In response to recent reports regarding the financial challenges in the Federation of Bosnia and Herzegovina (FBiH), the FBiH Ministry of Finance Toni Kraljevic provided a statement to FENA, affirming that it is fulfilling its constitutional and legal responsibilities by informing the public about the execution of the 2023 budget.

The Ministry emphasized that the 2023 FBiH budget, adopted on January 27, 2023, was set at 6.7 billion Bosnian marks (€ 3.42 billion), encompassing all legally mandated obligations, with a projected deficit of 200 million Bosnian marks (€ 102 million).

On April 28, 2024, the newly appointed FBiH government inherited the existing budget framework, including the projected deficit and other obligations that had accumulated during the year.

However, the revenue projections in the adopted budget were not fully realized, further increasing the deficit. The failure to collect revenue from end-users, mainly due to FBiH Highways’ inability to service 183 million Bosnian marks (€ 93.5 million) in loan obligations, contributed significantly to this shortfall. The new government reprogrammed this debt in late 2023 to stabilize operations and enable new investments.

Additionally, the unrealized sale of receivables, initially expected to generate 100 million Bosnian marks (€ 51 million) for the 2023 budget, and the World Bank's Development Policy Loan (DPL), amounting to 109 million Bosnian marks (€ 55.6 million), were not received as anticipated. The absence of expected dividends from BH Telecom further reduced revenue by 35 million Bosnian marks (€ 17.8 million).

These factors collectively reduced the budget's revenue by over 420 million Bosnian marks (€ 214 million), a situation beyond the Ministry of Finance's control or foresight. Concurrently, the expenditure side of the budget grew due to several significant factors.

Amendments to the Law on Social Protection, War Civilian Victims, and Family Support added 67 million Bosnian marks (34.2 million euros) in expenditures. A pension adjustment of 3.9%, effective from May 2023, required an additional 45.9 million Bosnian marks (€ 23.4 million euros). Rising Eurozone interest rates increased loan interest expenses by 62.9 million Bosnian marks (€ 32 million).

The implementation of the Law on Family Support in FBiH required an additional 15.6 million Bosnian marks (€ 7.9 million). Furthermore, a 10 million Bosnian marks (€ 5.1 million) boost to the Solidarity Fund raised the total allocation to 43.5 million Bosnian marks (€ 22.2 million), representing more than a 50% increase from the previous year to assist vulnerable populations.

Despite these challenges, the Ministry implemented corrective measures, saving over 100 million Bosnian marks (€ 51 million) and ensuring that all 2023 budget obligations were met on time.

This responsible fiscal management continues into the current year, with a focus on prudent debt management. In the first eight months of this year, the Ministry repaid over 770 million Bosnian marks (€ 393 million) of existing debt, while new borrowing remained below 342 million Bosnian marks (€ 174 million).

The Ministry's efforts demonstrate its ability to maintain financial stability, with regular payments from the budget. This week alone, over 50 million Bosnian marks (€ 25.5 million) in payments are scheduled for agriculture, displaced persons, and small and medium-sized enterprises.