Ashdown to stop public sector wages, pensions hikes in Bosnia

AFP ^ | November 6, 2003

[joan]

SARAJEVO, Nov 6 (AFP) - The top international representative in Bosnia warned Thursday he would stop an increase in public spending by Bosnian Serbs to prevent the country losing the support of the world's monetary institutions.

"Don't commit financial suicide. Step back now. If you don't than I will be forced to intervene to prevent you from destroying this country's chances of a better future," Paddy Ashdown told a news conference, directing his message to the Bosnian Serb government.

He was referring to its attempt to buy social peace by raising public sector wages and pensions by 20 percent with effect from next week.

It could end Bosnia's stand-by arrangement with the International Monetary Fund (IMF) and ultimately jeopardise assistance worth 100 million euros (114 million dollars) from other financial institutions, he warned.

Ashdown has the authority to cancel government decisions, impose laws and sack local officials under sweeping powers bestowed on his office by the peace accord that ended Bosnia's 1992-95 war.

Since that war Bosnia has been made up of the Serbs' Republika Srpska (RS) and the Muslim-Croat Federation, each having its own government, parliament, army and police forces. The two are linked by weak central institutions.

The Bosnian Serb government last month announced the 20 percent increase in payments under strong pressure from labour unions which threatened a general strike and following pensioners' mass protests.

The decision was made despite an IMF warning that it breached the terms of the stand-by arrangement.

An average monthly salary in Bosnia amounts to some 200 euros (228 dollars) while an average pension is roughly half that amount.

The IMF arrangement requires strict fiscal discipline, provides crucial budgetary support to the entire country and is seen as a key to other international monetary institutions' aid.

[joan]

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