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Bosnian Veterans Protest Over Cuts Sought By IMF

War veterans protesting in Sarajevo

War veterans protesting in Sarajevo

SARAJEVO (Reuters) -- Several thousand veterans and invalids of Bosnia's 1992-95 war protested on June 18 in Sarajevo over government plans to cut welfare payments in order to secure a loan from the International Monetary Fund (IMF).

Protesters gathered in front of the government offices of Bosnia's Muslim-Croat federation to demand that veterans, invalids, and demobilized soldiers be exempt from the planned 10 percent cut in benefits.

Public sector workers and employees of state-owned companies will see their salaries cut by the same margin. But the demonstrating war veterans said they could least afford the cuts because their incomes were far lower.

"It is not fair that such cuts apply equally to veterans with compensation for their wartime service of only 250 Bosnian marka ($177/month) and government officials who earn at least 10 times more," one demonstrator said.

Many East European governments are being forced to take harsh austerity measures due to the crisis. Latvia's health minister resigned this week rather than push through tough cuts to help secure IMF funding.

No government official has yet addressed the Bosnian protesters. In order to win the three-year IMF loan, worth 1.2 billion euros ($1.68 billion), Bosnia's two autonomous halves, the federation and the Serb Republic, must propose revised budgets this week and find significant savings.

The federation cabinet is under particular strain because of benefits granted since the war to veterans and invalids who make up the largest welfare category and account for a large part of the electorate.

The Serb Republic is in a more favourable position thanks to privatization receipts from previous years and tighter budget controls, but it also needs to boost reserves as the effects of the global economic downturn become more visible.

Federation Finance Minister Vjekoslav Bevanda told "Oslobodjenje" newspaper: "The IMF stand-by deal is the only way out of the financial crisis. We have done our best. The only category that will be excused from the cuts are unemployed demobilised soldiers."

Under the IMF requirements, the federation must cut 414 million Bosnian marka ($294 million) in this year's budget, while the Serb republic must save 146 million marka.

The central government's consolidated budget deficit is estimated at 700 million marka or close to 5 percent of GDP.

Some analysts expect a wave of social unrest in the summer and question whether the governments will have the determination to implement the policies agreed with the IMF.

The IMF board is expected to meet on June 26 to assess Bosnia's progress. It forecasts 3 percent economic contraction this year and zero growth in 2010.