Dear President of the Republic of Srpska,
Dear Vice Presidents of the Republic of Srpska,
Dear Speaker of the National Assembly of the Republic of Srpska,
Dear Chairman of BiH Presidency and representatives of BiH institutions from the Republic of Srpska,
Dear Members of the RS National Assembly,
Your Grace,
Your Excellency Ambassadors,
Dear guests,
Dear citizens of the Republic of Srpska,
Ladies and gentlemen,
Allow me, first of all to say that it is truly a great honor and a privilege for me as well as responsibility to stand before this high Chamber asking your support for the formation of the Government of the Republic of Srpska and its program of work in the coming four-year term.
The Government of the Republic of Srpska led by the current President of the Republic achieved significant results under complex political, economic and international circumstances. More importantly the main strategic directions toward political and institutional stabilization, economic progress and reforms have already been defined and the new Government will continue with all successful activities aimed at strengthening of the Republic of Srpska. The new Government would face a better situation in term of internal political relations and relations with BiH institutions than before that would thus open wider space for the new Government to focus on the economic prosperity of the Republic of Srpska. Our common goal is strong, stable and prosperous Republic of Srpska, functioning in full Dayton capacities and capable to deal appropriately with all demands of its citizens. There would be stalemates and challenges along this way but positive trends that the Republic of Srpska recorded give us grounds to believe that the future would bring more positive trends and economic progress.
In this regard allow me to refer briefly to basic macroeconomic and fiscal indicators, given that they are the starting point for the policies that will be implemented by the new Government of Republic of Srpska. Presenting the work program of the Government for the 2014-2018 term, Prime Minister Cvijanovic emphasized then that success of the Government would be measured by the economic growth. From 2015 to 2017, the real GDP growth was 2.8%, 3.5% and 3.1% respectively while the estimates for 2018 say it would be around 3.6%. In the past 16 quarters there was a continuous growth meaning that during the previous Government there was not a single quarter which recorded a decline of gross domestic product. Here, I would like to emphasize that for the first time in 2017 the nominal gross domestic product amounted to over BAM 10 billion!
During the previous Government mandate the coverage of imports by exports ranged between 60% and 71% along with the rise of the exports share in the gross domestic product which grew to 35%. The labor market and unemployment were in the center of all policies of the previous Government of the Republic of Srpska and it is therefore important to highlight significant results in this area. For the first time in the Republic of Srpska, the number of people employed exceeded the number of 260,000. The record employment rate of 38.7% and unemployment rate of 17.2% have been the best ever since being measured in Republic of Srpska.
In terms of fiscal figures, the share of public debt in gross domestic product has gone from 46.7% in 2015 down to 39.4% at the end of 2018, while the share of total debt in gross domestic product dropped from 57.3% in 2015 to 51.3% at the end of 2018.
Dear Members of the Assembly,
Ladies and gentlemen,
In preparing the work program of the new Government of the Republic of Srpska to be presented today, we particularly analyzed economic and fiscal challenges and obstacles that await the Republic of Srpska in the upcoming period. The time we live in abounds in challenges and we must respond to those challenges with a courageous, resolute and clear vision of where we are going.
Despite excellent results that I already referred to, a period ahead of us requires to an approach that would shift the focus from fiscal policies to structural reforms. I believe that the current economic and fiscal position of the Republic of Srpska, and especially the political position that give us the access to all levels of government, shall enable us to shift attention to the structural reforms and thus improve competitiveness and economic productivity of the Republic of Srpska.
The policies of the Government would be implemented in cooperation with the business community and the trade unions and other categories of our society which refer directly to the groups concerned in order to provide a wide consensus among all interested parties.
I want to stress that my work in the next four years would be guided by two key principles and those are professional competence and accountability. First and foremost, I want to have professional and accountable people in my team who would perform their work in a professional and responsible manner. Therefore, I will strive to appoint competent and responsible people at all offices whose performance shall be measured by their result. We shall closely monitor the work of all institutions of the Republic of Srpska, especially public enterprises and I will not hesitate to publicly point to those who do not perform well.
