Bosnia and Herzegovina

Bosnia and Herzegovina - Monitoring report

Date of the monitoring visit: from 20 to 22 November 2018 and from 19 to 21 February 2019
Report adopted on: 31 October 2019

Le présent rapport fait suite à la troisième visite de suivi et à deux visites de post-suivi organisées en Bosnie Herzégovine depuis que ce pays a ratifié la Charte Européenne de l’Autonomie Locale en 2002.

 

Dans l’ensemble, le rapport fait état du peu de progrès réalisés dans la mise en œuvre des précédentes recommandations du Congrès, sur la situation de la démocratie locale et régionale en Bosnie Herzégovine. Il note avec satisfaction que les collectivités locales peuvent s’associer librement pour la promotion et la défense de leurs intérêts et que les autorités infra-étatiques participent activement à la coopération transfrontalière internationale.

 

Les rapporteures expriment leur préoccupation concernant les points suivants : l’absence de progrès dans la mise en œuvre des réformes constitutionnelles à tous les niveaux d’autorité, l’absence d’élections à Mostar depuis 2008, le manque de clarté de l’attribution des responsabilités entre les divers niveaux d’autorité, le non-respect du principe de subsidiarité et le manque de consultation des collectivités locales sur toutes les questions qui les concernent directement.

 

Les autorités de Bosnie Herzégovine sont appelées à garantir le bon fonctionnement de la démocratie locale et régionale au travers de l’introduction du principe de l’autonomie locale dans la Constitution de Bosnie-Herzégovine, le renforcement du dialogue politique pour trouver une solution viable à l’impasse électorale dans laquelle se trouve la ville de Mostar, la révision de la législation afin d’éviter le chevauchement de compétences et garantir l’application pratique du principe de subsidiarité et la consultation systématique des collectivités locales sur toutes les questions qui les concernent, notamment les ressources financières et les réformes de l’autonomie locale.

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Article ratified Ratified with reservation Non ratified
Compliance Partial compliance Non compliance To be determined
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Article 2
Constitutional and legal foundation for local self government - Article ratified

The principle of local self government shall be recognised in domestic legislation, and where practicable in the constitution.


At State level, the BiH Constitution does not contain the concept of Local Self-Government. Thus neither constitutional guarantees for the relations between municipalities and different levels of government are established in the State Constitution, nor does (framework) legislation for local self-government exist at State level. The relations with local self-government are therefore exclusive relations between the two Entities (and, in the Federation of Bosnia and Herzegovina, also the Cantons) and local authorities. As a result, three parallel systems of local self-government exist: Federation of Bosnia and Herzegovina (and Cantons), Republika Srpska and Brčko District. The single situations of local self-government thus differ considerably one from each other, according to the respective legislative framework and in practice.

 

Legislation in the Federation of Bosnia and Herzegovina: The Law on Principles of Local Self-Government of the Federation, adopted in 2006, has been fully harmonized with the Charter; the basic principles and definitions of local government and local authorities can be found in articles 2 to 7. At the time, the Federation of Bosnia and Herzegovina legislator intensely cooperated with the Council of Europe (and UNDP), and cities and municipalities had been involved in consultations during the legislative process. The competencies have been regulated, as well as the relations between Mayors and Councils and the (stronger) role of local communities within the municipalities, mjesne zajednice. An attempt to amend the Law on Principles of Local Self-Government (2013/14) in order to strengthen the latter bodies further, in a perspective of strengthening citizens’ participation, has met local authorities’ resistance.

 

As there is no Ministry for Local Self-Government at the Federation of Bosnia and Herzegovina level, the Federal Ministry of Justice comprises a Department for Public Administration which also deals with local self-government issues. The establishment of a Ministry of its own would only be possible by constitutional amendment.

 

When it comes to the cantonal laws on local self-government, so far only three cantons have harmonised their laws with the Federation of Bosnia and Herzegovina Law on Local Self-Government, while Canton Tuzla has taken over the federal law in its entirety. This is the situation 12 years after passing of the deadline for the harmonisation of cantonal laws with Federal law, which had been established six months after the adoption of the Federation of Bosnia and Herzegovina Law, in 2006. A positive example is the Constitution of Sarajevo Canton which was amended in 2017. It now contains clear definitions of Canton, City of Sarajevo and municipalities and their respective powers. A two year-deadline has been foreseen for the implementation of these amendments regarding the harmonisation of competencies and resources. This process is still ongoing.

 

In Republika Srpska, a new Law on local self-government was adopted in November 2016. After comprehensive consultation for months and expression of full support by the Republika Srpska Association of local authorities, the new law, which is supposed to respect the guidelines provided by the Charter, entered in force on 1 January 2017.

 

Overall, Bosnia and Herzegovina’s legislative situation can be considered in compliance with Article 2 of the Charter, as the principle of local self‑government is expressly recognised in applicable domestic legislation.

 

However, the problem remains that the overall constitutional structure does not consider local self-government sufficiently and as part of a comprehensive system. Therefore, the introduction in the Constitution of Bosnia and Herzegovina of at least a definition of local self-government, such as the level of government closest to the citizens, and of the right to local self-government of local authorities, would be desirable and useful in order to guarantee a minimum standard throughout the country.

 

Some years ago, the Associations of municipalities and cities of the Federation of Bosnia and Herzegovina and of Republika Srpska organized public debates throughout the country (with assistance from Swiss Development Agency) and, based on the conclusions of those public debates, presented a proposal to include the concept of “local self-government” in the BiH Constitution to the then President of the BiH Constitutional Amendments Committee, Mr Sefik DZAFEROVIC (now a member of the Presidency of BiH). However, no change has ever been adopted.

Article 3.1
Concept of local self government - Article ratified

Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population.


The main question is whether, in the present situation, municipalities in Bosnia and Herzegovina regulate and manage a “substantial share of public affairs under their own responsibility”.

 

In assessing compliance, both legislative and factual aspects have to be considered. Under the current legislation in the two Entities and 10 Cantons, there is a considerable number of competencies to be exercised and managed by municipalities (see article 8 of the Federation of Bosnia and Herzegovina Law on Local Self-Government, and Republika Srpska Local Self-Government Law).[10] The related problems will be discussed below under Article 4 and mainly concern the lack of clarity in the assignment of functions and the generation of unfunded mandates for municipalities through the delegation of tasks.

 

Another important indicator for assessing the role of local government, and its practical operation, is local government’s share in revenue and expenditure. In the Federation of Bosnia and Herzegovina, municipalities and cities share some 10 percent of revenues, vis-à-vis a relatively small share for central government (some 20 percent) and the 10 Cantons (some 25 percent); the rest is divided between pension and disability funds at the Federation of Bosnia and Herzegovina level (around 25 percent) and separate health and employment funds in each Canton (almost 20 percent of total revenues). In Republika Srpska, cities and municipalities share some 14 percent of revenues, vis-à-vis 44 percent of central government revenues and 42 percent dominated by pensions, disabilities, health, road and employment funds.[11] This share may be substantial considering the political and economic situation of the country, but not so when compared to the most general standards across Europe.

 

In the light of the above, it may be concluded that Article 3.1 of the Charter is generally respected, but there is certainly room for substantial improvement.


[10] Article 8 of the Federation of Bosnia and Herzegovina Law on principles of local self-government (2007) lists the following competencies (unofficial English translation):

"The competences of a local unit of self-government shall include specifically:

- ensuring and protecting human rights and basic freedoms in accordance with the Constitution ;

- adoption of the budget of the local unit of self-government ;

- adoption of programs and plans for the development of the local unit of self-government and providing conditions for its economic growth and job creation;

- establishing and implementation of spatial planning and environmental protection policies;

- adoption of regional, urban and implementation plans, including zoning;

- establishing and implementation of a housing policy and adoption of programs for housing development and other types of property development;

- establishing a policy and setting the level of reimbursement for the use of public goods;

- establishing and implementation of a policy for control, management and use of construction land;

- establishing a policy for control and management of property of the local unit of self-government;

- establishing a policy for managing natural resources of the local unit of self-government and distribution of revenue collected as compensation for the use of those resources;

- management, financing and improvement of the operations and facilities of the local public infrastructure:

· Water supply, wastewater disposal and treatment,

· Solid waste collection and disposal,

· Public sanitation,

· City cemeteries,

· Local roads and bridges,

· Street lights,

· Public car parks,

· Parks;

- organisation and improvement of local public transport;

- establishing a preschool education policy, improvement of the preschool institutional network, and management and funding of public institutions for preschool education;

- establishment, management, funding and improvement of institutions for primary education;

- establishment, management, funding and improvement of institutions and building facilities to satisfy the needs of citizens in the areas of culture and sport;

- assessing the work of institutions and quality of services in the areas of health care, social welfare, education, culture and sport, and ensuring funds required for the improvement of their work and quality of services in accordance with the needs of citizens and capabilities of the local unit of self-government;

- analyses of public order and peace and level of safety of people and property, and making recommendations to relevant authorities;

- organising, implementation and responsibilities for measures of protection and rescue of people and material goods from elements and natural disasters;

- establishment and conduct of compliance inspections with regard to the regulations from within the competencies of the local unit of self-governance;

- rendering regulations on taxes, reimbursements, contributions and fees within the competencies of the local unit of self-governance;

- holding referendums in the territory of a local unit of self-governance;

- floatation of bonds and decisions on debt incurrence by local units of self-governance;

- Conduct of activities for ensuring proper sanitation and health conditions;

- ensuring proper work conditions for local radio and TV stations in accordance with the law;

- ensuring and maintaining records of personal status of citizens and electoral rolls;

- activities from the domain of land survey and land cadastre, and property records;

- organisation of efficient local government in accordance with local needs;

- establishment of the organisation of local self-government;

- animal protection."

 

[11] LGI Report 2018, p. 31 and p. 65.

Article 3.2
Concept of local self government - Article ratified

This right shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage, and which may possess executive organs responsible to them. This provision shall in no way affect recourse to assemblies of citizens, referendums or any other form of direct citizen participation where it is permitted by statute.


The structure of municipalities is similar to other European countries: there is an elected council and a mayor, elected through different electoral processes. Elections are held every four years, and the last local elections were held on 2 October 2016. Elections are regulated by the constitution and by the Electoral Code. Every person who is a citizen, has reached the age of 18 and has been registered has the right to vote in local elections. Local elections have been subject to observation by the Congress and other international organisations and bodies. The general appraisal was that they were fair and regular.

