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Background Payments Bureaus have multiple functions left over from the Yugoslav era, including payment operations, tax collection and distribution, statistics collection, treasury services, cash management, accounting services, interaction with Financial Police, and lending. This confluence of powers is too concentrated, having a negative effect on both the public and private sectors and chokes business development. Reporting and cash deposit requirements are onerous for business, discouraging investors. Their activities are not publicly accountable. The monopoly powers of the bureau and the high fees and costs of operations as well as opacity in their operations lead to corruption and also constitute a serious impediment to the growth of private markets. Madrid Commitments, Objectives "The Council emphasises the need to ensure better governance and full transparency in public finances. To that effect the Council urges the Entities:
- to co-operate fully and without reservation with the international community on a comprehensive and coherent structural reform of the payments bureaus. The reform must cover the payments clearing functions, the treasury functions, information and accounts for tax compliance and other key aspects. Detailed functional and financial audits of the payment system should begin in January 1999 and be completed by June 1999. A detailed and final plan for the reform of the payment system and a timetable for the implementation of this plan will be prepared and agreed upon with the international community by June 1999. The implementation of the entire reform program will be completed by 31 December 2000. This will coincide with the abolition of the present payment bureaus by that date;" Rapidly move functions now undertaken by Payments Bureaus to appropriate government and private sector institutions by making the payments system publicly accountable, creating regulatory agencies for payments systems, transferring inter-Entity settlements to the Central Bank, ending monopoly on payments processing, organizing alternative clearing houses, terminating the treasury operations in the Payments Bureaus, developing tax compliance and administration systems, transferring reporting requirements to Securities Commissions, developing inter-bank clearing and settlement mechanisms, and abolishing the requirement that all businesses have accounts with the Payments Bureaus. Present situation - progress to date Good progress has been made in reform of the Payment Bureaus (PBs). Amendments to the Federation Law on the Internal Payment System were prepared by the Central Bank of Bosnia and Herzegovina (CBBH) and the International Advisory Group on Payment Bureaus (IMF, USAID, OHR, EC, CAFAO, US Treasury, and the World Bank). In both the Federation and Republika Srpska, a Governing Board is being established to oversee the process of dismantling and finally liquidating the PBs. There will be one Governing Board in each Entity. The Boards will have three members, nominated by the Prime Minister, the Minister of Finance, and the Banking Agency of the respective Entity. An expert team began work on a functional audit of the PBs. The purpose is to provide the information needed to design and implement the transformation of the functions of the PBs to the appropriate (public and/or private) institutions. For OHR email addresses and other contact information, please click the Contacts heading. USAID: Mike Sarhan World Bank: Elaine Patterson Funding needs |
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Additional information, Remarks: This reform is fundamental.
Background Given extremely low level of confidence in the banking system, the entity authorities have agreed with the World Bank to establish a deposit insurance agency for private or privatizing banks; legislation is being passed. Technical assistance is required to finance the establishment of the agency and its initial running. Madrid Commitments, Objectives A sound banking sector is a prerequisite for creating an attractive environment for foreign and domestic investment. Develop a banking sector that can boost public confidence and support private enterprises. Present situation - progress to date In order to mobilize local savings, donors need to assist in starting up the deposit insurance facility for each entity. Finally, efforts are needed to encourage one or two European bank branches to establish in BiH. For OHR email addresses and other contact information, please click the Contacts heading. EBRD: Ms. Hargitai USAID: Mike Sarhan World Bank: Elaine Patterson Funding needs |
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Additional information, Remarks: This is an urgent need for 1999. Several donors are active in this area (e.g., EBRD in twinning with two banks, EU in training and banking association development, USAID in training) but not on the scale needed to achieve the objectives by the year 2000.
Background The situation of the Republika Srpska Banking Agency is critical in regards to its ongoing operations, its initial capital and operating budget, and its potential independence and technical capability. The present source of funding is from interest received on loans granted to banks by the former National Bank of Republika Srpska, and it is limited in amount and time. The agency is currently paying staff at one-third the budgeted level and qualified staff members are starting to take other jobs. Dependence on the government budget for the operation of this important agency is risky with so many uncertainties and competing pressures. Madrid Commitments, Objectives A strong banking sector is fundamental to attracting foreign investment and supporting a strong market economy. Provide operational support for the Republika Srpska Banking Agency for three years. Present situation - progress to date The project will support the Republika Srpska Banking Agency's present operational needs to be set up properly with the appropriate equipment (computers etc.). The Agency will be provided with qualified contracted staff to work with local staff to conduct various activities including bank examinations, installation and maintenance of systems for unified bank reports and off-site bank reviews. For OHR email addresses and other contact information, please click the Contacts heading. USAID: Mike Sarhan Funding needs |
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Additional information, Remarks:
Background To ensure the sustainability of economic reforms and to shield the vulnerable groups in the transition process, it is essential that a comprehensive anti-poverty strategy be developed rapidly and then implemented. This requires not only a searching examination of the efficiency and equity of public expenditures, but also specific programs such as pensions and health care and child support and the development of a safety net. Given the close relationship of poverty to earnings and employment, the labor market also needs to be studied, with a view to making it more flexible and to re-writing the labor code. Madrid Commitments, Objectives Develop a strategy to fight poverty, including social protection for vulnerable elements of society by September 1999. To support the development of policy levers of a coherent and efficient strategy, design and implement surveys that measure levels of poverty, delineate the core group of unemployed and identify the vulnerable groups. Form the labor market perspective, effect necessary labor laws that harmonize the environment in both Entities. Present situation - progress to date The World Bank is already working on some of the issues. The ILO has initiated efforts on a new Labor Code for the Federation, but lacks funding. For OHR email addresses and other contact information, please click the Contacts heading. World Bank: Elaine Patterson Funding needs |
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Additional information, Remarks:
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