IMF WARNS BOSNIA ON SOARING PRICES AND INTEREST RATES

SARAJEVO, Bosnia (January 20,2008) - The International Monetary Fund (IMF) said that a surge in food prices and interest rates charged on loans in Bosnia may put pressure on stretched household budgets and slow consumer spending and investments.

"As food bills increase, households have less money to spend on other goods and services...which is especially true in Bosnia as consumption is a key economic driver," the IMF said in its Macroeconomic Newsletter.

It said that such a development could prevent Bosnians from servicing their debts and lead banks to ration new loans.

Prices of basic food staples in Bosnia have increased since last year due to a severe summer drought and surging prices of oil on the global market.

Some food items like butter and bread have increased by more than 80 and 40 percent respectively, while fuel and electricity prices are also expected to rise in coming weeks.

"To help mitigate inflation risks in the near term, public and private sector wage increases will need to be kept in line with productivity growth," the IMF said.

Bosnia's year-on-year inflation was 4.9 percent in December, while the foreign trade gap reached a record high of 8 billion Bosnian Marks (6 billion US Dollars).

The Bosnian GDP grew 7 percent due to a steady rise in industrial output and expansion in construction and services.

The IMF also warned that the current system of social benefits could not meet the needs of the most vulnerable social groups and urged the Bosnian authorities to design a well-targeted and funded benefit system.

Bosnia's trade unions have threatened to stage mass protests against soaring food prices and the government's failure to tackle the problem.

They also urged the government to cut the current 17 percent value added tax (VAT) to 12 percent and abolish the tax on food staples.

But the IMF said that strategies such as reducing the VAT or introducing exemptions are unlikely to provide targeted relief to the most needy, and would add further complexity to the tax system.

"The looming economic challenges underscore the importance of undertaking economic reform and adopting prudent fiscal policies," it added.

But the IMF also said that higher food prices could stimulate domestic agriculture production and import substitution, helping to ease the pressure in the long run.

BOSNIAN HELSINKI COMMITTEE: BOSNIAN AUTHORITIES HAVE DONE NOTHING TO URGE UNITED STATES TO RELEASE SIX BOSNIAN CITIZENS FROM GUANTANAMO PRISON

SARAJEVO, Bosnia (January 20,2008) – The Bosnian Helsinki Committee for Human Rights urged, on the occasion of the 6th anniversary of the detention of six Bosnian citizens of Algerian origin (the Algerian group) by the US government,the Bosnian authorities to do everything in their power to protect human rights of six Bosnian citizens.

The Bosnian Helsinki Committee announced that the Bosnian authorities need to develop the citizenship revision mechanisms, which will be based on human rights.

The Bosnian Helsinki Committee reminded that numerous international instances, both governmental and nongovernmental, as well as the European Parliament and the Council of Europe, unanimously announced that the act of detention of the so-called Algerian group is a harsh breech of human rights and liberties.

”The most serious offences that were made on the occasion are illegal seizure of citizenship and extradition of persons to a country favouring death penalty and implementing torture methods and other inhumane and humiliating actions”, the Bosnian Helsinki Committee announced.

It has also been added that Bosnia has done nothing except for things that have been the state obligation to urge the Us government to free six detained Bosnian citizens.

The Committee expresses concerns over the fact that the process of seizure of citizenship is continued.

”We hereby condemn the extraditions announced that are not in accordance with the European Human Rights Convention and Convention on the Rights of children”, the Bosnian Helsinki Committee for Human Rights announced.

On January 17 2002, the Bosnian authorities extradited six Bosnian citizens of Algerian origin to the US authorities. They are all still imprisoned at the Gunatanamo prison.

STRENGTHENING OF HIGHER EDUCATION IN BOSNIA PROJECT COMPLETED

SARAJEVO, Bosnia (January 20,2008) – Representatives of the European Commission and the Council of Europe and the Bosnian state institutions marked in the Bosnian capital Sarajevo the completion of a joint project “Strengthening of Higher Education in Bosnia”.

On that occasion, an entire-day conference followed and the results of the projects were presented. The project was initiated in December 2005. It was based on the seven adopted strategy and guidelines for implementation of the Bologna reforms in Bosnia.

These documents were developed by workgroups which included all public universities and students in Bosnia, as well as state and entity ministries and six international experts from the European Council.

The documents were adopted by the Bosnian Government on December 27 2007.

The project focused on three important sectors – recognition of diplomas and study periods, ensuring quality and credentials, as well as the frame for higher education qualifications in Bosnia.

The Bosnian Minister of Civil Affairs Sredoje Novic emphasized at a press conference that this act marked the first phase of completion of the project. He holds important that the seven ministries of education in Bosnia unanimously adopted the document.

This document became obliging for all the universities in Bosnia. Novic expects that in the first four moths of 2008, agency for higher education should be formed, as well as the diploma recognition centre. Money has been ensured from the Bosnian state budget for that purpose.

He also expects that the higher education reform in Bosnia should be completed by the end of 2010 and emphasized that most of the work remains in the hands of universities and professors.

