1. REALISING BOSNIA AND HERZEGOVINAS POTENTIAL SECTOR POLICIES Dragan Doko, Minister of Foreign Trade and Economic Relations SECTOR PRIORITIES AND PUBLIC INVESTMENT PROGRAM International conference on development of Bosnia and Herzegovina CG Meeting on Bosnia and Herzegovina Sarajevo, September 22 and 23, 2004

2. 2 SECTOR POLICIES Sector priority policies have been defined during the preparation of the BiH Medium Term Development Strategy Public Investment Program of BiH has defined priority projects in accordance with determined sector policies 2

3. 3 SECTOR PRIORITIES Liberalization of the energy market: To implement action plans of the entities for restructuring of the energy sector To restructure the coal mines To continue the liberalization of telecom market To implement high education reform To implement health financing reform To establish an adequate social welfare system To start pension system reform 3

4. 4 SECTOR PRIORITIES To adopt and implement new legal and institutional framework for the forest management To ensure an adequate support to agriculture production To define industrial policy of the country To introduce system of electronic link with citizens (e-government) To implement National plan for environment protection To promote the road construction and maintenance management To continue with railway transport reconstruction 4

5. 5 WATER SUPPLY AND DEMINIG are HIGH PRIORTY OF THE SECTOR Bosnia and Herzegovina is a territory with the largest number of landmines in Europe, what creates the difficulties for development of agriculture, forestry, industry, infrastructure and tourism Around 55% of the population in BiH has an access to clear drinking water Around 20% of the population has no access to sewerage management To continue with major participation of domestic revenues in demining and water supply programs To ensure donations for financing the priority projects of these sectors 5

6. 6 PUBLIC INVESTMENT PROGRAM OF BOSNIA AND HERZEGOVINA 2004 - 2006 (PIP) 6

7. 7 OVERVIEW of the PUBLIC INVESTMENT PROGRAM OF BOSNIA AND HERZEGOVINA 2004 - 2006 (PIP) Portrays planned investments and is composed of prioritized development public investment projects for the time period 2004 to 2006 Includes per annum costing, sources of funding and budget counterpart funds, in the case of external funding A three-year rolling plan and that will be updated each year Reflects the needs at the State, Entity, Brčko District, Canton and Municipality levels to meet the countrys and sectoral policies, strategies and objectives Is being used as an instrument for mobilizing resources – both domestic and external assistance 7

8. 8 CONTENTS of the PUBLIC INVESTMENT PROGRAM OF BOSNIA AND HERZEGOVINA 2004 - 2006 (PIP) It is a compilation of the projects contained in the Public Investment Programs of the BH Institutions, Federation of BiH, Republika Srpska and Brčko District The projects are classified as following: "New - High and Medium priority" Projects - No financing has been secured "Committed" Projects - Received solid financial commitments for the time period from 2004 to 2006 - but disbursements have not yet started "Ongoing" Projects - Funding was secured previously and is committed for the following period 8

9. 9 CONTENTS of the PUBLIC INVESTMENT PROGRAM OF BOSNIA AND HERZEGOVINA 2004 - 2006 (PIP) Projects of the Federation of BiH and Republika Srpska have been synchronized with the budget cycle, the assets needed for the first year being included in their respective budgets and they do not exceed the available assets defined by Entity Medium-term Expenditure Frameworks Projects of the BiH Institutions are in compliance with the budget of the BiH Institutions for 2004, and are compatible with the Medium – term priorities of the Draft European Partnership for 2004 Projects of the Brčko District have been synchronized with the budget and expenditure plans of Brčko District 9

10. 10 PUBLIC INVESTMENT PROGRAM OF BiH (PIP) 2004–2006 AND MEDIUM–TERM DEVELOPMENT STRATEGY OF BiH (PRSP) 2004-2007 PIP translates the sectoral priorities and strategies of the PRSP into concrete investment projects and PRSP-related sectoral capacity building projects The projects included in the PIP are in line with the objectives of the PRSP and its sectoral priorities In the forthcoming period, it is necessary to strengthen the mechanism for preparation and approval of public investment projects, in order to improve planning procedures. It should be a continuous task involving all competent institutions at all levels of government in BiH 10

