Budgetary responses to a global pandemic in Bosnia and Herzegovina

Abstract

PurposeThe purpose of this research is to show the impact of the pandemic on the budget of Bosnia and Herzegovina (BiH) as a developing country. It also aims to give an answer as to how BiH politicians used budgetary measures to respond to the pandemic and what key economic factors influenced the design of those measures.Design/methodology/approachThe study conducted detailed analyses of budgets at level of central government, as well as other publicly available documents of relevant governments bodies, international statistics and media reports up to the end of June 2020.FindingsDecline of economic activity and a number of budgetary measures adopted by central BiH authorities under the influence of characteristics of BiH economy, characteristics of public finance and available source of funding, resulted in less government revenues and sizable government expenditures to assist the economy and public health system. The fiscal stability achieved over the past years and low level of debt allowed BiH authorities to build a deficit into the rebalanced budget. Most of the deficit was covered with the International Monetary Fund (IMF) assistance and in part also through internal borrowing and with surpluses/ deferral revenues from the previous year.Research limitations/implicationsAt this point, it is impossible to predict what kind of impact the pandemic-related crisis will have on BiH public finances and whether further economic interventions will be needed.Originality/valueThis paper shows the measures that developing country governments dependent on external funding sources can take in times of crisis and what their impact is on the budget.