CHARACTERISTICS, STRUCTURE AND SUSTAINABILITY OF DEBT OF THE REPUBLIC OF SRPSKA

Abstract

The aim of the research is to address the challenges that may be a constraint on economic growth and development. In the research, we used the relevant literature and acts that were in front of the delegates at the National Assembly of Republic of Srpska. The research question is: "What are the main characteristics of the Republic of Srpska's debt?" In line with this, the methods employed in this paper are the analysis and synthesis of previous researchs, theoretical findings and publicly accessible documents pertaining to the debt of Republic of Srpska, and an overview of the case studies.  The contribution of the paper is reflected in the explained wideness and the possibilities of using different sources of money, and the limits on which the debts can be used in order to achieve sustainability tasks. We have concluded that this year, the Republic of Srpska bill has reached the largest amount of debt – KM 858 million (755 million principal and 103 million interest). In line with the presented evidence, priority should be given to projects that would be financed by advantageous credit arrangements and to rationalize public spending. Despite the usual opinion, we have proven that the debt of the Republic of Srpska is sustainable - the average interest rate is lower than the GDP growth rate and that, although unpopular, the currency board system corresponds to the position of Republic of Srpska. However, we have pointed out the danger of stereotype that the public debt of less than 60% necessarily indicates that the country is in a good position.