BANJA LUKA, Bosnia (Reuters) - Bosnia’s autonomous Serb Republic passed a restrictive 2017 budget of 3.2 billion Bosnian marka ($1.7 billion) early on Saturday, up 2.3 percent from this year and with a meagre surplus which will be used to cover a mounting debt.
Passing the budget was a key condition set by the International Monetary Fund to unlock cash under its 553 million euro ($576.72 million) loan deal for Bosnia. It was approved with 45 votes for and 20 against in the 83-seat regional parliament.
The budget sees tax revenues rising 3.5 percent from this year, to 2.37 billion marka, while non-tax revenues are seen up 10.7 percent to 221.4 million marka, Finance Minister Zoran Tageltija said.
“The government is determined to maintain restrictive public spending in order to preserve the stable financial system and the budget balance, and increase control of spending,” Tageltija told lawmakers.
Some 2.4 billion marka of spending is planned while debt servicing costs will be 650 million marka.
The budget anticipates external financing of 609 million marka, of which 302 million will come from selling domestic debt, 220.7 million from international loans and 84.4 million from other financial earnings.
The budget surplus of 67.1 million marka will go to cover debts, Tageltija said.
The parliament also passed a law cutting wages by 0.7 percent despite protests on Thursday by unions representing civil servants, police, and workers in health and education. The government said the cuts were needed to save jobs.
The parliament also adopted an economic reform plan for 2017-2019, under which the region’s output is projected to grow about 3 percent in 2017. It includes a series of social-economic reforms requested from Bosnia by the European Union for closer ties with the bloc.
Reporting by Gordana Katana and Daria Sito-Sucic; Editing by Catherine Evans