Diaspora Saves the Country from Financial Collapse

Diaspora Saves the Country from Financial Collapse

Diaspora remittances to Bosnia and Herzegovina in 2016 are somewhat smaller than the year before, but, even so, they exceeded a staggering sum of three (3) billion BAM.

This is largely made up of the money orders that come to our country through official channels, and that were registered by the world and domestic financial institutions. According to the World Bank, Bosnia and Herzegovina takes second place in the region for incoming monetary amount in remittances, while Serbia takes first place.

Turning Billions

The aforementioned amount is not the total amount that the diaspora sends to Bosnia and Herzegovina. It is estimated that an additional three (3) billion comes to the country through unofficial channels. According to expert estimations, during summer holidays, the diaspora spends around one (1) billion BAM in the home country.

Economic experts point out that the diaspora actually saves this country from collapsing, emphasizing that its development capacity is not used enough, and that government at all levels are to blame.

According to research, B&H takes first place in Europe and seventh in the world considering the percentage of people living abroad in regards to total population. Data shows that about two (2) million people from B&H live abroad, including second and third generations. That amounts to more than half of B&H’s population.

On the other hand, it seems impossible that the country doesn’t have official records of the sum of money invested in the B&H economy by diaspora. Unofficial data shows us that investments to domestic economy are usually in IT, agriculture, the energy sector and tourism.

By all estimates, the key problem is that there is a lack of necessary trust between the diaspora and the government; there is no institutional framework to regulate such activities and activated enormous capacities of diaspora and its contribution to B&H. Another issue is that B&H lacks strategies for attracting diaspora investment.

The Disastrous Fact

Bosnia and Herzegovina does not possess the state ministry responsible for diaspora relations. There were initiatives and attempts to establish such a ministry, but they were all refused on the grounds that this area is under jurisdiction of the entities – and this is where the story ends.

Considering all the available information, we get to astonishing facts. Diaspora remittances account for 30 per cent of the total disposable personal income of B&H’s citizens. It is alarming information that diaspora remittances inflow is larger than foreign direct investments. Another alarming figure, pointed out by economic experts, is that official inflow coming from diaspora makes for 13 per cent of B&H’s GDP, illustrating the economic and financial situation of this country.

All research thus far suggests that authorities could use diaspora remittances, instead of unfavourable borrowing conditions, as a resource for expanding the budget through shares – remittances, which can be used as collateral of some sort for productive debts.

According to the World Bank and IMF regulations, countries whose income comes from remittances exceeds 10 per cent of their GDP – and 20 per cent of the value of exports of goods and services – are allowed to higher debt rate and more favourable conditions. Bosnia and Herzegovina fulfils these criteria.

Source: Akta.ba

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