Bosnia's Muslim-Croat region may not be able to make January payments to war veterans and pensioners unless parliament swiftly approves a temporary financing deal, the outgoing finance minister said on Monday. Veterans and invalids of the region's 1992-95 war held violent protests last spring against payment cuts as part of government austerity measures tackling the impact of the economic crisis.
The Muslim-Croat federation government opted in mid-December for temporary financing of its institutions in the first quarter of 2011, because parties that won the October general election were opposed to the adoption of a 2011 budget proposal. The federation parliament has still not formed the upper house enabling it to pass a decision on temporary financing because of a row between moderate and nationalist blocks, unlikely to be resolved soon.
"We shall pay out all payments projected for this fiscal year, conclusive with December. As for January, there will be no payments without the decision on temporary financing," Finance Minister Vjekoslav Bevanda said at a year-end news conference.
A block of moderate parties led by multi-ethnic Social Democrats want to form the government but two Bosnian Croat nationalist parties threaten to block the work of the parliament in the upper house unless they are included in it. Bevanda said there was still time for political parties to form a parliament majority.
He said that his government has proposed a 2011 budget of 1.67 billion Bosnian marka ($1.1 billion), with a deficit of 75 million marka agreed with the International Monetary Fund (IMF) under its 1.2 billion euro ($1.6 billion) standby deal.
"I think that 2011 will be very difficult," Bevanda said, adding he hoped that his successor would not give in to political pressures and will continue with restrictive policies. "I hope the government will be formed as soon as possible and get on with structural reforms," he said, urging the public administration reform and larger support to entrepreneurs.
Bosnia's other autonomous region, the Serb Republic, passed a 2011 austerity budget of 1.6 billion marka last week, with a deficit of 177.4 million marka. The central government, whose budget is largely composed of contributions from the two regions, is set to approve on Tuesday temporary financing for the first quarter of 2011 since the regions have failed to agree on its 2011 budget. The IMF has made the drafting of a general budget framework for 2011 a key condition for the release of its future loan instalments to Bosnia.