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BiH is breaking agreement with IMF, again

BiH is breaking agreement with IMF, again
BiH Fiscal Council is supposed to discuss the report on possible failure in fulfillment of the Widened Agreement with International Monetary Fund since the proposition of bill amending the law on salaries and benefits, which stipulates the increase of a coefficient for police officers in BiH institutions, was sent to parliamentary procedure in BiH Parliament.

In the report, experts warned that the bill in question stipulates the increase of coefficient and that this proposal is not in accordance with obligations assumed from the Letter of Intent, signed by state institutions with the IMF. In the report, authors demand the fast action of responsible institutions since the proposed bill has already been adopted by the House of Representatives and House of peoples in the first reading, and it is expected that the final adoption of the bill will take place in the next few weeks. The widened arrangement with the IMF, for which the BiH authorities signed the Letter of Intent, stipulates the limiting of a total fund for salaries and benefits of employees in joint BiH institutions. In agreement with the IMF, BiH promised that the total deficit will be around 0.9% of the GDP, and in order to achieve this, BiH joint institutions assumed an obligation to limit allocations for salaries and benefits this year, so that the total allocations for this purpose will not exceed 655 million BAM (more than 325 million Euro). BiH Council of Ministers, in June 2016, adopted the policy of limiting public expenditures on salaries and benefits of employees in joint institutions in order to meet the assumed obligation.

“If the BiH House of Peoples adopts the proposed bill, additional funds in the amount of 10 million BAM (5 million euro) per year will be needed for its implementation, which is why BiH institutions will not be able to fulfil the assumed obligation to limit the fund for salaries and benefits of employees in joint institutions. Also, the adoption of this law could influence an increase of funds for financing the BiH institutions”, experts emphasize in the report.

They also stressed that the obligation to limit the fund for salaries and benefits was not assumed only from the Letter of Intent, but also from the Reform Agenda for the period 2015-2018. The report also says that the request to increase coefficients for professional military personnel has already been received by the Ministry of Finance and Treasury, and that there is a possibility of launching a procedure to amend the law on salaries and benefits in BiH institutions regarding military personnel.

In a recent letter to BiH institutions, IMF expressed concern over these problems and said that, if Parliament adopt amendments to the law on salaries and benefits in BiH joint institutions, will consider it as new circumstances. It, as they said, would require new negotiations of BiH with the IMF on programme goals./IBNA

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