The preparation of the budget for the year 2001 has presented some serious trials for the new RS government.
First, the Government advised the public that in the past fiscal year, the state still owed about 300 million marks to budget consumers [i.e. state employees, services, and social security recipients]. Despite the change in the Government, this represents a debt by the state to budget consumers and they did not write it off nor is there any legal basis by which the Government might be relieved of its obligation to pay. Objectively, then, the Government at this moment is already 300 million marks short in order to settle its accounts with budget consumers. It will not be easy to collect that much additional money during the entire year.
Second, in its economic policy measures for the year 2001, the Government promised a fierce battle against the gray economy, crime and corruption. In this lies the hope that the money for budget consumers will actually be collected and that at least some of the debt owed from the previous year will be paid. However, this will not be easy, especially in the sphere of the gray economy, because it is unfortunately the only "social security program" we have.
Third, the Government began its preparation of the new budget with a report on the implementation and revision of the previous budget; consequently, it must be prepared at the end of the year to present a report on the implementation and revision of the budget that it proposed. That forces the Government to be maximally realistic in its assessment of budget revenue and expenses, and to be cautious in carrying out budgetary spending policies lest it repeat the mistakes of the previous government.
Keeping this in mind, the Government has no other option than to assess the real fiscal capacity of the Republic of Srpska, to define the measures and intensity of effective revenue collection and to tell many people, simply: "There's no money!" This is the only logical conclusion because the Government has already convinced the public that it will be effective in collecting public revenue and rational in its spending. Of course, under the given circumstances, none of its promises will be easy to keep.
During the previous year domestic and foreign experts frequently estimated that the real fiscal capacity of RS is actually much greater than actual budget revenue collected. The new budget offers the opportunity to harmonize fiscal capacity and actual budget revenue. That means that the consumption of certain kinds of goods, primarily high excise goods, needs to be estimated on the basis of real consumer units and rate of consumption. For example, it is possible to estimate the number of smokers and the extent of cigarette consumption; the number of cars is known; and it is easy to estimate average monthly or annual fuel consumption... Also, it is not difficult to estimate the actual consumption of alcohol, coffee and so on. On the basis of these and similar estimates, it is possible to arrive at relatively reliable indicators of potential excise revenue, customs duties and taxes on the territory of RS. Whether these potential public revenues will also become collected budget revenue would depend on the efficacy of customs, the tax administration and the financial police. With this kind of approach, it cannot happen that statistical information indicate that we consume more alcohol than fuel, or that everyone is smoking but very few cigarettes are being imported. Therefore, by starting from an estimate of the real fiscal capacity of RS, the Government will have the opportunity to implement its measures against the gray economy, to verify the efficacy of these measures, and to test the synchronization of work on the part of its institutions. Of course, budgetary revenues should increase. However, if there is no increase in revenue, that will mean that the measures are ineffective or that we do not have a gray economy of the proportion we think we do. In that case, it will be realistic for us to consume more alcohol than our cars consume fuel (presumably so we can forget where we live) and to conclude that the smoke which surrounds us comes not from tobacco but from marijuana which is not a high excise good.
Regardless of the already established budgetary projections for the year 2001, during the budget period the Government will retain the ability to continuously harmonize its collection policies and the expenditure of public revenue with real fiscal capacity. This should remain its primary orientation. It would not be good if the Government were to begin granting the wishes of individual ministries during the course of the year. This would only contribute to a reproduction of the situation it inherited, and discredit its own economic policies. Consistency in the conduct of budgetary policies, it is true, will force the Government to make some very difficult reforms. The introduction of financial discipline in the economic sector has already led to the blocking of accounts of a large number of companies. Some of them will be forced into bankruptcy. Even though many people will experience this as a catastrophe, it is nevertheless a contribution to general efficacy. However, our discipline with regard to taxpayers will be reflected in demands for a more rational and cheaper government and its institutions. Therefore, the Government will have to begin the painful process of reforming state institutions. In a large number of instances, this will mean the closing of certain institutions in several domains. This will reduce public spending to a realistic framework and enable gradual economic growth. A alternative where all the institutions would be retained and brought to the level of normal functionality is quite improbable because it assumes a sudden economic boom, an impossibility under the given circumstances.
Therefore, the Government has no choice but to perfect its technique of plucking geese in such a way as to produce the least amount of squawking.
I haven't said anything in this article that the people in the Government don't already know. However, in conclusion I would just like to remind them that in our case what is frequently involved is the plucking of wild geese and a different method needs to be used. Inexperienced hunters have been known to frighten an entire flock and chase it away into a neighbor's marsh, especially when hunting in that other marsh is not allowed.