Specific ethnic, or “national” representation: According to the Constitution of the State and of the Entities, the public authorities have to be „generally representative“ of the population, i.e. the three constituent peoples and „Others“. While in the Brčko District this is guaranteed by quotas (see below), in Banja Luka and Republika Srpskamunicipalities, there are no quotas for the direct election of the City Council. However, if “Others“ count for more than 3% of the local population, one seat in the assembly is guaranteed for them through a special ballot (currently: 30 + 1).

 

A problem is the reference data for proportional representation, as for decades the last census before the war (1991) was the basis and the new census (2013) has been declared illegal by the Republika Srpska National Assembly. This has created considerable uncertainty. Banja Luka has around 190.000 inhabitants, but over 200.000 registered voters (actually, this is the number of issued ID cards) which is a difference of 30‑40.000 persons (considering the voting age).

 

In the Brčko District, collective rights are protected differently compared to the rest of the country. The Brčko District had been directly governed by the (Deputy) OHR. “National interests” are protected by affirmative action in government and a guaranteed minimum number of votes (quorum), but the statute determines which specific issues are considered “vital interests” of the groups, such as educational issues, culture, language, spatial and town-planning. In practice, the veto-power has never been used so far, but the (political) threat makes agreement necessary on practically all important issues.

 

Participation of citizens in local affairs in between local elections is guaranteed in both Entities (and Cantons), in particular through provisions on local referenda.

 

However, the rapporteurs would like to stress the urgent need to redress the situation in Mostar, where no local elections have been held since 2008. This situation is in violation of Article 3.2 of the Charter which requires that the right to local self-government shall be exercised by councils or assemblies composed of members freely elected by secret ballot on the basis of direct, equal, universal suffrage. Given the importance of the Mostar issue for the general functioning of local democracy in Bosnia and Herzegovina, the detailed analysis of the situation in Mostar is given separately at the end of the present report.

 

The rapporteurs consider that the requirements of Article 3.2 cannot be met in Bosnia and Herzegovina until the workable solution to the situation in Mostar has been found and the city residents can enjoy their right to choose their representatives at the local level. In the opinion of the rapporteurs, attention should also be given to the implementation of the 2013 census with the objective of creating certainty by reference to clear and accepted data.

Article 4.1
Scope of local self government - Article ratified

The basic powers and responsibilities of local authorities shall be prescribed by the constitution or by statute. However, this provision shall not prevent the attribution to local authorities of powers and responsibilities for specific purposes in accordance with the law.


The three headings on competencies, their exercise in full discretion and on their exclusive character are treated together due to the situation in practice, in particular in the Federation of Bosnia and Herzegovina.

 

The competencies of municipalities are regulated in legislation of both Entities (and Cantons).

 

In the Federation of Bosnia and Herzegovina, Article 8 of the Law on Principles of Local Self-Government provides for a huge number of powers, listing 29 different competencies. However, not all of these have been fully respected or correctly implemented (yet; since adoption of the Federation of Bosnia and Herzegovina Law on Principles of Local Self-Government in 2007). Also, Cantons can transfer competencies to municipalities without the allocation of appropriate funds and so, despite Article 11 of the Federation of Bosnia and Herzegovina Law on Local Self-Government principles establishing the contrary: according to estimations by the Association of municipalities and cities of the Federation of Bosnia and Herzegovina, in practice, only 20% of the necessary funds are allocated. Thus, the system is characterized by “significant confusion and frustration due to joint and overlapping competences between the two layers of government (and) by a municipal perception that unfunded mandates are handed down to them (as well as by) a failure to overcome latent inefficiencies in the assignment of responsibilities”.[13] In the Federation of Bosnia and Herzegovina, interlocutors expressed the opinion that local self-government competencies should include matters such as social and health care, pre-school and primary schools as well as public order as original competencies (and not as delegated ones), for which sufficient funds should be provided. This was labelled by most interlocutors as wishful thinking, as every level of government would try to “highjack” and keep as many competencies as possible.

 

Within the Federation of Bosnia and Herzegovina, it appears that Cantons do not implement decisions of the Constitutional Court. The rapporteurs were informed that there are no (sufficient) enforcement mechanisms or sanction in place to ensure the implementation of judgements.

 

In Republika Srpska, the allocation of competencies between only two levels of government is much more clear, due to the two-tier structure. The case of the “City of Eastern Sarajevo” (Republika Srpska), consisting of 6 “joint” municipalities, is special: it can also exercise competencies regarding the following subjects: public transport (subsidized), fire brigade, secondary school education, (promotion of) tourism, traffic signalization.

 

The Brčko District can exercise all competencies of the Entities, except for pension funds (see Article 9 of Brčko District statute). Its competencies seem clearly delimited from those of the State, e.g. health care, social protection and police are independent and under the supervision of the Brčko District Assembly. The same is true for the judiciary which forms a system of its own.

 

Although some progress has been made since 2012, in particular in the economic sector, recently municipalities have to cope with a number of additional problems, in particular providing care and housing for migrants, which exposes systemic problems: it appears that all levels of government can add (and add) obligations to municipalities’ tasks and cut their finances. It also seems that every level of government tries to keep competencies rather than transferring or delegating them in a subsidiarity logic. A particular problem is the divided competencies in the Federation of Bosnia and Herzegovina between Entity and Cantons as well as the lack of harmonisation of their legislation.

 

Therefore, the rapporteurs consider the requirements of Article 4.1 are generally respected while systemic problems persist regarding Articles 4.2. and 4.4 due to the lack of clarity and certainty of assignment of tasks and functions in practice, in particular in the Federation of Bosnia and Herzegovina (given the role of Cantons).


[13] Local Government Initiative, Local Government in Bosnia and Herzegovina. Report on Consultations of a Joint Commission on Local Government, June 2018, p.12 (see Table I. Revenue allocation to Local Governments in BiH, on p. 13)

Article 4.2
Scope of local self government - Article ratified

Local authorities shall, within the limits of the law, have full discretion to exercise their initiative with regard to any matter which is not excluded from their competence nor assigned to any other authority.


Consult reply indicated at article 4.1

Article 4.3
Scope of local self government - Article ratified

Public responsibilities shall generally be exercised, in preference, by those authorities which are closest to the citizen. Allocation of responsibility to another authority should weigh up the extent and nature of the task and requirements of efficiency and economy.


The principle of subsidiarity is not expressly enshrined in neither of the three Constitutions (of the State, Federation of Bosnia and Herzegovina and Republika Srpska). It is expressly mentioned only in Article 10 of the Federation of Bosnia and Herzegovina Law on Principles of local self-government regarding the transfer of competencies. However, in practice, in the Federation of Bosnia and Herzegovina, Cantons often absorb the competencies of municipalities, in particular with regard to utility services (water supply, sewage and heating; in the case of Canton Sarajevo also education and public transport), but central organisation at cantonal level is rarely more efficient. The new Cantonal Government of Sarajevo has announced to change the centralization policy of the past and to transfer competencies to municipalities. Interlocutors not rarely stressed that municipalities often do not even want additional powers, as these come with considerable costs (e.g. regarding elementary schools, the transfer of which already foreseen in Articles II.A.4 (b), of the Federation of Bosnia and Herzegovina Constitution and in Articles 8 and 10 of the Federation of Bosnia and Herzegovina Law on Local Self-Government Principles).

 

In a number of meetings in the Federation of Bosnia and Herzegovina, the rapporteurs heard about the importance of mjesne zajednice, i.e. local communities as sub-structures within municipalities. These are regulated at the Federation of Bosnia and Herzegovina level, in Articles 24 to 32 of the Federation of Bosnia and Herzegovina Law on Local Self-Government Principles, but also part of cantonal competencies on local self-government. Their Councils are established through direct election (in addition to local elections) and comprise a certain percentage of elected councillors. Mjesne zajednice are financed through the local budgets and apply for projects through the municipal level. Since 2013/14, there have been several attempts to amend the Federation of Bosnia and Herzegovina Law on Principles of Local Self-Government, not least for strengthening the mjesne zajednice and better involving citizens in a process of bottom-up development. However, local authorities resisted in order to keep their competencies.

 

In Republika Srpska, the principle of subsidiarity is not expressly anchored in constitution or legislation, but the nature of tasks as well as requirements of efficiency and economy have been considered in the reform of 2017. During the visit, the rapporteurs heard no complaints about the non-respect of the principle of subsidiarity in practice in Republika Srpska. The rapporteurs had the impression that although not expressly mentioned in the legislation, the rationale of subsidiarity in Republika Srpska seems to be mostly implemented in practice.

 

In the Federation of Bosnia and Herzegovina, a systemic approach guaranteeing the principle of subsidiarity seems hampered by the autonomous role of Cantons which tend to interfere with municipal competencies. The role of mjesne zajednice should also be included in a comprehensive system based on the logic of subsidiarity.

 

Thus, overall the rapporteurs consider the requirements of Article 4.3 only partially respected in Bosnia and Herzegovina.

Article 4.4
Scope of local self government - Article ratified

Powers given to local authorities shall normally be full and exclusive. They may not be undermined or limited by another, central or regional, authority except as provided for by the law.


Consult reply indicated at article 4.1

Article 4.5
Scope of local self government - Article ratified

Where powers are delegated to them by a central or regional authority, local authorities shall, insofar as possible, be allowed discretion in adapting their exercise to local conditions.

 


Cantonal Constitutions provide for the possible delegation of competencies to lower levels as well as for the transfer to higher levels. Following consultations with the municipality concerned, this delegation shall take into account the subsidiarity principle and the capability of the municipality, according to the Law on Principles of Local Self-Government (Article 10); it shall be accompanied by the allocation of the necessary funds for fulfilling new tasks (Article 9). While various interlocutors stressed that in practice obligations and responsibilities transferred to local authorities are often not accompanied by the transfer of financial assets for the fulfilment of those obligations, in contrast with Article 9 of the Charter, no complaints have been expressed with regard to undue interferences with the exercise of delegated powers.

