SARAJEVO, Bosnia and Herzegovina, May 8, 2007 – At a workshop organized today in Sarajevo, the World Bank presented its Fiduciary Update report to the BH government officials and key partner organizations. This report maps various developments in 2006 and provides suggestions on how to implement remaining reforms. This report is intended to support the dialogue with the governments and donors on strengthening the public financial management in BH and help design programs to build financial management and procurement capacity. This way, the Fiduciary Update may also help the authorities in assessing existing and future challenges and in identifying actions required to deal with them in a cost-effective manner. “Bosnia and Herzegovina has made good progress in establishing modern public financial management institutions and systems since the war ended in 1995. Yet many challenges remain,” says the report. “While international financial institutions, donors, and the Office of High Representative (OHR) played important roles in leading the reform process, the efforts and commitment of BH were critical to success.” The report says that fiscal policy remains fragmented among the State, the two Entities, and the Brcko District. In this situation, the establishment of an intergovernmental Fiscal Council is an important first step toward improving fiscal coordination among the governments. In future, the Fiscal Council should be vested with sufficient authority to make binding decisions. The Fiduciary Update also finds that the automated treasury system in the State and the two Entities has been the key to improved budget execution and cash management since 2002. This has improved control and discipline in the budget execution system, and improved overall cash management across the State and Entities. However, extra-budgetary funds (particularly health insurance and pension funds) and municipalities should also be brought into the system, as these bodies command significant resources. The Fiduciary Update also analysis the situation with strategic planning, public procurement, auditing and taxation system, and concludes that despite numerous challenges and even shortcomings, there is a good foundation for strong public financial management in Bosnia and Herzegovina. The report was based on interviews with public authorities and a detailed analysis of the laws and other relevant information. Government counterparts fully supported the Fiduciary Update missions and engaged with the Fiduciary Update team in a comprehensive dialogue. |
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