Bosnia and Herzegovina
Technical Assistance Report-Government Finance Statistics Diagnostic Mission-Institutional Units and Public Sector Debt
Author: International Monetary Fund. Statistics Dept.
Publication Date:
06 Feb 2018
eISBN:
9781484340134
Language:
English
Keywords:
ISCR; CR; government; debt; Bosnia-Herzegovina; BHAS; accounts payable; debt data; government of Switzerland; plan in cooperation; debt source data; TA mission
Download PDF (1 MB)

This Technical Assistance Report assesses the current government finance statistics compilation environment in Bosnia and Herzegovina (BiH), particularly the classification of institutional units and debt data compilation based on the Government Finance Statistics Manual and European System of National and Regional Accounts frameworks. It was found that a full list of public sector units in BiH does not currently exist. The Central Bank of Bosnia and Herzegovina (CBBH) is in a good starting position to compile the public sector debt data. The results of its work on financial balance sheets should enable the CBBH to produce general government debt data in a relatively short term.

Abstract

This Technical Assistance Report assesses the current government finance statistics compilation environment in Bosnia and Herzegovina (BiH), particularly the classification of institutional units and debt data compilation based on the Government Finance Statistics Manual and European System of National and Regional Accounts frameworks. It was found that a full list of public sector units in BiH does not currently exist. The Central Bank of Bosnia and Herzegovina (CBBH) is in a good starting position to compile the public sector debt data. The results of its work on financial balance sheets should enable the CBBH to produce general government debt data in a relatively short term.

Executive Summary

In close consultation with the Bosnia and Herzegovina (BiH) authorities and with strong support from the IMF’s European Department, a three-day government finance statistics (GFS) technical assistance (TA) assessment mission was conducted by the IMF’s Statistics Department during January 12–14, 2015. The mission was financed by the government of Switzerland through the State Secretariat for Economic Affairs and is part of an 18-month GFS capacity development project for selected Southeastern European countries. Under this project, a series of three missions to BiH are envisioned over 16 months; this mission was the first.

The main objective of this first TA mission was to assess the current GFS compilation environment in BiH, particularly the classification of institutional units and debt data compilation based on the Government Finance Statistics Manual (GFSM 2014) and European System of National and Regional Accounts (ESA 2010) frameworks. Building on work carried out during the April 2014 GFS TA mission, the mission met with officials from the Ministry of Finance (MoF), Agency for Statistics of Bosnia and Herzegovina (BHAS), and the Central Bank of Bosnia and Herzegovina (CBBH) to explore current compilation processes, identify gaps/weaknesses, and develop a country specific plan for BiH (see implementation plan and Appendix I).

The mission found that a full list of public sector units in BiH does not currently exist. A partial draft list was reviewed during the mission (Appendix II). The mission learned that the European Union (EU) has recently financed a project, led by the BHAS, to work on the delineation of institutional sectors; results of this work are expected by the end of 2016. To avoid duplication of effort, the mission recommends the authorities provide a project plan, with clearly indicated milestones, to the IMF. The BHAS has agreed to establish this plan (benchmark action). Future IMF TA will focus on the classification of specific public sector units, as requested by BHAS. The mission also recommends establishing a working group—comprised of representatives from the ministries of finance, statistical institutes, and CBBH— to be responsible for the classification of public sector units. The BHAS has agreed to coordinate this process (benchmark action).

Regarding public sector debt data, it can be concluded that the Central Bank of Bosnia and Herzegovina (CBBH) is in a good starting position to compile such statistics. The results of its work on financial balance sheets should enable the CBBH to produce general government debt data in a relatively short term. The mission recommends that the CBBH compile provisional quarterly debt data for the public sector and general government based on the currently available data, thus excluding other accounts payables (on a quarterly basis) but including domestic loans for public enterprises (benchmark action).

The mission is very grateful for the cooperation of the institutions that were involved in this diagnostic mission, and the information provided by them. The hospitality of the head of the government finance unit of the CBBH is especially appreciated.

Action Plan

article image

Project Objectives

article image

Project Outputs

article image
article image
Priority Scale: H - High M - Medium

Planned and Expected Technical Assistance

article image

I. Introduction

A. Mission Objectives and Tasks

1. The objective of the 18-month Switzerland State Secretariat for Economic Affairs-funded government finance statistics (GFS) project is to strengthen capacities of the five participating countries in the compilation and dissemination of GFS data based on the latest international standards. As all participating countries have applied for European Union (EU) membership, this project supports the implementation of both the Government Finance Statistics Manual 2014 (GFSM 2014) and the European System of National and Regional Accounts (ESA 2010). The focus is on delineating the public sector, developing a full register of the institutional units for dissemination, and improving debt data compilation and dissemination in the Public Sector Debt Statistics Database. The project will also identify priorities for further development of GFS and debt statistics to fill data gaps identified under the project, and help countries prepare time-bound action plans.

