May 23, 2020 / 12:38 PM / 9 days ago

Bosnian Serb region adjusts 2020 budget for coronavirus costs

BANJA LUKA, Bosnia, May 23 (Reuters) - Bosnia’s autonomous Serb Republic revised its 2020 budget up by 5.5% on Saturday to fill gaps in revenues due to the coronavirus crisis with new debt and to re-direct spending to support the health sector and businesses.

The budget was increased by 188 million Bosnian marka ($105.7 million) to 3.6 billion marka after the government projected a deficit of 412 million marka, up from 20 million marka first forecast.

Finance Minister Zora Vidovic said the government made savings of 41 million marka through cuts in salaries, services, grants, investments and other costs.

She said that spending would rise to pay for measures needed to ease the impact of the coronavirus, and that 151 million marka from the budget would be transferred to a compensation fund to support businesses and the health sector, and 52 million marka would be earmarked for the region’s health fund.

The parliament approved a 115% debt increase to 678 million marka, of which 354 million marka would be raised via domestic debt issuance and 324 million borrowed from international financial institutions.

Vidovic said the region’s total debt of nearly 6 billion marka would not exceed allowed ceiling of 60% of GDP. She based the debt calculation on the World Bank best-case scenario forecasting the fall of 2020 GDP in Bosnia of around 3.5%.

But Jelena Trivic, an opposition MP and economics professor, warned the debt would reach 70% of GDP taking into account 1 billion marka debt accumulated by the health fund.

The Bosniak-Croat Federation, Bosnia’s other autonomous region, in April revised its 2020 budget up by 11.2% to reflect an increase in spending aimed at shoring up its economy battered by coronavirus containment measures. (1$ = 1.778 Bosnian marka) (Reporting by Daria Sito-Sucic, Additional Reporting by Gordana Katana in Banja Luka; Editing by Ros Russell)

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