capacity of the state and strengthen the capacity of the entities. There is no other purpose. And, of course, no one says anything about that!

It is then easy to conclude that the Fiscal Framework limits budget planning to 1.3 billion BAM over the next three years, which would mean that Bosnia and Herzegovina has no intention of using EU funds from the Growth Plan, or, possibly, the current government may intend to change the Global Fiscal Framework for the next three years, but no one has expressed any such intention.

It is also important to know that it is not possible to increase the budget through a rebalancing in a way that makes it larger than what the Fiscal Framework limits it to!