Schmidt decided that RS would pay the debt to Viadukt.

The High Representative for Bosnia and Herzegovina yesterday made a decision resolving the long-standing state debt that has blocked the 2025 budget and deepened the political crisis, but Serbian officials rejected his move, which portends further upheaval.

Christian Schmidt, using his powers to intervene in legislation and finances, decided that the debt would be paid from the portion of toll revenue that belongs to the Republika Srpska, and stated that his final decision would take effect immediately.

Serbian officials - who believe that the debt to the Slovenian company Viadukt should be repaid from the profits of the Central Bank of Bosnia and Herzegovina - said that Schmidt's imposition of the decision undermines the complex balance of power in the already fragile state.

The President of Republika Srpska (RS) Milorad Dodik stated yesterday in Banja Luka that Schmidt's decisions are destroying Bosnia and Herzegovina.

"Kristijan Šmit is destroying BiH and that means the collapse of European policy in BiH, which advocates other principles and standards, not arbitrariness and anti-constitutional behavior," Dodik said. He reiterated that Šmit is not the legally elected High Representative for the RS in the UN Security Council, that he has no right to make decisions, and that everything he does is "speculative and harmful."

Republika Srpska incurred debt to the Viadukt company after terminating a contract to build a hydroelectric power plant in 2013. The company sued the regional government before the Washington-based International Center for Settlement of Investment Disputes, Christian Schmitt stated in his decision.

In April 2022, that body ruled that BiH as a state should pay Viadukt almost 80 million convertible marks ($47,4 million), and with interest, the amount has grown to around 120 million marks to date, Schmidt added.

The Bosniak and Croat members of the tripartite Presidency of BiH are refusing to approve the state budget for 2025 until it is clarified how the debt will be settled.

The blockade is part of a broader political crisis that erupted after Milorad Dodik was sentenced in February to a year in prison and a six-year ban from politics for disobeying Schmidt's decisions. Dodik has appealed the verdict.

Schmidt decided yesterday that 120 million marks from the part of the toll revenue that belongs to the RS will be transferred to the state treasury to settle the claims of Viadukt. “This approach is in line with the principle that whoever incurred the debt must pay it,” he said.

In a separate decision, Schmidt stated that now the Central Bank's profits can also be used to improve voting systems ahead of the general elections planned for 2026.