Council of Europe representative Sjur Berger is of the opinion that the implementation of this project will enable Bosnia to become a full-time member of the European system of education. Also, its importance is seen in the fact that a quality higher education is the key for progress and future of Bosnia.

He added, however, that the most difficult part of the implementation of the reform is to come and that the Bosnian state should fully support the implementation at all levels.

CONSTRUCTION OF 5C HIGHWAY BEGINS

SARAJEVO, Bosnia (January 20,2008) - The Bosnian Minister of Communications and Traffic Bozo Ljubic had a meeting in the Bosnian capital Sarajevo with the project managers from all companies in charge of construction of the 5C highway.

He also announced the official beginning of construction of those projects.All the activities are to be completed by 2014.

As announced, some companies have already started the project development activities and 18 months is the deadline for completion of the project, apart for the LOT 4 (the Zenica detour), which is to be completed in 30 months.

The seven contracts are worth 30 million Bosnian Marks. The Bosnian Ministry of Communications and Traffic is to monitor the activities.

”Development of the main projects for the construction of the 5 – C corridor enables us to obtain all the consents necessary within 18 months. We will be given assistance in the process of electing the executors of activities and potential investors”, Minister Ljubic stated and added that he expects all the work will be completed in accordance to plans.

Minister Ljubic signed December 7 in Sarajevo agreements with representatives of companies who will implement the main projects at the 5 – C corridor.

Agreements singed at that point were: LOTs 1, 2 and 3 for the Svilaj – Doboj South (63 kilometres), LOT 4 (the Zenica detour) (9 kilometres) and LOTs 6 and 7 Mostar North – Bijaca (57 kilometres). However the LOT 5 contract was not signed on the occasion for the Mostar North – Mostar South section because one of the participants at the tender complained.

LOTs 1,3,6 and 7 will be conducted by Croatia’s Institute of Construction Activities and the IPSA Institute from Sarajevo, LOT 2 will be conducted by the Lotti company from Rome and LOT 4 will be conducted by the Inox Company from Madrid.

HEAD OF EUPM VINCENZO COPPOLA MET WITH NEW DIRECTOR OF SIPA MIRKO LUJIC

SARAJEVO, Bosnia (January 20,2008) - Head of the European Union Police Mission in Bosnia (EUPM), Brigadier General Vincenzo Coppola met the newly appointed Director of the Bosnian State Investigation and Protection Agency Mirko Lujic.

General Coppola congratulated the new director on his post and pointed out that he is facing big challenges and expectations. They agreed that SIPA, as an agency for law enforcement at the state level, has to be continually developed so that it would be able to fulfil all its tasks.

“Organized crime is a serious issue in Bosnia which negatively affects not only the economic and security situation of BiH but also the entire region” said General Coppola.

“SIPA has made good progress in the past and I am particularly pleased with the results of the Financial Investigation Department” stressed Coppola.

“Other areas, however, need to be further developed and I expect the Director to rigorously drive the agency forward and increase its capabilities,” he said.

The newly appointed Director of the Bosnian State Investigation and Protection Agency Mirko Lujic stated that the fight against organized crime was SIPA’s priority:

“SIPA is still facing staffing problems especially at senior management level” said Lujic.

“I am, however, convinced that we will be able to address this issue in a short period of time. Even with limited resources SIPA is bringing good results and we will see more in the future.”

General Coppola emphasized that the EU Police Mission will continue to give full support to SIPA.

He reassured the Director that the EU Police Mission’s international police officers will remain at SIPA’s disposal to share their expertise and pro-actively advise, monitor and inspect the agency.

BOSNIAN STATE BUDGET REDUCED BY 40 MILLION BOSNIAN MARKS

SARAJEVO, Bosnia (January 20,2008) - The Bosnian Government adopted a corrected state budget, which amounts to 1,186,357,560 Bosnian Marks, which is 5 million Bosnian Marks less than in the last version of the draft.

Bosnia's Prime Minister Nikola Spiric explained that the Bosnian State Government obtained the 5 million Bosnian Marks, by which the state budget was reduced, by a linear reduction of material costs of all users of the budget by 2.7 percent.

The state budget will be reduced by another 35 million Bosnian Marks, for the budget from the unique account of the Bosnian Tax Administration. Spiric pointed out that this kind of budget ensures constant financing of the Bosnian state institutions and the started reforms.

The Bosnian Government also obliged to ensure the additional funds for the implementation of the revised strategy on return.

BOSNIAN TAX ADMINISTRATION PLANS TO COLLECT 4,83 BILLION BOSNIAN MARKS IN 2008

SARAJEVO, Bosnia (January 20,2008) - The Bosnian Indirect Taxation Authority plans to collect 4.83 billion Bosnian Marks, net, in 2008, which would be by 165 million Bosnian Marks more than it collected in the previous year, its spokesman announced.

The revenue forecast is seen as highly ambitious, especially since lower revenues are expected from taxes. According to the same source, the Bosnian Indirect Taxation Authority collected 250 million Bosnian Marks from indirect taxes (VAT, import tariffs, excises and tolls) in the first 17 days of 2008.