Public Investment Programme of BiH

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PUBLIC EXPENDITURE MANAGEMENT CHALLENGES IN
ECA/PRSP COUNTRIES
BOSNIAS REFORM EXPERIENCE TO
DATE
Ljerka Maric, Minster of Finance and Treasury -
BiH
International conference on Strenghtening Public
Expenditure Management Warsaw, Poland, February
6- 9, 2005.
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• In the first half of this year BiH Council of
  Ministers together with FBiH Government and RS
  Government adopted Mid-Term Development Strategy
  BiH (PRSP) for period 2004-2007. It is a first
  strategic document agreed and approved by the BiH
  authorities without involvement of the
  international community.
• Prior to the approval of the PRSP, wide
  consultation process was organized with
  participation of NGOs, youth, private sector,
  trade unions, academics, donors, and ordinary
  citizens.

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BASIC GOALS OF MEDIUM-TERM DEVELOPMENT STRATEGY
ARE

• by end 2007, achieve 70 of GDP from 1991
• by end 2007, restore a partial creditworthiness
  on the international capital markets
• create economic preconditions for faster
  integration of BiH into EU

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CRITERIONS FOR SUCCESS OF MEDIUM TERM DEVELOPMENT
STRATEGY (PRSP) ARE DEFINED AS

• Reduction of unemployment rate by 20 relative to
  the current unemployment rate
• Reduction of poverty rate by 20 relative to the
  current poverty rate
• Signing Stabilization and Association Agreement
  with the EU

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IMPLEMENTATION OF MEDIUM TERM DEVELOPMENT
STRATEGY REQUIRES REALIZATION OF THE FOLLOWING
PRIORITIES

• Preservation of macro-economic stability
• Implementation of fiscal reform
• Faster growth of private sector
• Implementation of anti-corruption strategy
• Strengthening of financial sector
• Implementation of labor market reforms
• Implementation of public administration reform
• Implementation of several sectoral reforms, among
  them the most important being

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• Liberalization of electricity market
• To continue liberalization of telecom market
• To implement reform of higher education
• To implement reform of health system financing
• To establish adequate system of social protection
• To start reform of pension system
• To adopt and implement new legal and
  institutional framework for forestry management
• To provide adequate support for agricultural
  production
• To define industrial policy of the country
• To introduce system of electronic relations with
  citizens (e-government)
• To implement National Environment Protection Plan
• To improve road construction management and road
  maintenance management
• To continue reconstruction of railways

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REAL GDP GROWTH TARGETS
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Source BiH Medium-Term Development Strategy -
PRSP
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CPI PROJECTION
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Source BiH Medium-Term Development Strategy -
PRSP
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FISCAL DEFICIT PROJECTIONS
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Source BiH Medium Term Development Strategy -
PRSP
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REDUCTION OF PUBLIC EXPENDITURE SHARE OF GDP
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Source BiH Medium-Term Development Strategy
PRSP (Data for 2002)
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PUBLIC EXPENDITURE PROJECTIONS
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Source BiH Medium Term Development Strategy -
PRSP
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PUBLIC EXPENDITURES REDUCTIONPLAN 1
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Source BiH Medium-Term Development Strategy -
PRSP
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DEFENSE EXPENDITURES AS OF GDP
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Source SOR FBiH and RS
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PUBLIC SECURITY EXPENDITURES AS OF GDP
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Source SOR FBiH and RS
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PUBLIC EXPENDITURES REDUCTIONPLAN 2
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Source BiH Medium-Term Development Strategy -
PRSP
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Apart from rationalization of public
expenditures, important areas of fiscal reform
will be

• Establishing of Indirect Taxation
• Introduction of VAT
• Establishing of common framework of public
  procurements
• Reform of direct taxes
• Strengthening of budget planning system
• Strengthening of public revision system.

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PROJECTION OF PUBLIC REVENUE GROWTH
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Source Mid-Term Development Strategy BiH - PRSP
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CURRENT ACCOUNT BALANCE PROJECTIONS
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Source BiH Medium Term Development Strategy -
PRSP
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INCREASE EXPORTS REDUCE IMPORTS
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Source BiH Medium-Term Development Strategy -
PRSP
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PRIVATE SAVINGS GROWTH PROJECTION
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Source BiH Medium-Term Development Strategy -
PRSP
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FDI PROJECTION GROWTH
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Source Mid-Term Development Strategy BiH - PRSP
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PRIVATE INVESTMENT PROJECTION
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Source BiH Medium Term Development Strategy -
PRSP
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REDUCTION OF PUBLIC DEBT
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Source BiH Medium Term Development Strategy -
PRSP
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EXTERNAL DEBT SERVICING PROJECTIONS
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Source BiH Medium Term Development Strategy -
PRSP
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• Realization of Medium Term Development Strategy
  is underway.
• The implementation rate of the planned measures
  to date is around 84 percent
• Positive trends in terms of inflow of foreign
  investments greater than expected, high levels of
  exports, higher level of lending to corporates,
  give reasons for optimism that in this year
  planned economic growth rates will be achieved.

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• In order to realize goals from Miedium Term
  Development Strategy of BiH (PRSP), it will be
  necessary for the period of 2004-2007 to get
  around 1.5 billion of foreign aid in form of
  favorable credits and grants.
• The largest part of this aid would be used for
  realization of BiH Public Investment Program,
  which will be presented to you tomorrow, as well
  as for realization of structural reforms in the
  area of
• Corporate restructuring
• Public administration
• External financing gap will be presented by the
  end of the conference.

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