 

Therefore, it appears that Article 4.5. on delegated powers is respected with regard to the discretion of local authorities in the adaptation of those powers to local needs. The rapporteurs however identified more problems in the conditions of the delegation of powers such as their insufficient funding which will be further developed under the analysis of Article 9.

Article 4.6
Scope of local self government - Article ratified

Local authorities shall be consulted, insofar as possible, in due time and in an appropriate way in the planning and decision-making processes for all matters which concern them directly.

 


In the Federation of Bosnia and Herzegovina, municipalities appear to be quite vocal in public debate and their consultation on legislative proposals is foreseen as part of mandatory public consultation by the Law on Principles of Local Self-Government (Articles 53 and 56) as well as by the Federation of Bosnia and Herzegovina Parliament’s Rules of Procedures on Legislative Drafting. Among the 25 working bodies and committees within the Federation of Bosnia and Herzegovina Parliament, there is also one dedicated to local self-government issues. However, in practice, the consultation requirement by higher authorities does not seem to be systematically respected, in particular when new legislation imposes fees on local authorities (e.g. fire-brigades and electric energy supply). Currently, there are already 8 decisions by the Constitutional Court of the Federation of Bosnia and Herzegovina stating violations, including the annulment of the Federation of Bosnia and Herzegovina Law on Fire-Protection which imposed fees on local authorities without prior consultation. Another important area covers spatial plans and infrastructure. For example, Jablanica, situated on the current main North-South route to Mostar has not been consulted on the new highway (corridor 5C), which will – according to current plans – allow for an access in 40 km distance only, with probable negative consequences for the whole economic system of the municipality. Also, at Cantonal level consultation is not always respected: a law on transportation of pupils (2002) had been adopted by Canton West-Herzegovina without providing funds for municipalities to cover the new task and without approval by the Association of municipalities. Challenged by the association, in 2012, the Constitutional Court of the Federation of Bosnia and Herzegovina ruled in their favour. The issue of non-implementation of the relative Constitutional Court decisions will be mentioned under the analysis of Article 11.

 

The new Republika Srpska Law on local self-government (2016) provides for mandatory consultation with the Republika Srpska National Assembly through the Republika Srpska Association of local authorities, as an NGO representing all cities and municipalities. The rapporteurs have been informed that a strategy for the development of local self-government shall be elaborated and a working group for the follow-up on implementation has been established to this end. Already during the preparation of the new Law, for which the Charter has been used as a “guiding line” (according to the information from the Republika Srpska Ministry of Local Self-Government), comprehensive consultation has been organized for more than one year (starting in October 2015). The law has been supported by the Republika Srpska Association of local authorities and consultation has led to some changes in the draft. Some interlocutors stressed however the importance of informal, political channels for representing local interests, which could be an indicator that the official, formal channels are less used in practice.

 

The Brčko District participates via a representation office in the Council of Ministers BiH as well as in the co-ordination mechanism. The powers of the international supervisor are frozen for some years. The delegation was told by the representative of Brčko District that co-operation and compromise are part of Brčko’s peculiar political culture. The delegation heard no complaints on consultation with higher level authorities.

 

The rapporteurs consider that Article 4.6. is respected only in legislation, but not in practice. The practice of consultation needs to be developed and improved, in particular in the Federation of Bosnia and Herzegovina. The establishment of a Federation of Bosnia and Herzegovina Ministry for Local Self-Government as a central institution and interlocutor for all issues concerning local government, as recommended by the Association of the municipalities and cities of the Federation of Bosnia and Herzegovina, could be an important step to improve consultation process.

Article 5
Protection of local authority boundaries - Article ratified

Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.

 


This article requires that local communities should be consulted in case of changes of local authorities’ boundaries. Due to the territorial compromise at the end of the war, with 51% of the territory assigned to the Federation of Bosnia and Herzegovina and 49% to Republika Srpska, many municipal boundaries had changed, and most new municipal boundaries reflect changes in ethnic composition. Before the war, there were 109 municipalities; after the war, their number increased, as municipalities were divided between the Federation of Bosnia and Herzegovina and Republika Srpska, and mjesne zajednice with ethnic minorities became new municipalities.[14] Some municipalities that maintained pre-war boundaries changed ethnic composition.[15] Due to the fragmentation of the country into two Entities and 10 Cantons with constitutional status, no change of municipal boundaries has occurred across the formers` boundaries.

 

Apart from the debate over the status of Sarajevo (see above), there is a debate about the (economic) sustainability of some smaller Cantons which receive transfers from the Federation of Bosnia and Herzegovina budget. However, as the Cantons are politically determined structures and established by the international Washington Agreement of 1994 and, subsequently, in the Federation of Bosnia and Herzegovina Constitution, it is difficult to imagine that any merger will have success.

 

The previous monitoring reports of the Congress did not identify a definite problem with regard to change of municipal boundaries and prior consultation of the communities concerned. During this visit, the delegation did not hear any complaints from political leaders or associations on the possible non-recognition of Article 5 in the current situation.  In the absence of the recent practice and complaints on changes of local authority boundaries, the rapporteurs cannot but follow the letter of law and proceed from the principle that the provisions of the legislation on consultation in both Entities shall apply to the situation of potential changes of local authority boundaries in line with Article 5 of the Charter.

 

Thus, the rapporteurs consider the present situation in Bosnia and Herzegovina compliant with Article 5.


[14] For example, Zvornik was majority Bosniak and is now majority Bosnian-Serb. Pre-war Doboj was approximately 55 percent Bosniak, the Bosnian-Croat population joined the municipality of Usora, and now the municipality is nearly all Bosniak.See World Bank (ECSSD), From Stability to Performance. Local Governance and Service Delivery in Bosnia and Herzegovina, January 2009, p. 6.

 

[15] Eight municipalities have maintained the same borders: Banja Luka, Breza, Jablanica, Ljubinje, Novo Sarajevo, Š[iroki Brijeg, Tuzla, Visegrad. Of these, Visegrad was Bosniak and Bosnian-Serb prior to the war and is now majority Bosnian-Serb. The Bosnian-Serb majority in Banja Luka increased from approximately half the population to over 90 percent. Mostar was initially divided into six municipalities (three Bosniak and three Bosnian-Croat) after the war, but subsequently OHR cancelled this division and established Mostar as a city with six areas (for the case of Mostar, see separate section below). See World Bank (ECSSD), From Stability to Performance …, p.6.

Article 6.1
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

Without prejudice to more general statutory provisions, local authorities shall be able to determine their own internal administrative structures in order to adapt them to local needs and ensure effective management.


As a rule, municipalities have the power to determine their own internal administrative structures, respecting statutory provisions and limitations. This usually requires a proposal by the mayor and decisions by the local council. The mayor, as head of the executive and of the administrative staff, also has moderate powers to introduce changes and adaptations in the administration of the municipality. However, in the large majority of local authorities, the administrative and human resources are so reduced that in reality only very few things can be determined or adapted in order to ensure “effective management”.

 

More specifically, the Federation of Bosnia and Herzegovina Law on Administrative Bodies provides for limits to the municipal autonomy introducing a proportion between the establishment of new bodies and the population numbers of the area of competences.

 

A positive example for organisation of services and interaction with citizens is the GIZ-sponsored initiative “Sistem 48” in the municipality of Jablanica. Answers to citizens’ questions on any matter related to local services are given within 48 hours. Service priorities are discussed and decided in monthly meetings with Mayor and all service providers.

 

In Republika Srpska, the new law on civil servants has introduced a set of new criteria regarding standards of employment of civil servants and employees, in particular providing for a ratio of 3 employees for every 1.000 inhabitants (in Cities 1/1.000), thus determining the size of the administration; this ratio has to be achieved by 30 June 2019. Eastern Sarajevo, for example, will have to adapt its staffing levels to 65 employees within that deadline, through retirements and dismissals. In Banja Luka, staff numbers have to be reduced from currently 750 to 570. Interlocutors expressed concern and estimated that most of the local self-government units will not be able to respect the new ratio; they asked the Association to become active in order to change the quota. Also, for the collection of a new real estate-tax introduced on 1 January 2019 for Cities (only) difficulties are expected. The Republika Srpska local self-government Ministry pointed out that the adoption of the new law has been prepared through comprehensive consultation. It also commented that the cap for staff was necessary for containing the high share of wages and salaries in local budgets, as its continuous increase risks to make the provision of some basic local services impossible. Although in some municipalities people will have to be dismissed, due to overstaffing in the past, the long period for adaptation should make a management of redundancy possible by internal re-organisation and retirement; also, emergency services, such as fire fighters or similar are not concerned. Monitoring of the implementation and the re-examination of the cap in 2020 are foreseen as well as an extension of the deadline in some well-motivated cases.

 

The privatization of public property and companies, 20 years ago, deprived local self-government units of their own companies for public services, with some exceptions. In Banja Luka, 65% of the water supply is owned by the City, 35% by others; 49% of the district heating system are also owned by the City. However, basically all public services are run by private companies, e.g. road-construction and maintenance, transportation, cleaning and gardeners. This has consequences for procurement considered as complex, slow and prone to corruption. Not rarely, complex procedures have to be repeated after complaints by competitors which causes huge delays in the implementation of important projects. In Banja Luka a new social housing-project has been launched with three buildings owned and managed by the City (59 apartments).

 

The Brčko District has a peculiar administrative and institutional structure adapted to its specific situation. There are 11 Departments which correspond to small ministries. With 93.000 inhabitants (census figure, estimated 75.000 permanent residents) it has ca. 3.000 staff in the administration. Strong international presence (US) and frequent removals of office-holders have created a particular political culture which is much more open to compromise and agreement compared to the rest of the country. Thus, by contrast with the Entities, the school system in the Brčko District is not divided, but integrated and even history lessons are taught for all pupils together (the compromise being that the period 1992-95 is not treated). Only language classes are taught in different groups.

 

Municipalities have broad liberties in law, but there are also certain important restrictions, which make the rapporteurs conclude that Article 6.1 is only partially respected. The cap for local staff introduced by Republika Srpska is a matter of concern for the rapporteurs. Although the provisional application of this measure could be justified due to overstaffing in the past and the need to guarantee cost-efficient municipal administrations, it limits the organisation autonomy of local authorities in violation of Article 6 as it precisely prescribes the size of the administration (and not only a maximum threshold) without leaving room for discretion.