11. 11 PUBLIC INVESTMENT PROGRAMMING PROCESS The process started with needs assessment and the identification of projects by the BH Institutions, Entities, Brčko District of BiH, Cantons and Municipalities The process involves two stages of selection: The first selection takes into account the compliance of projects with the sectoral policies The second selection process is carried out to make sure the projects are in line with PRSP objectives and priorities, as well as with the available resources Preparation and design of individual Public Investment Programs 2004 - 2006 at the level of BH Institutions, Entities and Brčko District, was carried out with the active participation of ministries from all levels of Government, with the technical assistance of UNDP 11

12. 12 PUBLIC INVESTMENT PROGRAMMING PROCESS The preparation of the individual PIPs 2004 - 2006 included a process of project prioritization, carried out by Commissions for project prioritization, legally established at each level of government PIPs of the BH Institutions, FBiH, RS, Brčko District were individually adopted by their respective governments The four PIPs were consolidated to form the Public Investment Program of Bosnia and Herzegovina 2004- 2006 Public Investment Program of Bosnia and Herzegovina 2004-2006 has been adopted by the Council of Ministers of BiH 12

13. 13 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Planned investments by government level 2004 – 2006 in mill. BH Institutions128 Federation BiH481 Republika Srpska264 Brčko District114 Total for BiH987 BH Institutions 13% Federation BiH 48% Republika Srpska 27% Brčko District 12% 13

14. 14 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Overview of planned investments by sectors 2004 – 2006 in mill. Infrastructure345 Energy168 Water Management121 Instit. Capacity Building88 Other sectors265 Total all sectors987 Infractructure 35% Energy 17% Water Management 12% Inst. Capacity Building 9% Other Sector 27% 14

15. 15 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Overview by the project status 2004 – 2006 in mill. New projects - High priority405 New projects - Medium priority 43 Committed projects125 On-going projects414 Total all projects987 New Projects High priority 41% New projects Medium priority 4% Committed projects 13% On – going projects 42% 15

16. 16 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Overview by project types 2004 – 2006 in mill. Investment833 Institutional154 Total all projects987 Investment 84% Institutional 16% 16

17. 17 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Overview of planned investments 2004 – 2006 by years in mill. 17

18. 18 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Overview of the financial resources for planned investments 2004 – 2006 in mill. Project Self-financing8 Gov. - Budget174 Gov. – Altern.domestic finan.23 Donations121 Credits661 Total987 Gov. - Budget 18% Project Self - financing 1% Gov. Altern. 2% Donations 12% Credits 67% 18

19. 19 NEW PROJECTS PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 19

20. 20 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Overview of NEW PROJECTS by sectors 2004-2006 in mill. Water Management111 Infrastructure145 Instit. Capacity Building49 Environment32 Energy28 Other sectors83 Total448 Water Management 25% Infrastructure 32% Inst. Capacity Building 11% Environment 7% Energy 6% Other Sector 19% 20

21. 21 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Overview of NEW PROJECTS by project types 2004 – 2006 in mill. Investment395 Institutional53 Total448 Investment 88% Institutional 12% 21

22. 22 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Overview of the financial resources for NEW PROJECTS 2004 - 2006 in mill. Project Self-financing5 Gov. - Budget86 Gov. – Altern.domestic finan.23 Donations 1 41 Credits 2 293 Total448 Gov. - Budget 19% Project Self - financing 1% Gov. Altern. 5% Donations 9% Credits 66% 22 1 Out of which the secured donations amount to 8 million 2 Out of which the pledged credit amounts to 8 million

23. 23 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Foreign funds needed for financing of the NEW PROJECTS in the period 2004 – 2006 amounting 318 mill. Credits 285 mill. Donations 33 mill. 23

24. 24 OVERALL PLANNED INVESTMENTS 2004-2006 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 24

25. 25 PUBLIC INVESTMENT PROGRAM OF BiH 2004 - 2006 Overall planned investments 2004 – 2006 amount 987 mill. Domestic sources205 Foreign sources782 Overall planned Investments 2004-2006 in mill. 987 Out of which: Secured from foreign sources (for committed and on-going projects) 464 Lacking from foreign sources (for new projects) 318 mill. 782 Domestic sources 21% Foreign sources 79% Secured from foreign sources 59% Lacking from foreign sources 41% 25