2. The main objective of this first technical assistance (TA) mission was to assess the current GFS compilation environment in Bosnia and Herzegovina (BiH), particularly the classification of institutional units and debt data based on the GFSM 2014/ESA 2010 framework, reviewing debt data, and identifying ways in which existing data may be enhanced. The mission

  1. reviewed existing statistical classifications of public sector units;

  2. documented institutional arrangements for GFS and debt data compilation;

  3. reviewed existing data and identified data gaps (as time allowed);

  4. explored the availability of additional source data; and

  5. developed a baseline data improvement plan.

II. Overview of Mission Findings

3. The mission met with officials from the Central Bank of Bosnia and Herzegovina (CBBH), the Agency for Statistics of Bosnia and Herzegovina (BHAS), and the Ministry of Finance (MOF) of BiH to identify existing lists/classifications of institutional units, and assess the existing GFS and public sector debt data compilation processes. The mission found that a full list of public sector units in BiH is missing. This mainly concerns information on public enterprises. Only a very few public enterprises are now included in GFS, but more candidates that should be included in the GFS data were found. The mission was informed on an upcoming EU-financed project on sectorization that should result in a list with general government units1 by end-2016. This is discussed in more detail in Section III. In the last two years, the CBBH has made large progress in the compilation of balance sheets for general government. This facilitates the compilation of public sector debt. The debt structure and source data on debt can be found in Section IV. The mission produced a time bound GFS and public sector debt data improvement plan in cooperation with the CBBH and the BHAS, which can be found in Section V. Planned and expected TA is shown in this section. Preliminary data on general government data can be found in Appendix III. The officials met during the mission are included in Appendix IV.

4. The CBBH is currently responsible for compilation of data of GFS. The BHAS is responsible for the statistical classification of units in BiH in cooperation with the two statistical offices of the entities Republika Srpska (RS) and the Federation of BiH (FBiH). The CBBH also shares data on GFS with the BHAS. The source data for GFS are mainly provided to the CBBH by the MOFs at the central government levels. The cooperation of the different institutions involved in the compilation of GFS could be improved in many respects, especially data sharing. Currently, there is a signed Memorandum of Understanding (MoU) between the CBBH and the BHAS, but cooperation between the two institutions could be intensified to have consistency among all macroeconomic statistics. The BHAS expressed its view that in future it may produce nonfinancial sector accounts according to the ESA. However, in the short term, priority has been given to other projects such as revision of the national accounts according to ESA 2010 and developing regional accounts. The CBBH and the BHAS have not yet agreed on the possible future compilation of statistics related to the excessive deficit procedure, which is mandatory for EU member states, the production of which is encouraged for potential candidate countries. There are no MoUs between the CBBH and the BHAS on the one hand, and the MOFs on the other hand. Although a draft MoU was produced, no agreement could be reached about the final text. The data of the budgetary units are semi-accrual: expenses are (mainly) on an accrual basis, whereas revenues are on a cash basis. Source data on some government units provided to the CBBH are available at an aggregate level, which makes it difficult to assign the correct GFSM 2014 codes to revenues and expenditure. The accounting system also differs in some respects from GFSM 2014 and ESA 2010, which leads to additional data processing at the CBBH.

5. The mission has also been informed on the GFS activities and project outputs by the CBBH since the last TA mission of April 2014. The mission appreciated the progress and the improvements in the data compilation. Some GFSM 2014 recording and classification issues were also discussed with the CBBH during the mission.

III. Institutional Structure

6. BiH is composed of two entities: RS and the FBiH, and the District of Brčko (DB). The two entities, RS and FBiH, have a high degree of autonomy and each comprises about half of the country. Unlike RS, FBiH has 10 cantons. Both entities have municipalities and cities. Many of the tasks commonly observed as the responsibility of the government at the national level are found at the entity level in BiH. For example, tasks related to issues like unemployment, social security, health, and highways are under the responsibility of the entity and cantonal level authorities in BiH. This is also reflected by the budgets, where the budget of the government on the national level (BiH institutions) accounts for about 10 percent; FBiH accounts for 60 percent; and RS accounts for 30 percent.