Article 6.2
Appropriate administrative structures and resources for the tasks of local authorities - Article ratified

The conditions of service of local government employees shall be such as to permit the recruitment of high-quality staff on the basis of merit and competence; to this end adequate training opportunities, remuneration and career prospects shall be provided.


The Congress delegation did not hear any complaint from representatives of municipalities regarding the conditions of service or particular difficulties in recruitment. However, in general, the emigration of skilled workers to other European countries, notably Germany, affects the chances of smaller municipalities of finding trained and qualified staff, in particular for specialised tasks.

 

The Federation of Bosnia and Herzegovina framework law regulates the principles for salaries at municipal level, but it is allegedly not well respected and many municipalities seem to decide themselves on the salaries for their staff, which is bad for the comprehensive budgetary system, but does not constitute a violation of Article 6.

 

Problems have been signalled with the recruitment of civil servants, as the higher education system is not adequate, the number of inspectors too low for guaranteeing effective supervision (in Sarajevo Canton there are only 4 labour inspectors), and a Book of Rules on Professional Qualification has not yet been adopted. A particular problem affecting the local level is the lack of building-inspectors, which results in a lack of enforcement of decisions and, more generally, in a lack of respect of rules.

 

As municipalities have broad liberties in law regarding recruitment and conditions of service, although less so in practice, the rapporteurs conclude that Article 6.2 is generally respected.

Article 7.1
Conditions under which responsibilities at local level are exercised - Article ratified

The conditions of office of local elected representatives shall provide for free exercise of their functions.


The legal basis can be found in Article 1.1 of the Election Law of BiH which stipulates that the principles which shall be in force at all levels of government in BiH shall be determined by the Election Law of BiH. Accordingly, the Law on the Election, Termination of Mandate, Revocation and Replacement of Heads of Municipalities in the Federation of Bosnia and Herzegovina regulates all issues relating to the directly elected Mayors in the Federation of Bosnia and Herzegovina, while the election of municipal councillors is regulated by the Election Law of BiH. The Election Law of Republika Srpska stipulates that the election of local bodies (councillors in the Municipal Assemblies) shall be conducted pursuant to the Election Law of BiH, while an Entity law regulates the election and revocation of the Mayor’s mandate. The Election Law of the Brčko District regulates the election of councillors of the Assembly of the Brčko District, and its Article 1.1.(2) stipulates that provisions of the Election Law of BiH shall be directly applied in case of any issues not expressly regulated by the Election Law of the Brčko District.

 

Mayors are elected directly by a first past the post system. Elections in BiH are held under an open-list proportional representation electoral system with a 3% threshold. The Sainte-Laguë method is used for distributing seats among parties that pass the threshold, giving preference to smaller parties.

 

Since 2017, the new Law on local self-government (2016) is in force in Republika Srpska as well as the new Law on Civil Servants and Employees introducing significant changes, in particular for Assemblies which shall overcome frequent blockades: in the past, a recall of the Mayor was possible, but not for Councillors. However, it has been often tried (ca. 5-6 times), even only few months after elections, upon the initiative of a minority of Councillors or those who had left the majority. The new recall procedure provides for the Council being dissolved as a sanction, if the referendum fails. Under the new procedure, no recall referendum has been held, so far. Also, at least once every two months regular Council sessions have to be held.

 

In view of the rapporteurs, in general, local recall election may pose threats to the exercise of local self-government in view of all risks that may be caused by the abuse of this practice, such as above-mentioned blockades. The rapporteurs understand the need to establish effective safeguards to limit the possibility of misuse of local recall election that motivated the Republika Srpska legislative efforts. However, they have doubts whether councils’ dissolution can serve as an adequate safeguarding measure from the perspective of the right of local elected representatives to freely exercise their functions in the light of Article 7.1 of the Charter. The rapporteurs believe that simply rescinding the provision on a local recall election in the 2016 Law on local self-government could prove to be the most adequate solution.

 

Specific rules for ethnic or national representation apply: the Chairpersons of the Council have to be from a different ethnic group in municipalities where more than 80% of the population belong to one constituent people. Members of national minorities are entitled to representation in the Council in proportion to the percentage of their share in the total population according to the last census in BiH. The number of the members of national minorities who are elected directly to the Council is defined by the Statute of the particular Municipality or City as appropriate; national minorities which make up more than 3% in the total number of population of the particular constituency according to the last census, shall be guaranteed the minimum of one seat (article 13.14 BiH Electoral Law).

 

Various interlocutors have pointed to the problem of working under a permanent electoral campaign with different kind of elections being held every two years in BiH. In this regard, the rapporteurs would like to reiterate the previous Congress recommendation[16] to consider grouping together the elections of a local nature (local elections and elections to Cantonal Assemblies).

 

The rapporteurs consider Article 7.1. generally respected in Bosnia and Herzegovina.


[16] Report CPR36(2019)02final  on the elections of the Cantonal Assemblies in the Federation of Bosnia and Herzegovina (7 October 2018) adopted by Congress on 3 April 2019 at: https://search.coe.int/congress/pages/result_details.aspx?objectid=0900001680937716

Article 7.2
Conditions under which responsibilities at local level are exercised - Article ratified

They shall allow for appropriate financial compensation for expenses incurred in the exercise of the office in question as well as, where appropriate, compensation for loss of earnings or remuneration for work done and corresponding social welfare protection.


The Federation of Bosnia and Herzegovina laws on salaries regulate principles for staff and councillors establishing principles and setting ceilings (through co-efficients); however, 10 different laws exist in the 10 Cantons. All Mayors are professionals (no other activity is permitted), their income is calculated on the basis of a minimum salary multiplied by a co-efficient. Overall, salaries are relatively low (850 KM, on average). Councillors receive a provisional fee decided by the municipal council. In Jablanica, this fee is quite low and amounts to 300 KM per month and covers the sessions, participation in committees, travel expenses (within municipality) and office hours (once a week); reportedly, in other municipalities it may go up to 800 KM.

 

In Republika Srpska, the compensation of local self-government unit officials, i.e. mayor, chief municipality executive, their deputies, as well as the president and vice-president of the assembly, is to be decided in accordance with the Law on Officials’ Status in the Local-Self Governing Units. Compared with the Federation of Bosnia and Herzegovina, the situation is similar: all Mayors are employed professionals, but the basis for the Mayor's salary is the average salary in the municipality multiplied by a Council decision (1.100 KM, on average; range from 750 KM to 2.500 KM in Banja Luka and Bijelina). Article 41 of the Republika Srpska Law on Local Self-Government states that local councillors may receive an allowance, which is determined by the decision made by the local assembly (amount of up to 50% of the average net wage paid by local authority).

 

In conclusion, currently the requirements of Article 7.2 appear to be satisfied.

Article 7.3
Conditions under which responsibilities at local level are exercised - Article ratified

Any functions and activities which are deemed incompatible with the holding of local elective office shall be determined by statute or fundamental legal principles.


Specific Laws on Conflict of Interest in the Federation of Bosnia and Herzegovina, Republika Srpska and Brčko Districtdetermine which functions or activities are incompatible with the mandate of a mayor or council member. No specific issues regarding an excessive limitation have been raised during the visit of the delegation.

 

The situation in Bosnia and Herzegovina appears to be in conformity with Article 7.3.

Article 8.1
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of local authorities may only be exercised according to such procedures and in such cases as are provided for by the constitution or by statute.


According to Article 8, paragraphs 1 and 2, any administrative supervision of the activities of local authorities has to be carried out according to pre-established procedures and can only aim at ensuring compliance with the law and constitutional principles.

 

In the Federation of Bosnia and Herzegovina, the Ministry of Justice carries out supervision over administrative procedures and employment issues of civil servants (of Cantons and municipalities). Although already the Congress Recommendation 2012 had called the Federation of Bosnia and Herzegovina authorities to consider the institution of a separate Ministry for Local Self-Government (similar to the one in Republika Srpska), as an interlocutor for both, Cantons and municipalities, such a Ministry has not been established so far. Up to date, the municipalities have to approach different Ministries (at Federation of Bosnia and Herzegovina level and in the Cantons) for every issue; the same is true for supervision of municipalities. The Federation of Bosnia and Herzegovina Ministry of Justice, Department for Public Administration continues to act as interlocutor for local government affairs.

 

Cantonal authorities perform administrative control over municipalities by supervising the legality of administrative and other acts adopted under cantonal legislation or for implementing this legislation (in case of non-implementation, as an extreme measure, substitutive action by the Cantonal government is possible). Detailed cantonal inspections concern every aspect of administrative action, such as construction permits and utility services and a strict and frequent supervision over the keeping of civil registry books (every 6 months). These inspections include control over expenditure by budget users, including how local authorities manage allocated grants.

 

In the Federation of Bosnia and Herzegovina, administrative control of activities of municipalities by cantonal authorities is limited, regarding the sphere of execution of their own responsibilities, to control of legal compliance of performed activities; in case of delegated competencies, also expediency may be subject to control.

 

In 2018, the Federation of Bosnia and Herzegovina Audit Office audited 3 cities and 5 municipalities (with a total budget of 96.7 mil BAM) and 5 cantons. Due to many auditees within the jurisdiction of the Audit office of the Institutions in the Federation of Bosnia and Herzegovina (over 2000), when the total number of audits is planned each year, the main factor considered is the availability of human resources. Then, based on a risk assessment, the remaining audits are selected, with the main focus of the last couple of years being on auditees which have never been audited before.

 

The Republika Srpska Ministry of Administration and Local Self-Government has an inspection department which conducts supervision of legality regarding activities of municipalities. Specialist inspections may be conducted in specific fields by the departments of the relevant ministries (public contracts, health, etc). Until 2016, courts in Republika Srpska had been flooded by requests and complaints, as supervision and controversies regarding all acts of local self-government units necessarily had to be resolved by courts. The new Republika Srpska Law (2017) provides for supervision through courts over general acts and debts (over 10.000 BAM) as well as a competence for citizens' complaints.

 

The Republika Srpska Auditor General exercises a supervision regarding financial management and performance over Republika Srpska local self-government units; 5 years are needed to cover all 64 local self-government units. All audit reports with negative findings relate to municipalities or to their enterprises. As a consequence, these municipalities are revisited in order to check whether compliance has improved according to recommendations given. Typical problems comprise the accounting treatment of property, the execution of the budget, borrowing, the consolidation of financial reports of enterprises owned by municipalities. The main reason, according to the auditors, is the lack of qualification and of training of municipal staff. In reaction, the Republika Srpska Ministry of Finance has developed an Accounting Framework for Municipalities.

