BiH Must Address Impending Budget
Crisis

As you know, in Brussels last week the Steering Board of the Peace
Implementation Council called on the State and Entity authorities to address the
unsustainable cost of governance – now consuming more than half of the national
economic production. The sprawling administrative structure means that citizens
are paying too much money for too little service. In any case, there isn’t
enough money coming into the government coffers to maintain the huge
administrative structure.

If this issue is not addressed in the first half of 2005, it may be
impossible by as early as the end of this year for the authorities to meet all
their obligations in regard to civil servants’ salaries.

Tomorrow afternoon at the OHR the three finance ministers will convene the
first meeting of a Fiscal Sustainability Working Group.   This Working
Group will develop recommendations for the finance ministers by this spring on
how to reduce the cost and improve the quality of government at all levels in
BiH. In addition to the finance ministers themselves, the Working Group will
consist of experts from the finance ministries, the cantons, and the
universities, as well as representatives of the IMF and World Bank.  PDHR
Hays will play a coordinating role and OHR Secretariat.

The Working Group will draw up proposals, based on technical criteria, on how
savings can be acheived. It will then be for the governments and parliaments to
decide on how to act – but they will have to act quickly and effectively if BiH
is to avoid a fiscal meltdown in the next 18 months.

There will be a media opportunity in the course of this meeting. We will be
releasing details in a media advisory later today.

The Police Want Change

The High Representative Paddy Ashdown is at the moment in Tesanj. This
morning he joined police officers patrolling between Usora and Tesanj. The High
Representative was yesterday in Doboj meeting police in their regular duties.
The High Representative wants to hear the views of police on the police reform,
in light of the publication of the recommendations of Chairman of the Police
Reform Commission’s report last week. The current policing system needs reform
and everyone agrees it does not function properly.  The voice of citizens,
policemen and policewomen should be heard as well.

At 12.00 the High Representative will be participating live in a local
television programme on TV Amna, where he will outline his findings over the
last two days.

As you know the PRC report report recommends establishing a single structure
for policing that, if implemented, is designed to provide the citizens of BiH
with a more effective and responsive police force that is financially
sustainable and free from political interference. Police restructuring is also a
requirement for moving towards a Stabilisation and Association Agreement with
the EU.

Currently, BiH police forces are fragmented and limited in movement leaving
enough space and time for criminals to operate.