7. The budgetary central government includes the ministries, agencies, and other administration offices at the BiH level, the RS, the FBiH, the 10 cantons of FBiH, and the DB. The local government subsector is comprised of 139 municipalities and 4 cities from both entities. The subsector social security funds consist of pension funds, unemployment funds, health care funds, and funds for professional rehabilitation and employment of disabled. One fund for care of children is found only in RS. Units of the subsector social security funds are, in many countries, typically found at the national level. This is not the case in BiH, which reflects the high degree of entity autonomy as these units are on the level of entities, the DB, and on the cantonal level.

8. Previous GFS TA missions advised to reclassify the FBiH cantons as state governments. The CBBH has not yet implemented this viewpoint, as it argued that the current classification as central government best fits the administrative structure and the jurisdiction. The latter view is also shared by the MOFs within BiH. The CBBH is also of the view that current classification is in accordance with the GFSM 2014.

9. Extrabudgetary central government is currently comprised of public enterprises for road and reconstruction and maintenance on the entity and cantonal level, and public enterprises for highways on entity levels. However, BiH has many public corporations. Many of these public corporations, such as the railways companies and broadcasting corporation, are mainly subsidized by government, and thus should be reclassified in general government sector after further examination.

10. The production of a list with units classified according to ESA subsectors will be done in a sectorization project funded by the EU in the context of the Instrument for Pre-Accession Assistance (IPA) and with experts from Finland. The BHAS is in charge of this project. The project will start with a first meeting on January 26, 2015 with the external statistical experts and conclude by end-2016. At the request of the mission, the BHAS has agreed with the project board that the classification of public financial and nonfinancial corporations will be included in this project. The classification of the cantons will also be dealt with in this sectorization project.

11. A previous EU-funded project on sectorization of general government units, which concluded at the end of 2014, was only concerned with the classification of general government units according to ESA. The project resulted in a list with about 2000 entities.2 For this list, the statistical institutes received input from the MOFs in BiH. According to the BHAS, the current business register cannot be used to delineate the general government sector. During the mission, it was concluded that most entities on these list are not institutional units, but entities such as schools and hospitals that have already been consolidated within the government accounts, and thus taken into account in current GFS. This should be checked. Public enterprises that qualify as general government units are missing on the list. The CBBH will review the list and report to the IMF on its findings.

12. During the mission, a first attempt was done to identify public enterprises that exist in BiH and to assess provisionally which of them are market and nonmarket producers. A list of public enterprises is provided in Appendix II, including a first rough classification after discussion with the BHAS and the CBBH. The number of units in question and at which government level the units operate is also indicated.

IV. Debt Structure and Source data

13. The general government of BiH does not issue coins and bank notes, and is not involved in financial derivatives. Also, no insurance technical reserves are recorded, as the only pay-as-you-go social security pension schemes are managed by government.

14. General government units (mainly on level of the BiH entities, and for a small part relevant for local government) issue T-bills and long-term debt securities. Information is available on face value, nominal value, and market value. Information is used from government reports, which is consistent with information publicly available on the stock exchange.

15. Loans owed to foreign parties by general government are obtained from the external debt database of the MOF of BiH. Only the MOF of BiH is allowed to engage in transactions of loans by foreign parties (such as the European Investment Bank and commercial banks). These loans are the main part of the debt of BiH. The resulting cash can be transferred to other public sector units leading to the recording of loans provided by BiH to other public sector units in question. Loans are available at face value now. The CBBH is working with the MOF of the BiH institutions on producing data on accrued interest for the external loans. These data may be available soon and enable the valuation of the foreign loans at nominal value according to the Public Sector Debt Statistics: Guide for Compilers and Users.

16. The other accounts payable of general government are obtained from the so-called gross balance sheets, which are part of the public accounts of the general government units. The amounts of other accounts payable are relatively high and it might be that it also involves loans. One of the issues regarding the payables relate to war claims which originate from the war in 1992–95. It should be noted that the general government units apply a mixed cash-accrual accounting system. The expenses are on an accrual basis, but revenues are mainly cash based data. It means that payments made in advance to government by other units are not recorded under other accounts payable.

17. Information on loans and debt securities is also available for general government on a quarterly basis. The same methodology as has been discussed in previous TA missions can be applied as for the annual data. However, no information is available for other accounts payable.

18. For public corporations, information is available on debt instruments. It concerns currency issued by the central bank, SDRs (central bank), and loan liabilities of public nonfinancial corporations. The latter is available on a monthly basis from the monetary statistics, which does not distinguish between public and private financial corporations. It needs to be further examined which nonfinancial public corporations are included in the monetary statistics and if there is also separate information available on public financial corporations. Up to now, no information is available on other accounts payable of public corporations. Information on other accounts payable might become available as a product of an IPA project on financial accounts. This project will start in February 2015 and close by end-2016.