 

The rapporteurs consider the supervision framework to be in conformity with the principles enshrined in Article 8, paragraphs 1 and 2.

Article 8.2
Administrative supervision of local authorities' activities - Article ratified

Any administrative supervision of the activities of the local authorities shall normally aim only at ensuring compliance with the law and with constitutional principles. Administrative supervision may however be exercised with regard to expediency by higher-level authorities in respect of tasks the execution of which is delegated to local authorities.


Consult reply indicated at article 8.1

Article 8.3
Administrative supervision of local authorities' activities - Article ratified

Administrative supervision of local authorities shall be exercised in such a way as to ensure that the intervention of the controlling authority is kept in proportion to the importance of the interests which it is intended to protect.


Regarding the way in which supervision is exercised in practice, and in particular with reference to the requirement of compliance with the principle of proportionality, not much information could be obtained from interlocutors; there were no complaints.

 

Article 47 of the Federation of Bosnia and Herzegovina Law on Principles of local self-government expressly provides for proportionality in the exercise of inspection powers. All final decisions regarding annulment or amendment of municipal acts, adopted within the scope of their own responsibilities, shall be rendered by a competent court (Article 47, the Federation of Bosnia and Herzegovina Law on Principles of Local Self-Government).

 

Under Republika Srpska legislation true sanctions do not seem to be applied; in severe cases, the Public Prosecutor may become active. Usually, the report is sent to the respective municipal assembly which has to present a plan for remedies within 60 days, the implementation of which is examined with the next audit or in occasion of a special verification audit. The execution of budgets is under legality and compliance control. This is also the case in the Federation of Bosnia and Herzegovina.

 

In conclusion, the requirements of Article 8.3 regarding the proportionality of supervision appear to be satisfied.

Article 9.1
Financial resources of local authorities - Article ratified

Local authorities shall be entitled, within national economic policy, to adequate financial resources of their own, of which they may dispose freely within the framework of their powers.


Adequate, commensurate and sufficiently diversified financial resources are analysed jointly, as they altogether shall guarantee financial means for local authorities appropriate for fulfilling their tasks.

 

Public finances in Bosnia and Herzegovina

 

There are four systems of public finances in Bosnia and Herzegovina, i.e. the budget of BiH institutions, the budget of Republika Srpska, the budget of the Federation of Bosnia and Herzegovina, and the budget of the Brčko District. Given the size of the country, the share of subnational government in overall government is unusually high: “the State institutions absorb just 15 percent of public revenue, while the Federation of Bosnia and Herzegovina and Republika Srpskaabsorb about 52 percent and 30 percent respectively (the District of Brčko makes up the rest)”.[17] A Global Framework of fiscal balance and policies in BiH provides for co-ordination of fiscal policies in Bosnia and Herzegovina for the next three years; it is adopted in the form of an agreement between the governments of the Federation of Bosnia and Herzegovina, Republika Srpska and BiH and issued by the Fiscal Council of BiH composed of the respective heads of government and the three ministers of finance (the governor of the Central bank and the mayor of the Brčko District have observer status).

 

While direct taxation is exclusively in the competence of the Entities and raised at Entity level, indirect tax revenues are raised by the State (Indirect Tax Authority) and devolved to the two Entities which distribute to local self-government units according to different methodologies after the following steps: after the commitment of resources to the reserve account, for the return on indirect income, pre-determined resources are allocated for financing the institutions of BiH, followed by the amount of 3.55 % or at least 124 million BAM annually for financing the Brčko District. The residual resources are shared between the Entities. Municipalities receive the smallest share in resources compared to the other levels of government. Municipalities (and Cantons) rely heavily on indirect taxes: “VAT revenues make up: 30 percent of municipal budgets in the Federation of Bosnia and Herzegovina; almost 65 percent of cantonal revenues; and 50 percent of municipal budgets in Republika Srpska”.[18]

 

Before the amount of indirect tax-resources within the Entities is divided between Entity-budget and municipalities (and Cantons, in the Federation of Bosnia and Herzegovina), each entity first pays its own external debts from the VAT revenues creating considerable variations in the revenues of municipalities (and Cantons, in the Federation of Bosnia and Herzegovina), due to the changing level of debt service every year.[19]

 

In accordance with the Republika Srpska Law on Budgetary System, from the indirect tax-resources belonging to Republika Srpska, after the commitment of resources for serving external debt, 72% belong to the Republika Srpskabudget, 24 % to the budgets of local self-government units, and 4% to the Public Enterprise ‘Putevi Republike Srpske’ (road infrastructure).

 

The share of municipalities in indirect tax revenues is then distributed according to the following formula: 75% for population size, 15% for surface area, 10% for students in secondary schools. This formula (from 2005) does not differentiate between Banja Luka, the cities and municipalities, which has given rise to complaints by municipalities situated on borders or the Inter-Entity Boundary Line due to higher costs through commuters.

 

Their share in indirect taxes makes up for about 30 percent of the revenue of Republika Srpska municipalities. The Republika SrpskaLaw determines how local self-governmentunits’ own revenues are structured: real property tax, fines (contraventions), administrative fees, utility tax, water supply tax, fortune games. Free expenditure of own revenues is guaranteed. The ratio between indirect and own revenues is 70% to 30%. Among the shared taxes are business tax (70% Republika Srpska – 25% municipalities), indirect VAT (72% Republika Srpska – 24% municipalities), tax on transformation of land (70% municipalities); concessions (75% municipalities), income from rental of land owned by Republika Srpska (50% Republika Srpska – 50% municipalities), water (surface and under-surface, 30% municipalities), hydroenergy (30% municipalities).

 

In Republika Srpska, the overall financial situation of local communities is considered satisfactory by the relevant Ministries (Finance, Local Self-Government). In 2017, the 64 local communities in Republika Srpska (57 municipalities, and 7 towns) achieved a surplus of 40.43 million BAM (ca. 20 mio. Euro), and the unallocated surplus (i.e. unspent assigned funds) amounts to 16.96 million BAM (ca. 8 mio Euro). For 2018, as of 30 September 2018, a surplus of 53.7 million BAM has been achieved, and the unallocated surplus, that is, unspent assigned funds amount to 44.78 million BAM.

 

However, Mayors in Republika Srpska comment that despite some improvements the consequences of the enormous suffering for local budgets due to the economic and financial crisis are only gradually and slowly overcome and that budgets still have not returned to pre-crisis levels. In addition, the Mayor of Banja Luka specified that two changes in the electoral year 2018 have created major reductions in the City budget: changes of the accise-policy at State level and changes regarding the income tax at Entity-level. This significant reduction in the local budget (2018: -1.4 mio BAM, 2019: - 1 mio BAM expected) will have negative effects on projects and procurement. Reportedly, those changes have been pushed through via the urgency procedure, thus not allowing for any consultation. Within the next four years, the promised Republika Srpska Law on funding of local self-governmentshall provide certain and stable structures.

 

3 categories of municipalities in Republika Srpska can be distinguished according to their budgetary situation:

 

  • Cities and large local self-governmentunits have stable budgets, but sometimes problems with over-investments;
     
  • Smaller local self-governmentunits have much smaller budgets and often problems on the revenue side. Generally, these secondary towns and cities are in decline and “perform worse than rural areas on almost every economic indicator”;[20]
     
  • Smaller local self-governmentunits (5.000-20.000 inh.) are not necessarily poor, in particular, if they have the possibility to exploit natural resources (mining, water, forest), which permits budgetary stability, together with other resources. A high share of population still resides in these rural areas (around 60 percent).
     

Two examples illustrate the situation: Eastern Sarajevo as a – de facto – secondary city (despite being legally the capital of Republika Srpska) and the – de facto – the capital city of Republika Srpska, Banja Luka.

 

  • Eastern Sarajevo's budget is composed of 26% direct and indirect taxes and of 74% own revenue, i.e. generated in or by local self-government, e.g. licensing, sale of land. Most money (2/3) comes from indirect taxation, while local taxes and fees (on real estate, utilities and tourism) make up for ca. one third. The municipal budget is stable, with a current debt level of 8% (the maximum possible is 18%). A limited budget surplus every year is used for services. In 2004, the budget amounted to the total of 15 Mio BAM (7.5 mio Euro), in 2012 to 50 Mio BAM (25 mio Euro). However, according to the Mayor, almost three times as much were needed to fulfil all tasks.
     
  • The annual budget of Banja Luka amounts to 132 mio BAM (60 mio Euro), one third of which comes from indirect taxes (40 mio BAM / 20 mio Euro) and 50% from local taxes. Expenditure covers salaries (27%), the city administration, kindergardens, sport facilities, water supply and local enterprises; 1/3 (ca. 50 mio BAM) is spent for capital investments.

 

The structure of financial resources in the Federation of Bosnia and Herzegovina is complex, too. Revenue mainly comes from indirect taxation (around 60-70%), while direct taxes, most of them paid to Cantons and municipalities, only make up for a small portion of the Federation of Bosnia and Herzegovina budget. In addition, borrowing makes up for additional funds (see below). For municipalities in the Federation of Bosnia and Herzegovina, 30 percent of their budgets comes from indirect taxes, 9 percent (on average) from direct taxes, over 11 percent from property taxes, the rest are grants and transfers by the governments and other sources of income. A Federation of Bosnia and Herzegovina Law on financing of local self-governmentunits has been a demand by associations; in the meantime, a draft has already been prepared, but a working group needs to be established (after the Federation of Bosnia and Herzegovina government is formed).

 

The Brčko District raises local taxes (ca. 60 mio. Euro) and receives a share of VAT and indirect taxation (which is distributed on a monthly basis). It is considered a stable situation, in which 3,55% are guaranteed, for the first 5 years by legislation and an OHR decision, now through a gentlemen's agreement. Almost no credits or debts. 35 mio Euro (1/3 of budget) are spent on salaries, including judiciary and the education sector.

