Years of paying others’ debts

Center for Research and Studies GEA made an analysis on how the foreign debt of the Republic of Srpska affects revenues of cities and municipalities and cities.In short, results of the analysis reveal that growing financial obligations related to servicing the foreign debt of RS are becoming an increasing burden for city and municipality budgets. Despite growth in indirect taxation revenues, the portion of funds belonging to municipalities and cities in the Republic of Srpska is diminishing, which directly affects the quality of public services provided to citizens. Therefore, it can be said that, in many local communities, citizens have already felt the burden of the growing foreign debt. Besides, future projections show that cities and municipalities can expect an additional decline in revenues from indirect taxes due to financial obligations of the Republic of Srpska in terms of new external loans. As soon as 2017, the amount of these obligations will significantly exceed the total amount redistributed to cities and municipalities based on collected indirect taxes. Undoubtedly, it will additionally slow down the execution of local budgets in the next period, and it will open discussion about different models of distribution, especially in light of the upcoming local elections.

Find out here whether foreign debt will eat up the budgets of municipalities and cities in the Republic of Srpska. (local language only, English version coming soon)