In addition to professionalism and responsibility, I shall insist on the transparency of work of all institutions of the Republic and of public enterprises as well as the transparency of the work of each individual in the public sector so that we could timely react in case any deviation is observed. In this regard I expect full support from all society, holders of public offices, business community, trade unions, academic community, media and every citizen of our Republic to indicate to the things that are not in accordance with our common agreements and policies.
I want everyone to work together professionally and responsibly to build a better life and more prosperous Republic of Srpska. In all segments of our society there is I am sure, a possibility and room to make some progress and additional improvements. For this reason, I am more in favor of making "ten small steps" in each field rather than making "big leaps." I am not particularly interested in populist measures but primarily system solutions. In some cases, this would require additional time for analysis and identification of measures but would certainly contribute to a more efficient and effective reform of the given area.
Dear Members of the Assembly,
Ladies and gentlemen,
Having analyzed the economic and fiscal situation of the Republic of Srpska, there are obstacles and challenges that need to be resolved in the forthcoming period in order to improve competitiveness and productivity of the economy which is crucial for improvement of the economic status of each individual.
In this regard, the key obstacles which removal shall be in the center of the efforts of the new Government of Republic of Srpska are:
1. Low level of competitiveness and productivity of the economy;
2. Financially challenged health sector which accumulates unpaid obligations;
3. Non-efficient public sector;
4. Non-conformity of education and labor market with high structural unemployment;
5. Unbearable demographic situation of the Republic of Srpska.
Uncompetitive economy is additionally compromised and affected by unfair competition due to business entities operating in the grey zone. Non-harmonized business environment between the Republic of Srpska and the Federation of BiH often affects competitiveness. In addition, a fixed foreign exchange rate is obstacle for exporters when it comes to the international market and various barriers to the export of goods have a negative impact on the competitiveness of the economy of the Republic of Srpska. The unsatisfactory level and quality of scientific productivity, as well as outdated and inefficient structure of the economy affect the insufficient productivity growth of the economy of the Republic of Srpska. On the other hand, productivity is essentially the only real economic "guideline" for possible salary increase.
The health sector is burdened with non-adequate network of health institutions, demographic structure of the population which has a very negative impact on its sustainability, inefficiency and at the same time its overwhelming solidarity and social sensitivity which in many ways supersedes the optimal package of services which corresponds the level of contributions of each individual to the system.
The inefficiency of the public sector is primarily related to the inefficiency of public enterprises and there is scope for improving the public administration primarily referring to digitalization. In this way, we will make public administration more efficient and more effective and perhaps even more importantly, more humane and accessible to every citizen of the Republic of Srpska. We shall observe the reform of public enterprises through three segments: public companies that require budget support, utility companies owned by local self-government units and strategic public companies which are expected to be profitable and bring revenues to the budget and which reform must be carefully implemented for achieving more efficient and productive business and consequently adequate profit.
Lack of synchronization between education and the labor market leads to structural unemployment, negatively affects the competitiveness and productivity of businesses, leads to irrational use of resources, and on the other hand increases business costs for re-qualify training. In the field of higher education, educating people for jobs that the Republic does not need creates a distorted picture on the labor market and dissatisfaction among those who graduated from faculties that the labor market does not need. At the same time, the Employment Institute is overburdened with administrative tasks and cannot perform its full function of mediation in fostering employment and implementing active employment policy measures.
The demographic situation of the Republic of Srpska would in a long term perspective be the key problem facing the Republic of Srpska. Negative demographic developments in the long run worsen the position of the labor market and the fiscal position and sustainability of all budgetary costs and lead to reducing of the labor and aging of the population. Negative demographic situation cause problems to social protection funds and affect the adequacy of overall social benefits. The situation is more aggravated by the migrations so that such a negative demographic picture requires that all our future policies, the policies that would improve conditions and lead to keeping of the population on the territory of Republic of Srpska and increase natality must be prioritized.
On the basis of those identified obstacles, the key reform areas that will be in the focus of the new Government of Republika Srpska can be defined through seven priorities:
1. Raising competitiveness and productivity of the economy of the Republic of Srpska in order to increase salaries;
2. Sustainable health system;
3. Efficient public sector;
4. Education system and labor market adjusted to the needs of the economy;
5. Improvement of the demographic situation of the Republic of Srpska;
6. Research, development, innovation and digital economy;
7. European integration, regional and international cooperation.
I want to emphasize that protection of human rights and security of our citizens remain our priority and inclusive part of all our policies and therefore will not be specially considered. Human rights protection involves combating crime and corruption, expediting court procedures, commitment to human and minority rights, vulnerable groups and social inclusion, and in particular advocating for peace, stability and security.