 

Budget procedures

 

The competences of the Republika Srpska Ministry of Finance are prescribed by the Law on Republic Administration (Articles 18 and 34) and Article 7 of Republika Srpska Law on Tax Procedure. The process of drawing up the Republika Srpska budget shall be based on the Document of Framework Budget presented by the Republika Srpska Government for a three-year period, which defines policies and priorities (regulated by Republika Srpska Law on Budget System). It represents a preliminary draft budget for the following year and contains mandatory expenditure ceilings for any budget user.

 

In recent years, the Republika Srpska has conducted a series of budget reforms in co-operation with international institutions, with the purpose of strengthening administration and planning in the field of public finance. Budgeting in Republika Srpska moved from a traditional budget planning process towards the principles of program planning based on programs defined according to policy goals and intended results.

 

According to the Republika Srpska government, the Republika Srpska Minister of Finance does not provide local authorities with budgeting guidelines on prioritization, programs, policies etc. Instead, those guidelines are already determined by legislation: the Republika Srpska Law on Budget System (OG RS, numbers 121/12, 52/14, 103/15 and 15/16), the Document of Framework Budget, the Republika Srpska Law on Borrowing, Debt and Guarantees (OG RS, numbers 71/12, 52/14 and 114/17), the RS Law on Local Self-Government (OG RS, 97/16), the Law on Fiscal Responsibility (OG RS, numbers 94/15 and 62/18), and by the Decisions on Local Communities’ Budget Execution.

 

After preparation by the municipalities, the Republika Srpska Ministry of Finance (MoF) adopts recommendations on the draft budget, e.g. on the salary bill, on (shared) indirect revenues or on allocation of sufficient resources for debt-serving (if the ceiling for borrowing is exceeded). Municipalities are bound by these, but Councils adopt the budget and the accountability rests with the Mayor (who takes the final decision). Quarterly reports on the implementation of the budgets have to be submitted to the Ministry of Finance. Only 1% of the recommendations are not followed, according to the MoF; in those cases, the Ministry of Financeactivates the budgetary inspectorate to examine the reasons.

 

The budgetary procedure in the Federation of Bosnia and Herzegovina is similar: the Federation of Bosnia and Herzegovina Ministry of Finance has to give an opinion on the revenue-side of Cantons prior to the adoption of their respective budgets, the same is the procedure vis-à-vis local authorities. These opinions are not binding and comment on whether ministerial guidelines and projections have been respected by the local authority in adopting a draft-budget. A Fiscal Co-ordination Body, composed of the Federation of Bosnia and Herzegovina Ministries of Finance and of the Ministries of Finances from the 10 Cantons meets at least 2-3 times per year; it also includes a representative from the Association of local authorities of the Federation.

 

Municipal property

 

Each municipality has its own property. There have been problems with military property (formerly JNA) and surrounding territory, which was not registered in the land registry. Another problem is related to construction land, as urban planning is often a shared power between a local self-government unit, Canton and Entity, while in 2003, the High Representative has imposed a spatial plan on construction land at State level, for which the municipality is responsible. Cantons oppose this.

 

The land registry is an Entity institution; however, it is quite peculiar that a local self-government unit has to pay for information it needs for its own, public purposes (such as planning). A decentralisation of the registry might be considered.

 

Bosnia and Herzegovina is rich in natural resources, in particular water, forests, mining. In both Entities, property rights are vested with the Entities, whose ministries are tasked with the management of natural resources (in the Federation of Bosnia and Herzegovina also the cantonal ministries which are accused of strongly interfering and impeding the use of benefits). Municipalities benefit from a share of the revenues arising from the exploitation by public companies or concessions. The local self-government Associations argue that local self-governmentunits should be allowed to issue concessions in 14 areas.

 

In the opinion of the rapporteurs, natural resources should belong to municipalities. In 2002, the Federation of Bosnia and Herzegovina adopted a Law on Forestry transferring the managements of forests to the cantonal ministries (in Republika Srpska, there is a special Forestry Department within the Ministry of Agriculture, Forestry and Water Management). However, in 2009, the Federation of Bosnia and Herzegovina Constitutional Court annulled the law because of violation of the Charter and of the Federation of Bosnia and Herzegovina Law on Principles of Local Self-Government. So far, no new law has been adopted at the Federation of Bosnia and Herzegovina level; thus, 8 Cantons have adopted their own legislation. In view of the rapporteurs, the legislation regarding Forestry should be adopted in order to implement the Constitutional Court decision.

 

In Republika Srpska, Ministries consider the financial resources at disposal of local authorities to be in accordance with the responsibilities the latter are obliged to fulfil. In case financial resources are not sufficient, the local authorities conduct a due-diligence, which aims to identify ways for overcoming the lack of financial resources. However, 70% of property is held by 6 cities, which explains that the latter are not indebted. Controversies regarding property are quite frequent. Municipalities are in conflict with schools and other institutions as well as with cooperatives (who managed huge areas of farmland) regarding the ownership of formerly public property.

 

The rapporteurs consider that the requirements of Article 9, paragraphs 1 and 2, are not respected. They are concerned about the lack of adequate financial resources which are commensurate to the tasks local authorities have to fulfil.

 

The rapporteurs further suggest following up the legislative situation in both Entities: while a Republika Srpska Law on funding of local self-government shall be adopted within the next years providing certain and stable structures, in the Federation of Bosnia and Herzegovina, a working group needs to be established to discuss the draft Federation of Bosnia and Herzegovina Law on financing of local self-government units. The rapporteurs call upon the competent authorities to provide for this necessary legislation as soon as possible to improve the financial situation of local self-government in both Entities and ensure compliance with Articles 9.1 and 9.2 of the Charter.

 

Besides, more diversification in the sources of revenue of local authorities in Bosnia and Herzegovina, in particular for smaller municipalities, appears fundamental to bring the situation in line with Article 9.4.


[18] Numbers according to Local Government Initiative, Local Government in Bosnia and Herzegovina. Report on Consultations of a Joint Commission on Local Government, June 2018, p.18.

 

[19] Local Government Initiative, Local Government in Bosnia and Herzegovina. Report on Consultations of a Joint Commission on Local Government, June 2018, p.18.

 

[20] Local Government Initiative, Local Government in Bosnia and Herzegovina. Report on Consultations of a Joint Commission on Local Government, June 2018, p.18

Article 9.2
Financial resources of local authorities - Article ratified

Local authorities' financial resources shall be commensurate with the responsibilities provided for by the constitution and the law.


Consult reply indicated at article 9.1

Article 9.3
Financial resources of local authorities - Article ratified

Part at least of the financial resources of local authorities shall derive from local taxes and charges of which, within the limits of statute, they have the power to determine the rate.


Since 2017, the municipalities in Republika Srpska are responsible for the collection of its taxes and fees. In Republika Srpska, there have been plans (and consultations) for new types of revenues, e.g. real estate or property tax. However, the consulted local representatives seem to have been more interested in exceptions and exemptions rather than in legislative change permitting greater discretion for local self-governmentunits, e.g. through the power to set rates by means of local decisions.

 

In the Federation of Bosnia and Herzegovina, there are different opinions regarding the adequacy of municipal finances. It has been stated that this is above all a problem for smaller and underdeveloped municipalities, which are hardly self-sustainable. Celic in North Bosnia, with 10.000 inhabitants, mainly farmers, has been mentioned as example, where the budget only covers a basic minimum (salaries, street lights and basic utility infrastructure), while funds for development lack completely. Thus, the municipality is completely dependent on grants from the higher level of government.

 

The municipal revenues in the Federation of Bosnia and Herzegovina are largely determined by higher levels of government. Local authorities do not have any role in the collection of revenue, which is carried out by the Federation of Bosnia and Herzegovina or Cantons. Only a small segment is left for municipal decision, i.e. local taxes and fees with the two major local charges on citizens being related to land-use (KGZ) and to fees for services.

 

Another problem is that the proportional relations for determining financial resources were established a long time ago and can hardly be corrected or changed due to the high number of political actors with diverging interests. This also concerns Cantons: while Sarajevo Canton, with approximately 350-400.000 inhabitants, has a budget of ca. 800 mio. KM (ca. 400 mio Euro), Tuzla Canton, with 500‑600.000 inhabitants, only disposes of 350 mio. KM annually (ca. 170 mio Euro). Despite the higher costs of being the capital city, this striking imbalance leads to disadvantages for residents in the Tuzla area, when it comes to the provision of services. Meetings of Prime Ministers of the Cantons for greater co-ordination have not given any success and are now been discontinued.

 

The rapporteurs observe that the requirements of Article 9.3 are only partially met and giving more powers to local authorities to decide on local sources of revenue appears necessary to strengthen their fiscal autonomy.

Article 9.4
Financial resources of local authorities - Article ratified

The financial systems on which resources available to local authorities are based shall be of a sufficiently diversified and buoyant nature to enable them to keep pace as far as practically possible with the real evolution of the cost of carrying out their tasks.


Consult reply indicated at article 9.1

Article 9.5
Financial resources of local authorities - Article ratified

The protection of financially weaker local authorities calls for the institution of financial equalisation procedures or equivalent measures which are designed to correct the effects of the unequal distribution of potential sources of finance and of the financial burden they must support. Such procedures or measures shall not diminish the discretion local authorities may exercise within their own sphere of responsibility.


Based upon Article 76 of the Republika Srpska Law on Local Self-Government, the distribution of revenues to municipalities depends on their level of development. Thus, Republika Srpska local self-governmentunits are subdivided into 4 categories according to their development status, means and potential (Republika Srpska National Assembly decision on criteria for assessment of the development level, 2016) as (a) developed (cities), (b) medium developed, (c) underdeveloped and (d) extremely underdeveloped municipalities. The situation of the latter raises the question of equalisation mechanisms as there is no cure for the shortage of funds, because their population is not sufficient for generating revenue. Equalisation is mainly achieved through transfers of special grants by the Republika Srpska Ministry of local self-government(2.3 mio KM in 2018) according to criteria in the 2015 Rulebook, which are for each municipality and respectively previous year: (1) total per capita revenues of registered companies (35%); (2) total budget revenues (25%); density of population (20%) and unemployment rate (20%). In addition, other grants cover specific other areas, such as SMEs, agriculture, environment, infrastructure, etc.[21]

 

The Federation of Bosnia and Herzegovina budget co-finances lower levels with 10-20 mio KM p.a. Although there is neither a formal, legal obligation, nor a formalized equalisation system (considered necessary by interlocutors for the future), government subsidizes Cantons financially under strain by allocation and takes decisions on grants. Grants are received by local authorities in the form of financial assistance, i.e. co-financing of projects, e.g. construction, school buildings or specific-purpose grants. Local authorities have to report justifying the expenses 6 months after. Regarding Cantons, many interlocutors lamented careless financial management and, in general, the difficulty to establish general criteria; also, there are no priorities or guidelines. Instead, need is assessed from year to year.

