Bosnian Serb Leaders Under Fire Over Loan

Milorad Dodik

Bosnian Serb opposition parties said they would bring legal action against the Republika Srpska leadership after its decision to take the $300 million in a bid to avoid a liquidity crisis in the entity.

After his visit to Moscow this week, Republika Srpska President Milorad Dodik announced on Thursday that that the loan had been secured from the Florida-based fund Global Bancorp Commodities & Investment in the amount of $300 million with an affordable three per cent interest rate and a 36-month grace period.

Dodik said the Republika Srpska government plans to withdraw $50 million from the loan this year, which will prevent a liquidity crisis and secure the payment of salaries, pensions, social benefits and other bills.

“I think that this is good news for (Republika) Srpska, which should ensure that Srpska has stability in its financial system next year,” he told a press conference in Banja Luka.

But the announcement triggered criticism from the opposition and experts, mostly focused on the loan provider, a little known company which according to international business databases is based in Sarasota, Florida, and is managed by a Russian citizen called Alexander Vaisliev. 

A Bosnian Serb official told BIRN on Friday that the company was established only last year and was so far not involved in any business undertakings. In 2014 it tried to buy a bank in Slovenia, but its bid was rejected.

“This company or fund is controversial,” one opposition leader, Dragan Cavic from the People’s Democratic Movement, NDP, told media. 

Another opposition official, Vukota Govedarica from the Serb Democratic Party, SDS, said that he would raise the issue of the legality and constitutionality of the loan because he alleged that it violated Republika Srpska’s law on debt because the entity’s parliament has not approved it, as it is legally required.

Another local expert and critic of the Republika Srpska government, Slobodan Vaskovic, alleged on his blog that the loan was actually a part of a deal in which Russian investors will buy the government-owned Bank of Srpska.

Administrations all across Bosnia and Herzegovina are facing growing budget deficits because budget support from the International Monetary Fund has been blocked for a year over Bosnian leaders’ failure to implement agreed reforms. 

Without outside funding, the state and the two entities, as well as many cantons and municipalities, will not be able to pay salaries, pensions, social benefits and other bills in the last quarter of this year, officials have warned.

Dodik has been trying to get a loan from Russian financial institutions for more than a year, but local experts and international officials have in the past expressed serious concerns that this kind would not only make the economic situation in Republika Srpska more difficult because its government is in no position to pay commercial interest rates, but would also significantly increase Russia’s financial and political influence on the Bosnian Serb leadership.

Bosnian Serb opposition parties said they would bring legal action against the Republika Srpska leadership after its decision to take the $300 million in a bid to avoid a liquidity crisis in the entity.
After his visit to Moscow this week, Republika Srpska President Milorad Dodik announced on Thursday that that the loan had been secured from the Florida-based fund Global Bancorp Commodities & Investment in the amount of $300 million with an affordable three per cent interest rate and a 36-month grace period.

Dodik said the Republika Srpska government plans to withdraw $50 million from the loan this year, which will prevent a liquidity crisis and secure the payment of salaries, pensions, social benefits and other bills.

“I think that this is good news for (Republika) Srpska, which should ensure that Srpska has stability in its financial system next year,” he told a press conference in Banja Luka.
But the announcement triggered criticism from the opposition and experts, mostly focused on the loan provider, a little known company which according to international business databases is based in Sarasota, Florida, and is managed by a Russian citizen called Alexander Vaisliev. 

A Bosnian Serb official told BIRN on Friday that the company was established only last year and was so far not involved in any business undertakings. In 2014 it tried to buy a bank in Slovenia, but its bid was rejected.
“This company or fund is controversial,” one opposition leader, Dragan Cavic from the People’s Democratic Movement, NDP, told media. 
Another opposition official, Vukota Govedarica from the Serb Democratic Party, SDS, said that he would raise the issue of the legality and constitutionality of the loan because he alleged that it violated Republika Srpska’s law on debt because the entity’s parliament has not approved it, as it is legally required.
Another local expert and critic of the Republika Srpska government, Slobodan Vaskovic, alleged on his blog that the loan was actually a part of a deal in which Russian investors will buy the government-owned Bank of Srpska.
Administrations all across Bosnia and Herzegovina are facing growing budget deficits because budget support from the International Monetary Fund has been blocked for a year over Bosnian leaders’ failure to implement agreed reforms. 

Without outside funding, the state and the two entities, as well as many cantons and municipalities, will not be able to pay salaries, pensions, social benefits and other bills in the last quarter of this year, officials have warned.

Dodik has been trying to get a loan from Russian financial institutions for more than a year, but local experts and international officials have in the past expressed serious concerns that this kind would not only make the economic situation in Republika Srpska more difficult because its government is in no position to pay commercial interest rates, but would also significantly increase Russia’s financial and political influence on the Bosnian Serb leadership.