Bosnia's Central Bank refuses budget transfer amid arbitration debt concerns

The controversy arose after the Council of Ministers adopted a revised Draft Budget for Bosnia and Herzegovina’s institutions and international obligations for 2025. The budget includes a provision to settle liabilities stemming from the "Viaduct vs. BiH" arbitration case using profits generated by the Central Bank.

In response, the CBBiH issued a statement underscoring its status as an independent monetary authority, with a clear mandate to maintain monetary and financial stability in the country through the safeguarding of the national currency, the Bosnian (convertible) mark (BAM).

The Bank confirmed that at its Governing Board’s third session held on 27 March 2025, it had approved the Financial Report for the year ending 31 December 2024. The session also produced a decision on the allocation of net profits, which revealed that the Bank had generated 412.6 million KM in net profit during 2024.

As per the Law on the Central Bank and the Board’s decision, 244.3 million KM from the profits was designated for transfer to the Ministry of Finance and the Treasury of Bosnia and Herzegovina, the body responsible for the state budget.

However, in light of recent developments, the Central Bank has halted the transfer. The Bank argued that allocating this sum to cover arbitration debt could endanger its assets and, by extension, the stability of Bosnia and Herzegovina’s financial system.

"In accordance with our legal obligations and institutional mandate, we have decided to suspend the transfer of funds to the state budget until we are satisfied that there is no threat to the Central Bank’s assets," the statement reads. The Bank stressed that preserving the integrity of its financial holdings is vital for the broader stability of the monetary system.

The CBBiH reiterated its commitment to performing its statutory duties through its central office and regional branches and affirmed its readiness to act within the bounds of law and its mandate, against any measure that could jeopardise its operations or financial standing.

The statement also reaffirmed the Bank’s dedication to maintaining a secure investment policy aligned with its legal mission. It emphasised that the country's foreign exchange reserves are managed with security as the principal objective, further highlighting the potential risks posed by politically driven financial decisions.

This development introduces fresh uncertainty into the government’s budget planning process and raises wider concerns about the independence of monetary institutions in Bosnia and Herzegovina, especially when faced with mounting international financial obligations.