 

The Federation of Bosnia and Herzegovina Law on disbursement of public revenue, which sets up criteria for lesser developed areas, simplifies the distribution by relying on 4 fundamental criteria: (1) population-size; (2) territory-size; number of pupils in (3) primary schools and (4) secondary schools. According to some interlocutors, these simplified criteria set an additional cause for inequality through the use of different coefficients for calculating the needs of a local population (ranging from 1.1 to 2.0, e.g. Sarajevo is calculated with 1.5). This leads to advantages with social protection and health services better in Sarajevo and worse in the periphery. Therefore, it shall be reformed (technical mission of IMF, 2018): a new draft law shall include equalisation elements for “vulnerable areas” and higher indirect taxes (for differentiation, while direct taxes, in the Federation of Bosnia and Herzegovina competence, will remain equal everywhere). However, it is now up to the new government to take up the proposal and to update the current law, including the criteria (demographic numbers, number of pupils etc.). So far, the issue of underdeveloped areas is addressed by the Cantons.

 

The problem of migration will make new equalisation criteria and procedures even more urgent. Many interlocutors shared their concerns regarding this problem. In recent years, many (more) people leave the country; this demographic trend, together with the urbanization of the last 20 years, concentrated on few centers (in particular Sarajevo and Banja Luka) creates great difficulties, above all for rural areas and secondary towns and cities in the periphery, as the only potential for development is people and population growth. Bigger cities are still growing, but mayors estimate that there are more than 100.000 people leaving the country every year, mostly due to the (feeling of) uncertainty created by the “frozen conflict“. By contrast with the past, not only workers (“Gastarbeiter”), but whole families are leaving. In Banja Luka the number of unemployed people has dropped by 5.000 every year and there is already a lack of qualified workers in some professions (e.g. bus drivers). While the reduction of unemployment is certainly a positive factor, the reduction and ageing of the population result in a smaller tax and revenue base and higher costs for essential service (in particular health care and care for the elderly).

 

The rapporteurs consider that Article 9.5 is only partially fulfilled, as the current systems either rely too heavily on special grants (Republika Srpska) or are in need of reform (the Federation of Bosnia and Herzegovina). Thus, the introduction of a formal, legal obligation for development and equalisation should be considered together with the establishment of a formalised equalisation system after careful examination of the currently used formula and criteria in order to adapt them to a rapidly changing context (e.g. emigration and demographics).


[21] See Local Government Initiative, Local Government in Bosnia and Herzegovina. Report on Consultations of a Joint Commission on Local Government, June 2018, p.69 (Box 20: The RS Grant System to Undeveloped and Extremely Undeveloped Municipalities).

Article 9.6
Financial resources of local authorities - Article ratified

Local authorities shall be consulted, in an appropriate manner, on the way in which redistributed resources are to be allocated to them.


Republika Srpska, specific provisions in legislation guarantee and oblige institutions to consult local self-governmentunits on issues relevant to the position and role of local self-government. Article 73, point 2 of Republika Srpska Law on Local Self-Government (O.G. RS 97/16) states, inter alia, that local self-government units are to be consulted about any issue regarding provision and distribution of resources, as well as about any amendments to the Law, which may affect the financial status of a local self-governing unit. Article 151, point 2 of the same law specifies that in the process of drafting legislation or other regulations concerning the position, rights and duties of local self-government, the respective organs are obliged to submit the draft laws or proposals and other acts of general application to the Association of Local Authorities and local self-government units for consultation. A memorandum which regulates the (means of) co-operation in the field of financing local self-government units has been signed between the Republika Srpska Government and the Association of Local Authorities. However, some interlocutors pointed to too many changes which had occurred in the tax sector producing instability and uncertainty of revenue sources.

 

In the Federation of Bosnia and Herzegovina the legislative situation is similar. Article 34 of the Federal Law on Principles of Local Self-Government provides that “The legislator shall be obliged to obtain the opinion of the Association of Municipalities and Towns on all issues that concern allocation of funds, as well as on all changes to laws that may affect financial obligations of local units of self-government.” However, as the rapporteurs noted under analysis of Article 4.6 (see supra para.77), some shortcomings remain in the practice of consultation, such as on fee issues.

 

Therefore, the rapporteurs conclude that the situation of consultation on allocation of budgetary resources in Bosnia and Herzegovina seems compliant in law, but there is still room for improvement in practice to bring it fully in line with Article 9.6.

Article 9.7
Financial resources of local authorities - Article ratified

As far as possible, grants to local authorities shall not be earmarked for the financing of specific projects. The provision of grants shall not remove the basic freedom of local authorities to exercise policy discretion within their own jurisdiction.


Republika Srpska, local self-government units do not easily get loans for financing their investments from the Republika Srpskabudget. Considerable resources are planned for capital investments of local communities, from the Republika Srpska budget for 2018 on the position of public investment (as of 30November 2018, 25.854 million KM has been distributed, i.e. ca. 12.5 million Euro). In addition to resources from the Republika Srpskabudget, local self-government units receive resources for capital projects from the Republika Srpska Government and resources from clearing debt. Two types of transfers by the Republika Srpskalocal self-governmentMinistry can be distinguished: while ordinary transfers are not purpose-specific, extraordinary transfers can be conditioned by the Ministry.

 

In the Federation of Bosnia and Herzegovina, direct cantonal grants to municipalities are the rule, as partial investments covering 40-50% of the costs, with municipalities obliged to report on the expenditure. In numerous cases, partnerships with International Organisations, such as World Bank, UNDP; GIZ provide additional funds for investments in schools, energy efficiency etc.

 

The requirements of article 9.7 are satisfied, according to the rapporteurs.

Article 9.8
Financial resources of local authorities - Article ratified

For the purpose of borrowing for capital investment, local authorities shall have access to the national capital market within the limits of the law.


Republika Srpska government does not impose limitations on indebtedness; these are regulated by the Republika Srpska Law on Borrowing, Debt and Guarantees (O.G. RS, numbers 71/12, 52/14 and 114/17) which sets a ceiling for borrowing. This favours cities, while smaller municipalities can hardly ask for large funds, as their small budgets cannot sustain serving debts.

 

In the Federation of Bosnia and Herzegovina, borrowing makes up for additional funds for capital investment, with lower levels relying predominantly on domestic means (some also issue their own bonds), and the Federation of Bosnia and Herzegovina relying on domestic and international borrowing as well as on issuing treasury bills and long-term bonds. However, due to the general improvement of the economic situation, there is currently less need to borrow.

 

Currently, the Association of Municipalities and Cities of the Federation of Bosnia and Herzegovina is a part in court proceedings against the Federation of Bosnia and Herzegovina regarding the repayment of loans to the IMF, which is served as a priority before the distribution of resources to Cantons or municipalities. Thus, the Association claims that the repayment resulted in a reduction in funds for local government units from indirect taxes.

 

The requirements of Article 9.8 appear as generally satisfied; however, the situation in the Federation of Bosnia and Herzegovina regarding the repayment of IMF loans should be followed due to concerns regarding the consequence of reducing funds for local government.

Article 10.1
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, in exercising their powers, to co-operate and, within the framework of the law, to form consortia with other local authorities in order to carry out tasks of common interest.


Various forms of intermunicipal co-operation (IMC) exist within the Entities, in particular regarding the organisation and maintenance of infrastructure, such as local roads, water and waste management, as well as schools. However, in case of larger or more important projects, most of these are managed directly by the Cantons (in the Federation of Bosnia and Herzegovina) or by the Republika Srpskagovernment, respectively.

 

Although there are no specific incentives for promoting them, some forms of inter-Entity co-operation between local authorities exist, too, often with the objective of economic development and within the framework of projects funded by international donors (e.g. UNDP, Council of Europe). However, different regulations in the Entities have to be respected and often create considerable obstacles. The more so, as inter-entity co-operation is not actively promoted and encouraged and thus difficult to realise in practice: thus, co-operation is possible, but remains rather the exception.

 

Thus, day-to-day services across the Inter-Entity Boundary Linemost often either do not function well or are totally lacking. The Republika Srpska Ministry pointed to the difficulty of finding the right interlocutor on the Federation of Bosnia and Herzegovina-side, as there is no local self-government ministry in the Federation of Bosnia and Herzegovina (sometimes the Ministry of Justice steps in). It seems that only where foreign donors support co-operation financially, cross-Inter-Entity Boundary Lineco-operation can develop, e.g. the Swiss-funded water supply-system for the Una-Sana-region. A telling example regards the situation of commuters between East Sarajevo (Republika Srpska) and the City of Sarajevo (Canton Sarajevo, Federation of Bosnia and Herzegovina) situated in two adjacent and neighbouring valleys. Taxis crossing the Inter-Entity Boundary Line(running between the two cities) have to stop and to take down their taxi signs, if they do not want to risk a fine for running a public service not recognized by the legislation and authorities of the other Entity. The same is true for public transport, which on each side stops just before the Inter-Entity Boundary Line. The rapporteurs were surprised to hear that some interlocutors considered this situation as normal saying: “of course, there is no direct bus-line connecting the two cities”. The interlocutors explained the situation by different legislations regarding public transport in the two Entities. While public transport is part of the powers of municipalities, the Republika Srpska Law on general transport appears to be an effective obstacle for organizing cross-entity public transport as a service for commuters. This bewildering fact (and attitude) is even more strange considering Article I.6 of the Dayton Constitution which provides for the establishment of a Common Market in BiH; this provision is at least not fully implemented, creating disincentives for citizens and enterprises. In contrast with the information received by the concerned local authorities, the Republika Srpska Ministry of local self-government told the delegation that the two cities could resolve the issue by coming together and concluding an agreement. It is true that such agreement had been reached after the war regarding the water supply. Again, it appears that good will would make bottom-up co-operation possible.