19. Hence, the CBBH can provide information on the quarterly debt in the framework of the Public Sector Debt Statistics Database of the IMF/OECD/World Bank on a short-term basis. It would concern currency, SDRs, debt securities and loans for general government, public nonfinancial corporations, and the central bank (part of the financial corporation subsector). However, classifications of units and valuation of the debt instruments should be examined in a second step.

20. The availability of data on public debt on an annual basis is shown in Figure 1.3 With respect to quarterly data on debt, no information on other accounts payable is available for the whole public sector.

Figure 1.
Figure 1.

Availability of Public Debt Data on an Annual Basis

Citation: IMF Staff Country Reports 2018, 028; 10.5089/9781484340134.002.A001

* Insurance, pensions and standardized guarantee schemes

Appendix I. Work Plan Set Out for the First Mission

Work Plan (Short-term action points)

Central Bank of Bosnia and Herzegovina:

  • Review current list of general government units of previous EU project to check if units from this list are not included in current GFS figures;

  • Make a list of public enterprises that receive government subsidies based on available information used in current GFS compilation process;

  • Meet with experts from IPA project on financial accounts in February;

  • Inform MOFs on diagnostic mission SECO project and organize meeting with MOFs during next TA mission;

  • Compile provisional quarterly debt data for the public sector and general government based on the currently available data.

Agency for Statistics of Bosnia and Herzegovina:

  • Contact MOFs and statistical institutes of entities to establish a body for classification of public sector units, and organize meeting during next TA mission (depending on cooperation other institutions);

  • Meet with experts from IPA project on sectorization in January, have a (draft) project plan for this IPA project and provide to IMF report of this mission.

International Monetary Fund:

  • Organize training/workshop on March 16–20;

  • Available for ad hoc advice.

Appendix II. Draft Institutional Unit List

Units of General Government (included in GFS)

Central government (52 units):

article image

State governments:

article image

Local Governments (143 units):

article image

Public enterprises (need to be classified, rough provisional classification, not yet included in GFS and public debt):

General government units (more than 6 units):

  • 1. Indirect Taxation Authority (1 unit);

  • 2. Public Radio and Television companies (3 units);

  • 3. National Railway companies (2 units, RS and FBiH);

  • 4. Local Urban Development institutions (unknown);

  • 5. Water Management companies (unknown);

  • 6. Forestry Management companies (unknown);

  • 7. Funds for housing (cantonal level).

Public nonfinancial corporations (more than 25 units):

  • 8. Airports (4 units);

  • 9. National Airways company (1 unit);

  • 10. Post companies (2 units, RS and FBiH);

  • 11. Telecom companies (2 units, FBiH);

  • 12. Local Bus companies (many);

  • 13. Harbor (1 unit);

  • 14. Energy Production companies (3 units: 1 RS unit, 2 FBiH units);

  • 15. Energy Network/Infrastructure (1 unit);

  • 16. Energy Distribution companies (many units);

  • 17. Gas companies (1 unit, RS and many local units);

  • 18. Waste companies (many units);

  • 19. Water Supply companies (unknown);

  • 20. Mining corporations (ca. 10 units);

  • 21. Public newspapers (Gazette, government announcements).

Public financial corporations (10 units):

  • 22. Supervising units for the financial sector (2 units, RS and FBiH);

  • 23. Supervisory Security commissions (2 units, RS and FBiH);

  • 24. Supervising Insurance units (3 units);

  • 25. Balkan Bank (1 unit, RS);

  • 26. Development Banks (2 units, RS and FBiH).

Appendix III. Public Sector Debt Data

Debt general government at face value (provisonal data, not yet published)

in mn KM

article image

Appendix IV. List of Officials Met during the Mission

article image
1

At the request of the IMF, the scope of the project has been extended to also identify public financial and nonfinancial corporations.

2

The list is not available in English.

3

Dark green means data are available; light green, data are partially available; red, no data are available; black, not applicable.

Same Series

Other IMF Content

Other Publishers

Cover IMF Staff Country Reports
Bosnia and Herzegovina: Technical Assistance Report-Government Finance Statistics Diagnostic Mission-Institutional Units and Public Sector Debt
Author: International Monetary Fund. Statistics Dept.
Volume/Issue:
Volume 2018: Issue 028
Publisher:
International Monetary Fund
ISBN:
9781484340134
ISSN:
1934-7685
Pages:
19
DOI:
https://doi.org/10.5089/9781484340134.002

Availability of Public Debt Data on an Annual Basis