By World Bank, Wei Ding, Christine Wallich
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Additional info for Bosnia and Herzegovina: toward economic recovery
Appropriate legislation reflecting that agreement needs to be drafted and approved by the Federation Parliament. Page xxiii Key Institutions for the Serb Republic. Since the Serb Republic has maintained a unitary structure and has already had central institutions, the key task is to adapt these institutions toward serving a market-oriented economy, which Serb authorities have explicitly stated as their key reform objective. However, one institution that needs to be established separately is a Banking Supervision Agency that will be required once the central banking function is taken over at the State level.
On the Serb Republic side a more centralized fiscal system, similar to the current structure, will likely continue. Since taxing power will reside with the two constituent Entities of the State, the consistency and coordination on tax policy and administration is a major issue. Some taxes, such as the value-added tax, cannot be imposed at a subnational level unless internal borders are imposed, which is clearly not advisable. Likewise, customs administrations and policies have to be consistent and coordinated in order to provide uniformity in protection and Page xxiv undistorted customs revenue collection.
Fiscal Arrangements at the State Level. The division of fiscal responsibility between the State and its two constituent Entities was outlined in the Dayton-Paris agreements. However, many details and mechanisms have yet to be concretized. Under the framework an asymmetrical fiscal arrangement for the State will emerge. On the Federation side there will be a fairly decentralized tax and fiscal system with significant taxing and spending powers devolved to the cantons, with the Federation government responsible mainly for those areas that have Federation-wide impact, such as defense and trade.
Bosnia and Herzegovina: toward economic recovery by World Bank, Wei Ding, Christine Wallich