 

Co-ordination problems between the Entities also regard the police forces, with the difficulty to guarantee the continuation of a car chase across the Inter-Entity Boundary Line in the (frequent) case of car-thefts, in particular in Sarajevo, where the Inter-Entity Boundary Lineis close, but also the guarantee of health care-services for citizens from other areas (the guarantee of the latter is difficult even between some Cantons).

 

There are some significant developments with municipalities themselves organizing and agreeing on the modalities of co-operation. Examples are the co-operation between the municipalities of Tesanj, Teslic and Zepce, as well as Sarajevo and East Sarajevo jointly hosting the European Youth Winter Games (EYOF) in February 2019, i.e. a major international sport event organized together across the Inter-Entity Boundary Line. This event, financed mostly by the Canton Sarajevo (4.5 mio KM plus infrastructure), can be considered a positive example for what can be done, if there is political will on both sides.

 

The Federation of Bosnia and Herzegovina Ministry of Justice and the Republika Srpska Ministry of Public Administration and Local Self-Government suspended the implementation of the project "Beacon Scheme" conducted by the Federation of Bosnia and Herzegovina and Republika SrpskaAssociations, where municipalities had a chance to compete in various areas and topics and were awarded prizes for their best practices. The project promoted inter-municipal co-operation of all local self-governments in BiH with a competitive approach. The project, which had been run for seven years was recently suspended due to a lack of funds (35,000 Euro per Ministry and year).

 

Cross-border co-operation has been successfully promoted (and financially supported) by the EU and the Council of Europe, e.g. in a trilateral Interreg program (launched in 2007), and results in a number of projects with Serbia, Croatia and Montenegro. In the Drina-river region, the areas of co-operation comprise secondary schools, hospital and transportation as well as twinning agreements. An Action Plan between Serbia and Republika Srpska shall establish priorities. The Herzegovina-Neretva Canton is one of the co-founders of the Adriatic-Ionic-Euregiio, established in 2006.

 

The rapporteurs welcome the engagement in cross-border co-operation projects and consider the requirements under Article 10.1 and 10.3 satisfied. However, they call upon the authorities in both Entities to promote and support the co-operation of municipalities across the Inter-Entity Boundary Line by creating the necessary positive environment for those activities in order to facilitate the provision of services and to foster economic development.

Article 10.2
Local authorities' right to associate - Article ratified

The entitlement of local authorities to belong to an association for the protection and promotion of their common interests and to belong to an international association of local authorities shall be recognised in each State.


Bosnia and Herzegovina has two independent Associations of Municipalities and Cities (AMCs), one in and for the Federation of Bosnia and Herzegovina and the other one in and for Republika Srpska. The Association of local authorities of Republika Srpska consists of 64 local governments, whereas the Association of Municipalities and Cities of the Federation of Bosnia and Herzegovina represents 80 local governments, plus Brčko District. They play a crucial role in advocating for changes in legislation and funding on behalf of municipalities, hold regular meetings and frequently organize discussions for their members and the public. They also provide professional services to municipalities primarily in the area of legal and fiscal support and EU integration. A jointly funded project by the Swiss and Swedish Governments aims at strengthening capacities and activities over three phases in the period from January 2016 to December 2027, with a total investment of 5.000.000 CHF. The project will be realized in partnership of the Swiss Agency for Development and Co-operation (SDC) and the Swedish International Development Cooperation Agency (SIDA).

 

The Association of Municipalities and Cities of the Federation of Bosnia and Herzegovina repeatedly criticized the authorities for not having been sufficiently involved in the reform processes, by contrast with the Congress’s last recommendation.

 

The situation of the associations is in compliance with Article 10.2.; their representative role should be continuously and constructively used in consultation processes, in particular where reforms are planned.

Article 10.3
Local authorities' right to associate - Article ratified

Local authorities shall be entitled, under such conditions as may be provided for by the law, to co-operate with their counterparts in other States.


Consult reply indicated at article 10.1

Article 11
Legal protection of local selfgovernment - Article ratified

Local authorities shall have the right of recourse to a judicial remedy in order to secure free exercise of their powers and respect for such principles of local self-government as are enshrined in the constitution or domestic legislation.


The effective legal and judicial remedy for municipalities as a guarantee for local self-government depends on the issue raised. For many issues, the ordinary jurisdiction is competent; municipalities enjoy locus standi in courts in order to defend their rights, property or interests, just as any other legal person. Therefore, cities and municipalities have access to regular courts, where they can defend their interests and rights. In this matter, the delegation did not hear any complaints from interlocutors.

 

Other issues can be brought by the municipalities to the Constitutional Courts of the Entities, which can decide with “final and binding“ judgments (for local self-government, see e.g. Articles IV.C.3 and 10 (3) of the Federation of Bosnia and Herzegovina Constitution). There are constantly controversies involving local authorities in front of the Constitutional Courts of the Entities, most of them regarding the obligation to consult on legislative proposals concerning local authorities. In particular, many laws in the Federation of Bosnia and Herzegovina have been declared unconstitutional for violation of consultation requirements. Due to the competence of the Constitutional Courts of the Entities, the Constitutional Court of BiH has declined its own competence in 10 cases which included, among others, also issues related to local self-government.

 

In fact, mirroring the absence of any provision on local self-government in the Constitution of BiH, the Constitutional Court of BiH does not have any competence in this field. However, some of its rulings on electoral matters can influence the situation of local government, e.g. the Ljubic case of 1.12.2016 (U 23/14) which strongly affects the situation in Mostar. After the expiry of a 6-months deadline without action by the legislator, the unconstitutional provisions have been eliminated creating a legal vacuum and making action by the legislator a precondition for holding local elections in Mostar (see below).

 

In front of the Federation of Bosnia and Herzegovina Constitutional Court, in the ten years between 2009 and 2019, 99 cases concerned local self-government: 57 decisions stated a violation of the right to local self-government, 14 found that there was no violation, 9 cases were inadmissible or withdrawn and 11 cases are still pending. Most cases concern the violation of Article 4 of the Charter or the lack of consultation. A second major group of cases concerns the imposition of duties and tasks without sufficient funding, in contrast with the principle of commensurate financing; an example is the provision by allowances for firefighters by cantonal legislation without consulting the municipalities whether they can afford these and without providing additional funds. And finally, the non-harmonisation of cantonal local self-government legislation with the Federation of Bosnia and Herzegovina Law on local self-government principles. For instance, the Sarajevo Canton did not yet adopt its own law on local self-government and after a complaint by Mayors and the Association of Municipalities, in 2011 the Federation of Bosnia and Herzegovina Constitutional Court stated the need to legislate. However, this decision has not yet been implemented.

 

Problems with the lack of respect and implementation of the judgments of the Federation of Bosnia and Herzegovina Constitutional Court regarding the protection of the rights to local self-government continue: until December 2017, 44 decisions of the Federation of Bosnia and Herzegovina Constitutional Court have not been not executed. As an example, despite a judgment from 2009 in favour of the Association of Municipalities and Cities of the Federation of Bosnia and Herzegovina together with the municipality of Konjic, amendments to the Law on Forestry have not yet been adopted. The judgment obliged the relevant Ministry to harmonise the law in question in co-operation with the Association of Municipalities and Cities of the Federation of Bosnia and Herzegovina, within a period of six months which has passed without anything been done. As forests are a significant municipal resource and source of income, this is of great concern.

 

But Constitutional Courts cannot enforce their own judgments. Although there are provisions in the criminal codes sanctioning non-enforcement of judicial decisions, no action has been taken on their basis, as elements of intent would have to be proven, which would – with regard to the legislator – be interpreted as limiting the principles of the free mandate and of the separation of powers. The real problem lies in the political dimension of these cases which would require wider and profound changes for which there is no political agreement, in particular regarding the current system of ethnic representation. Thus, even legal void seems more acceptable (as it guarantees the status quo) than reforms which would necessarily have to touch and shift balances. However, the legal void may create considerable financial consequences: a 2009 complaint against the Sarajevo Canton regarding preschool education led in 2011 to a judgment in favour of the municipalities. That this decision has not been enforced is certainly due to the cost of the measure for the budget of Sarajevo Canton: enforcing the decision means to distribute 300 Mio KM to local self-government units.

 

The rapporteurs underline that it is a matter of great concern that judicial protection through the Federation of Bosnia and Herzegovina Constitutional Court is in many cases not effective, as court decisions are not implemented.

 

By contrast with the situation in the Federation of Bosnia and Herzegovina, in front of the Republika Srpska Constitutional Court there are hardly any cases regarding the conflict over jurisdiction, while there are numerous initiatives by citizens challenging local decisions encroaching upon their rights in ordinary courts. The most controversial issues concern utilities, infrastructures, publicly owned land or planning decisions (development and zoning plans). The problem often seems to consist in mistakes in implementing legislation, as claims are often confirmed for procedural reasons. While no violation has been found regarding the constitutionality of the Republika Srpska Law on local self-government, some violations have been detected in decisions and general acts of administrative supervision (Ministry of local self-government) and ordinary courts.

 

Following the German model, there is also a direct complaint of municipalities to the Republika Srpska Constitutional Court for alleged violation of the right to local self-government, but the delegation was informed by the Court that this is not used in practice, as municipalities seem to prefer political channels through their Association, and voluntary harmonisation is often an alternative to a complaint before a court. The judicial means for obtaining guarantees of local self-governmentvis-à-vis the Ministry, e.g. regarding the exercise of inspection powers, are also not exercised in practice; it seems that again the political dialogue with the Ministry is preferred by local self-government units. The dominance of the same political party at both levels (municipalities and Republika Srpska government), may play a role here.

 

In light of the preceding considerations, the requirements of Article 11 appear to be formally respected.

ACCESSION

to the Council of Europe

RATIFICATION

of the European Charter of Local Self-Government

CONSTITUTION | NATIONAL LEGISLATION

At State level, the BiH Constitution does not contain the concept of Local Self-Government. Thus neither constitutional guarantees for the relations between municipalities and different levels of government are established in the State Constitution, nor does (framework) legislation for local self-government exist at State level.



30Ratified provision(s)
0Provision(s) with reservation(s)
0 Unratified Provision(s)
19Compliant Provision(s)
5Partially Compliant Articles
5Non-compliant Provision(s)