Yugoslav war vets bring Bosnia to financial brink

Mon Feb 22, 2010 10:25am EST
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By Daria Sito-Sucic

SARAJEVO (Reuters) - Paying benefits to veterans of the wars that broke up former Yugoslavia hits budgets of all the breakaway states, but none harder than Bosnia, where the problem could cause financial collapse, experts and official say.

Croatia is relatively rich and pays substantial money to its half million veterans of the 1990s wars, Serbia does not pay out to the many who were paramilitaries and Kosovo's war veterans wield considerable political clout.

In all of the countries, veterans' groups are influential and have been closely linked to wartime political elites who awarded them with state payments in return for political support.

But unless a regional parliament in Bosnia passes laws on Tuesday toughening criteria for veterans' payments, it will lose badly needed budget support loans from the World Bank and the International Monetary Fund and likely face financial collapse.

"The future of the fiscal system is uncertain," Marco Mantovanelli, head of the World Bank mission in Bosnia, said.

"Without proposed reforms, there is no fiscal sustainability in sight, particularly in the Federation of Bosnia-Herzegovina."

Bosnia's two regions, the Muslim-Croat federation and the Serb Republic carved from the opposing sides in the war, would have to slash their budgets and, in turn, face social unrest.

The situation is especially risky in the Muslim-Croat federation because about 40 percent of the budget goes for cash payments mainly to war-related categories such as veterans and families of fallen soldiers and the disabled.   Continued...