The new Government of the Republic of Srpska shall give special consideration to the youth, pensioners, people with disabilities, veterans and other socially vulnerable groups. We want to provide additional economic, fiscal and financial stability of the Republic and thus a long-term improvement of the position of all categories of society by realizing our planned programs and policies.
Allow me to introduce the policies of the new Government of the Republic of Srpska according to each of the previously defined seven priorities.
1) RAISING COMPETITIVENESS AND PRODUCTIVITY OF THE ECONOMY IN ORDER TO RAISE SALARIES shall be implemented through following measures:
1. Unburdening of the economy;
2. Diminishing grey economy;
3. Raising economic competitiveness;
4. Reform of the Investment-Development Bank and the Guarantee Fund of the Republic of Srpska;
5. Improving availability of the financial funds;
6. Sector policies and
7. Building Infrastructure.
2. SUSTAINABLE HEALTH CARE SYSTEM
shall be established through implementation of the following measures:
1. Defining clear responsibilities of all stakeholders in the health system;
2. Setting and consistent implementing measures that would "stop the vulnerability" of the health system;
3. Analysis of total obligations of health care system;
4. Defining the model and implementing measures for settlement of outstanding obligations in the healthcare system;
5. Introducing fiscal responsibility and transparency in all institutions of the health system;
6. Designing and establishing a new network of health institutions;
7. Introducing new models of health system financing and defining more "healthcare packages"; and
8. Building the necessary health care infrastructure.
3. EFFICIENT PUBLIC SECTOR
The new Government of Republic of Srpska shall be committed to improve the efficiency of the overall public sector. The aim is to make the overall public sector more efficient, public companies profitable source of budget revenues and to change the structure of public spending reducing it at the benefit of capital spending. In that sense the following measures shall be taken:
1. The structure of budget spending shall be changed to create fiscal space for increasing public investments;
2. Increasing the efficiency of local self-government units;
3. Reform of public enterprises;
4. Integrating the financial system supervision;
5. Social care program;
6. Policies in the field of pension and disability insurance and veteran protection.
4. EDUCATION SYSTEM AND LABOR MARKET ADJUSTED TO THE NEEDS OF THE ECONOMY
Working on the preparation of Economy Development Guidelines, many businessmen emphasize the problem of the lack of quality labor. Education should stimulate innovation, critical thinking and entrepreneurship and provide young people with the skills needed to be globally competitive, a key driver of development. Adjusting education to labor market and the needs of the economy is a continuous process and cannot be implemented in the next two or three years. Reforming the education system and the labor market in line with the needs of the economy will increase the competitiveness and productivity of business entities and make a better allocation of resources currently being invested in the education of personnel that the economy does not need. In this regard, the Government of the Republic of Srpska will in order to integrate education with the labor market, implement the following measures:
1. Improve the labor market;
2. Reform the Employment Institute of the Republic of Srpska;
3. Create a policy in accordance with the needs of employers;
4. Develop dual education system in secondary vocational and technical schools;
5. Improve the quality of higher education.
5. IMPROVEMENT OF THE DEMOGRAPHIC SITUATION OF THE REPUBLIC OF SRPSKA
Improvement of the demographic situation of the Republika Srpska requires long-term policies and not politics during the term of only one government. It is certain that the Government of Prime Minister Cvijanovic made a special step forward in the stalling negative demographic trends and implementing policies that enhance the position of students, address housing issues of the young couples and in particular providing support for unemployed mothers.
Republic of Srpska as other countries of the region and other European countries faces the problem of negative birth rate and aging of the population. Therefore, we can say that the basic problem of Republic of Srpska is the issue of a very low birth rate. Additional challenge is the outflow of manpower. In this regard, we all know that there are no economic or fiscal measures that can offset such negative demographic trends. Therefore, all our policies in the following period should as a special imperative strive to improve demographic picture of the Republic of Srpska.
