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Bosnian region passes 2016 budget, includes pensions payments


    BANJA LUKA, Bosnia (Reuters) - Bosnia's autonomous Serb Republic approved a 2016 budget of 3.13 billion Bosnian marka (1 billion pounds) on Wednesday, an increase of 50.1 percent from this year's revised budget after the pension fund was included in the budget figures.

    The adoption of the 2016 budget and new labour laws by Bosnia's two regions was the main condition set by the International Monetary Fund (IMF) to continue talks on a new loan deal for the Balkan country, after the previous one expired in June.

    Finance Minister Milan Tegeltija said that the budget was designed based on a projection of a 58 percent rise in tax revenues, which will also include 779 million marka in contributions for pension payments.

    As of next year, pension contributions paid by companies will go into a treasury account -- as part of the government's response to address shortfalls in the existing pension fund -- and will thus become part of the regional budget.

    Indirect taxes, the main source of revenue for the region which include sales tax, value-added tax or goods and service taxes, are set to rise 5.5 percent to 1.14 billion marka, Tegeltija said.

    The budget also envisaged a 12.7 percent rise in non-tax revenues, based on expectations of higher dividends from public companies and financial institutions. The financing, including debt issues and loans, is set at 659 million marka.

    On the spending side, the debt payment is projected at 669 million marka, 31.2 percent up from this year. Social payments amount to 1 billion marka after including pension payments, while a wage bill increased 2.4 percent to 723 million marka.

    "Both revenues and spending were designed to support liquidity of the budget and stability of Republika Srpska," Tegeltija told the parliament, adding the budget will have a 10. 7 million marka surplus which will go for the payment of debt.

    Opposition lawmakers criticised the budget as debt-ridden, with some saying that 44 percent of original revenues would be used to pay debt.

    The parliament also adopted economic policy for 2016, under which the region's output is seen to grow 2.4 percent and which includes a series of social-economic reforms requested from Bosnia by the European Union for closer ties with the bloc.

    (Reporting by Gordana Katana, writing by Daria Sito-Sucic; Editing by Dominic Evans)