The High Representative of the International Community in Bosnia and Herzegovina (BiH), Christian Schmidt, imposed a decision on July 17th according to which the 56 million euro debt to Viadukt would be paid from fuel tolls, from the part that should have been paid into the budget of the Republika Srpska (RS) entity.
In another decision, Schmidt secured money for the Central Election Commission of Bosnia and Herzegovina to cover all costs of purchasing election technologies, such as ballot scanners, which should be introduced throughout the country by the General Elections scheduled for 2026.
Schmidt, using the Bonn powers under which he can intervene in domestic legislation, made these two decisions by imposing amendments to the Law on Amendments to the Law on Financing Institutions.
How did the RS debt arise that the state of BiH should pay?
The Slovenian company Viaduct has initiated arbitration proceedings against BiH because the Government of Republika Srpska awarded a concession to its own Elektroprivreda RS in 2013, which jeopardized an earlier Slovenian hydroelectric power plant project on the Vrbas River.
Following the ruling of the ICSID, an arbitration court in Washington, in 2022, Viaduct initiated proceedings to seize BiH state assets in the country and abroad to settle the debt, including the assets of the BiH Air Navigation Services Agency (BHANSA).
Enforcement of the assets of the Central Bank of BiH, namely its real estate in several cities in BiH, was also requested.
For seven years, authorities in Bosnia and Herzegovina have been unable to reach an agreement on the distribution of more than 160 million euros from the collected tolls paid with every liter of fuel sold, which should be used to finance the construction of highways and roads throughout the country.
The distribution of this revenue between the entities of the Federation of BiH and Republika Srpska, and the Brčko District of BiH as a separate administrative unit, could not be agreed upon by the state and two entity finance ministers. They form the Board of Directors of the Indirect Taxation Authority of BiH, which collects money from value added tax (VAT), customs duties, excise duties and other indirect taxes.
According to earlier statements by the Minister of Finance of the Federation of BiH, Toni Kraljević, the representatives of the (RS) requested a larger amount than, according to estimates from the Federation of BiH, was collected in road tolls in the RS area.
At the same time, the authorities of Republika Srpska and its representatives in the state government refused to comply with the arbitration decisions in the Viaduct case, despite the entity's obligations under the 2017 Agreement with the Council of Ministers of BiH on mutual rights and obligations in that proceeding.
"This share [of the tolls that will be used to pay off the debt to Viaduct] is not intended for RS budget expenditures and has no impact on RS budgetary stability. It will not affect any payments or services for RS citizens," High Representative Christian Schmidt said.
He explained that the funds will be transferred to the Ministry of Finance and Treasury of BiH so that the Ministry can make the payment to Viaduct.
"Or, if there are other thoughts or indications that it should be done through some new negotiations, as I heard, it can be done that way. Great, that's their job, but the state doesn't pay for it, but the Republika Srpska," added Schmidt.
What will the profit of the Central Bank of BiH be used for?
According to the High Representative's decision, part of the profit of the Central Bank of BiH, which amounted to around 2024 million euros in 200, will be paid into the state treasury account, and the minister or his deputy will forward this money to the account of the Central Election Commission of BiH for the implementation of the project to introduce new technologies.
The Central Election Commission of BiH previously estimated that it would need around 59 million euros to introduce new election technologies.
With a previously imposed decision in July 2022, Šmit amended the BiH Election Law, initiating the introduction of biometric voter data scanners and ballot scanners, as well as other necessary equipment. The pilot project was implemented in local elections that same year.
Since the draft budget for 2025, which has not yet been adopted, did not provide for these funds, Schmidt decided to secure them from the profits of the Central Bank of BiH.
The remaining money will be transferred to the account of the Federation of BiH entity, in accordance with the law regulating the distribution of profits of the Central Bank of BiH, and the prescribed portion will be retained by this bank.
The RS authorities, as well as the state finance minister Srđan Amidžić, who comes from the ruling Alliance of Independent Social Democrats in that entity, proposed that the debt to Viaduct be paid off from the profits of the Central Bank of BiH, which was rejected by representatives of the other entity, the Federation of BiH.
"According to the law, the profit of the Central Bank of BiH must be used for the needs of the state, not for the needs of the entities. With this decision of mine, the Central Bank of BiH, as an extremely respected central bank internationally, can now make its profit available to state institutions. This will finance the costs of purchasing electoral technologies for their introduction in the 2026 general elections, which has been expected for a long time," said Schmidt.
BiH is facing several more claims from investment arbitrations based on bilateral investment agreements, which involve possible claims for monetary compensation in an amount exceeding 1,3 billion euros.
The High Representative finally called on authorities at all levels to fulfill their obligations and immediately adopt the state budget.
He noted that "we should not forget other institutions, such as cultural institutions" that have been waiting for years for a resolution to their legal and financial status.
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