Reflecting a long-standing policy of transferring responsibilities to the BiH Authorities, the Economics Department has been reorganized as an Economic Transition Unit (ETU).
With fewer members of staff than the old Economics Department, the ETU is tightly focused on promoting and coordinating economic reforms that are crucial to the fiscal sustainability and broad economic development of BiH and necessary for its EU integration. All of these activities have a bearing on improving BiH’s fiscal architecture and making its business environment more attractive to international and domestic investors.
As part of a general effort to put BiH on a more secure macroeconomic footing and enable the country to finance its public institutions, the ETU is helping to improve fiscal coordination among the State, Entities and Brcko District. It is also assisting in creating the legal framework for the National Fiscal Council and is playing a key coordinating role in the effort to rationalize public salaries. Reducing the overall wage bill in the public sector is necessary in order to create fiscal leeway for further State-building.
Additional activities include monitoring the implementation of the VAT system and helping to complete the reform of BiH’s direct tax system.
The adoption of new business registration laws in 2005 represented a significant step forward in establishing a business environment in BiH that will attract the investment that is needed in order to create jobs. The enactment of Bankruptcy legislation and laws designed to improve corporate governance have also contributed to a notable improvement in the business environment. However, only full implementation of these laws as well as corporate restructuring will bring real benefits to new businesses and ensure private sector development. The ETU is consequently engaged in monitoring the implementation and impact of this reform legislation.
In this respect, business associations and chambers will have to raise their profiles and become the advocate for a better business environment. The ETU will promote and publicly support this development to establish a strong voice for economic reform and businesses' interest.
The Indirect Tax Authority was established to integrate the formerly fractured and inefficient customs system and to implement VAT as of 1 January 2006. Monitoring its implementation remains a core responsibility of the ETU in 2006.
The ETU is also involved in helping to complete the legal framework of the railway sector. This means finalizing the revised Agreement on the BiH Railway Public Corporation.
In the energy sector, the ETU’s involvement is being systematically reduced as the relevant institutions – Regulators, Independent Systems Operator, Transmission Company – are established. However, it will continue to monitor the energy sector’s integration in the regional energy market.
Another important issue in the course of 2006 is centralizing banking supervision following the successful restructuring of the banking industry, as well as coordinating efforts to promote Small and Medium Enterprises.