Therefore, I would like to emphasize once again all policies of the new Government of the Republic of Srpska would have demographic picture as the inevitable component. The demographic reconstruction of the Republic of Srpska is our main national and political goal.
6. RESEARCH, DEVELOPMENT, INNOVATION AND DIGITAL ECONOMY
One of the challenges awaiting the Republic of Srpska in the coming years is a big but inevitable task of modernizing the administrative apparatus and moving towards a service-oriented public administration turned to citizens and businesses.
It is my intention that all our policies are based on research, development, innovation and digital economy, that is, they will be supported by new information technologies, which will enable their more efficient and effective implementation. Digitalization opens up new opportunities for a better life of citizens through a number of services, cheaper services, more accessible information and knowledge, and connectivity among people. Even though it is often related to the technique, digitization is much more than that, because it provides a chance for new jobs that are better paid. And most importantly, digitization is our opportunity to halt the outflow of the workforce.
By building a National Center for Digital Identity Management during the following and next year, conditions will be created for each of our citizens and each of our companies to be able to perform business with government agencies in a fast and efficient way, using modern technological means of communication. But our business does not end there. We need to devise and implement a complete new development strategy based on the digital economy, in which our people will export what we certainly do not lack, and these are ideas, innovations, software, and everything that we will unify as "e-Serbian ", that is, a four-year investment program that will encourage and strategically support the development of e-business in the Republic. At the same time, we will strengthen our institutional capacities and employ the best and the highest quality among us, information security, e-government, the crypto capital market are just some of the segments of the development of an information society that will be in the function of the economic development of the Republic of Srpska and we need the cooperation of the state, the individual and the economy.
7. EUROPEAN INTEGRATION, REGIONAL AND INTERNATIONAL COOPERATION
The process of European integration is definitely one of the priorities of the Government of the Republic of Srpska in the future. After all, the Government and all other relevant institutions of the Republic of Srpska have been the most progressive and proactive actors in BiH with regard to fulfilling the "European" obligations. We shall insist on full protection and respect for the constitutional position and competences of the institutions of the Republika Srpska and we will oppose any attempt to abuse the integration process for weakening the capacities of the Republic of Srpska and suppressing its competencies. The Republic of Srpska in the process of European integration, within BiH, can act exclusively as an equal partner and not as an obedient subordinate. It is crucial, therefore, to insist on consistent application of the Coordination Mechanism of the European integration process in BiH in all segments of the integration process. The agreed co-ordination mechanism is fully based on Dayton's constitutional solutions and protects the position and competencies of the Republic of Srpska. The coordination mechanism represents an appropriate framework for the joint implementation of all segments of the integration process, from integration policy to programming of assistance funds and development of various common documents such as the Economic Reform Program and the new Government shall insist on it. One voice on behalf of BiH which represents the request of the European Commission and the EU does not exist without the Republic of Srpska and the full respect and implementation of the coordination mechanism. The Republic of Srpska would continue making maximum efforts to achieve progress in the process of European integration and it is in the best interest of the new Government, and all citizens of the Republic of Srpska that the European Commission and the European Council finalize the procedure as soon as possible regarding the approval of the candidate status and the opening of accession negotiations. Official Brussels will have a reliable partner in the new Government of the Republic of Srpska on the European path subject to full respect for its constitutional position and competence.
On the other hand, with regard to possible membership in NATO, the new Government of Republic of Srpska will move exclusively within the framework defined by the National Assembly of Republic of Srpska which set military neutrality. This position is based on very bad experiences from the immediate past that the Serbian people have with this organization and on the fact that for us, any NATO border on the Drina river is absolutely unacceptable. We follow the position of the Republic of Serbia and if, hypothetically, the Republic of Serbia at a certain moment changes its position on this issue, the people in the Republic of Srpska should decide in a referendum on the issue of BiH membership in NATO.
Based on all those comprehensive measures which the Government plans to achieve and implement in order to improve the standard of living and quality of life of citizens of the Republic of Srpska, it is realistic to expect:
1. Growth of gross domestic product;
2. Reducing the unemployment rate;
3. Increase of wages and pensions;
4. Increase of social and other benefits;
5. Increase of budget revenues;
6. Increase of investments.