Proposal of 10 measures to overcome the economic crisis sent to authorities

(Patria) - The BIT Alliance, an association of domestic IT companies, has sent a proposal of 10 measures to the Council of Ministers, the Government of the Federation of BiH, and the Government of Republika Srpska, which, if adopted, will significantly help the entire domestic economy to more easily overcome the current crisis caused by the coronavirus pandemic and preserve jobs.

The IT industry itself in Bosnia and Herzegovina, as well as the rest of the world, is going through great difficulties, which are primarily reflected in hampered business operations and a significant general decline in revenue. It seems obvious at this moment that the consequences will be very significant, and the BIT Alliance considers it extremely necessary for the authorities in Bosnia and Herzegovina to adopt urgent and quality measures, with the aim of mitigating the economic damage resulting from this global situation.

Through active measures by the competent authorities, economic entities in our country can and must be helped to maintain business operations and preserve jobs. The BIT Alliance and its members constantly monitor trends in the domestic and world economy, and the economic measures proposed so far by domestic authorities are simply insufficient and will not have a significant effect when it comes to saving domestic companies.

Therefore, the authorities in BiH have been proposed 10 measures to help the economy in Bosnia and Herzegovina, which have been developed using the experiences of numerous other countries in Europe and the world, as well as assessments of BiH's capabilities.

PROPOSED MEASURES

1. General moratorium on the repayment of credit debt to banks and other financial institutions for a period of at least 3 months for all citizens and business entities, starting from April 2020: We are aware that certain steps have already been taken in both entities regarding this issue, but it is evident that there are a number of ambiguities in the implementation of these measures, and we consider it necessary to adopt a clear and precise decision in cooperation with the competent Banking Agencies and the Central Bank of BiH that will include a general moratorium for all companies and citizens. We believe that dividing them into those who are in trouble and those who are not is not wise at this moment, because those who may not be in trouble now will quickly fall into problems themselves by being obliged to meet their full obligations to both banks and others. This measure will certainly significantly strengthen the liquidity of the economy and enable greater possibility of preserving jobs, and we are sure that the banking sector will not be endangered in any way because of this;

2. Urgently request the write-off or deferral of repayment of BiH's foreign debt due in 2020. Various levels of government in BiH have financial arrangements with international institutions such as the IMF, the European Bank for Reconstruction and Development, the European Investment Bank, the World Bank, and other creditors, and we believe it is necessary to request the write-off or deferral of repayment of these loans for the next period, at least for 2020. In this way, if such a request is accepted, budgets would achieve savings of at least 800 million KM this year, which can be used to overcome the current economic crisis;

3. Exemption from payment of contributions and income tax for a period of at least 3 months for all business entities, and taking over the obligation to pay these obligations by the Council of Ministers of BiH, the Government of the Federation of BiH, the Government of Republika Srpska, and the Governments of the cantons in FBiH;

4. Exemption from payment of advance profit tax during 2020 for all business entities, except for banks and insurance companies, and exemption from payment of property tax, which would be of most help to the tourism industry in BiH at this moment, but also to citizens. We believe that this would not represent a significant blow to the budgets, and that money would mean a lot to all companies, especially small and medium-sized enterprises, to cope more easily with this crisis. We believe that models of eventual deferral of payment of this obligation are not adequate for the current situation and the problems that will follow, because these obligations will then represent a huge burden for companies that will gain momentum after the crisis;

5. Direct all public procurements in Bosnia and Herzegovina primarily to domestic producers of goods or domestic service providers for at least the next 24 months wherever possible. Adopt the necessary amendments to the Law on Public Procurement to ensure this, and in consultation with the European Commission, suspend the application of the Law on State Aid in BiH for a period of at least 24 months, given that EU countries are also evidently not applying similar provisions;

6. Enable unimpeded cross-border transport of goods and services, by urgently harmonizing measures with the countries we border, but also including EU and CEFTA countries;

7. Reduction of salaries in public service and public enterprises, with exceptions for workers in healthcare, police bodies, and education, and also taking into account employees in the public sector whose salaries are below the average salary in BiH. Funds saved can be used to increase the salaries of healthcare workers, who are most burdened by the current situation, to procure necessary health equipment, but also to help the economy;

8. We support the already stated requests to adopt budget rebalances in such a way that all costs not related to salary payments, extra-budgetary funds, healthcare, social protection, and similar necessary expenditures are transferred to items related to the health sector and mitigating the consequences of the economic crisis and preserving employment;

9. Postpone the VAT payment deadline from the tenth day of the month to at least the end of the month, and we believe that the possibility of postponing the obligation to pay VAT upon collection of receivables should be seriously considered, if not for all, then at least for business companies with lower total annual revenue, which would be determined based on the analysis of competent institutions, and enable VAT refund for payments for uncollected receivables starting from March 1, 2020;

10. Abolish the collection of all rents for premises owned by public institutions or companies for the next 12 months;

The BIT Alliance believes that these proposed measures, along with a number of those already proposed by other business associations and government institutions themselves, would represent an adequate initial response by official BiH institutions to the economic crisis that is already evident, and a request has been sent to the authorities to consider and adopt them as soon as possible. These measures would ensure the amortization of the initial impact of this crisis on the economy and provide additional time for the creation of new programs adapted to the current situation.