New Rules for Discretionary Spending

Friday March 21st, 2014
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A rulebook governing discretionary spending in the BiH institutions calls for cost cutting measures, but leaves no guidelines as to who is entitled to the discretionary spending and what the cap is.

Zgrada Parlamentarne skupštine BiH

BIH Council of Ministers has adopted a rulebook to save at least one million KM in the budget. (Photo: CIN)

By The Center for Investigative Reporting

The Council of Ministers if Bosnia and Herzegovina(BiH) has adopted a Rulebook on Discretionary Spending in BiH Institutions that calls for savings worth at least one million KM a year.

The rulebook defines a 2.1 million KM discretionary spending cap for 74 state government agencies. Until recently, the agencies were spending between three and four million KM a year on business related lunches and dinners.

According to the rulebook, the highest discretionary spending budget of 330,000 KM will have the BiH Ministry of Foreign Affairs and the BiH Ministry of Defense, including the BiH Armed Forces. The lowest annual discretionary spending of 3,000 KM will have smaller agencies such as The BiH Archive.

The BiH Ministry of Finance and Treasury has drafted the rulebook. The ministry’s officials say that the document was based on auditors’ recommendations going back for years.

“It was necessary to do this because it’s a way to achieve some savings”, said the ministry’s spokeswoman Nataša Krsman.

The rulebook does not concern the BiH Parliamentary Assembly for whose spending is responsible the Joint Commission for Administrative Affairs said Krsman.

The Parliamentary Assembly’s discretionary spending is around 110,000 KM a year. The Audit Office of the BiH Institutions has given it a qualified opinion for the past two consecutive years. The use of discretionary spending was one of the points discussed in the auditors’ reports.

“The notion of discretionary spending has not been clearly and precisely defined in a sense of separating the real and justified spending from what the employees entitled to this discretion are consuming daily in the way of food and drinks,” wrote auditors in their 2011 and 2012 audits of the state parliament.

The Center for Investigative Reporting (CIN) did an investigation into discretionary spending at the state and entity level last year and found that some government agencies used the funds to pay for their employees’ food, buy books written by their party peers and tip in the bars.

Discretionary spending in BiH government institutions is not defined by a law or a single rulebook. Instead, every agency has its own rulebook governing the matter. The investigation found that the rulebooks differed, among other things, in establishing monthly caps and who was entitled to discretionary spending. In some agencies only the management had a right to discretionary spending, while in others the employees had it as well. There are also agencies in which all employees have a right to discretionary spending.

The adopted rulebook said that the right to discretionary spending belongs to the members of the Presidency and the Council of Ministers, their deputies and the chiefs of cabinet, the agency heads, their deputies and aids, the agency secretaries, ambassadors, heads of missions and consul generals. However, agency heads also have the power to authorize other persons to enjoy discretionary spending.

The same goes for monthly allowances which have not been defined precisely. The rulebook reads that the agency heads should adopt internal documents that would establish monthly caps for discretionary spending. So far, monthly allowances ranged from 40 KM to 5,000 KM depending on position, while some agency heads have had no caps at all.

Finance Ministry officials say that there should be more categories, because some agency have to be “excluded from some rules” due to the nature of their job.

By the end of the year the agencies should have adopted the bylaws that would be harmonized with the rulebook, so that it could come into effect from the beginning of 2015.

Published on March 21, 2013.

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The Center for Investigative Reporting in Sarajevo (CIN) work is available for free to all organizations that credit CIN as their source and link to

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