REPUBLIC OF SRPSKA
MINISTRY OF FINANCE
Trg Republike Srpske 1, Banja Luka; Tel. 051/339-768; 051/339-179; Fax 051/339-655; www.vladars.net; e-mail mf@mf.vladars.net
Number: 06.08/444-246/13
Date: 25 September 2013
Pursuant to the Decision on the issue of Republic of Srpska bonds for the settlement of liabilities arising
from tangible and intangible damage caused during the war between 20 May 1992 to 19 June 1996 ("Official
Gazette of the Republic of Srpska", number 78/13) and the Rulebook on the conditions and procedure of the
issue of securities ("Official Gazette of the Republic of Srpska", number 60/12), the Minister of Finance issues
the following:
PROSPECTUS
for including the eight issue of the Republic of Srpska bonds for the settlement of liabilities
arising from tangible and intangible damage caused during the war
between 20 May 1992 to 19 June 1996 on the stock market
1.
1.1.
RESPONSIBLE PERSONS
Minister Zoran Tegeltija, PhD
STATEMENT
1.2.
"After taking all necessary measures, I hereby declare to the best of my knowledge that the information
contained in the prospectus is complied with the facts, as well as that the information which could
affect the accuracy and completeness of the prospectus is not omitted”.
/SEAL:
REPUBLIC OF SRPSKA
MINISTRY OF FINANCE
BANJA LUKA/
2.
2.1.
MINISTER
Zoran Tegeltija PhD
/handwritten signature/
RISK FACTORS
 In accordance with the Law on Borrowing, Debt and Guarantees of the Republic of Srpska
("Official Gazette of the Republic of Srpska", number 71/12) and the Decision on the issue of
Republic of Srpska bonds for the settlement of liabilities arising from tangible and intangible
damage caused during the war between 20 May 1992 to 19 June 1996 ("Official Gazette of the
Republic of Srpska", number 78/13), the liabilities arising from the issued Republic of Srpska
bonds are absolute and unconditional liability of the Republic of Srpska, and shall be equally
treated and be at least in the same range as all other current and future liabilities for whose
settlement the funds are provided by the Republic of Srpska.

The funds for the settlement of principal, interest and other costs related to the issue are planned
by the Republic of Srpska budget. The repayment of Republic of Srpska debt is done from the
incomes of the Republic of Srpska and presents the priority liability. The risk of failure to fulfil
obligations arising from the Republic of Srpska debt, including the liabilities arising from this
issue, is reduced to a minimum.
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
So far the Republic of Srpska has issued 18 bond issues, on the basis of the settlement of internal
debt as follows: five issues for the settlement of liabilities arising from old foreign currency
savings (RSDS-O-A, RSDS-O-B, RSDS-O-C, RDSD-O-D and RSDS-O-E), two issues for the
settlement of liabilities to suppliers (RSOD-O-A and RSOD-O-B), one issue for the settlement of
liabilities arising from enforceable court decisions (RSIO-O-A), seven issues of bonds for the
settlement of liabilities arising from war damage (RSRS-O-A, RSRS-O-B, RSRS-P-C, RSRS-0D, RSRS-O-E, RSRS-O-F and RSRS-O-E) and three issues of the long-term Republic of Srpska
bonds by public offering (RSBD-0-A, RSBD-O-B and RSBD-O-C). In addition to the above, the
12th issue of the Republic of Srpska treasury bonds was issued, with maturity date less than one
year. All coupons due for payment to the date of preparation of this prospectus are paid within the
legally prescribed deadline.

Taking into account that this issue is the eight issues of bonds for the settlement of liabilities
arising from the war damage, we present more information for this type of debt, i.e., a total of
BAM 291.55 million of bonds of nominal value of BAM 1.00 has been issued so far. On the basis
of due coupons, BAM 11.68 million was paid for the repayment of interest.
2.1.
3.
3.1.
3.2.
INFORMATION ABOUT ISSUER
Name of the issuer: Republic of Srpska - Ministry of Finance
 Seat: Banja Luka
 Address: Trg Republike Srpske 1
 Issuer’s identification number: 107000132538115
 E-mail mf@mf.vladars.net
 Tel. 051/339-768
 Fax 051/339-655
Events which could be important for the assessment of the issuer’s liquidity:

The Law on Borrowing, Debt and Guarantees of the Republic of Srpska ("Official Gazette of the
Republic of Srpska" number 71/12) defines the manner and procedure of borrowing, issuing the
guarantees and issues of securities of the Republic of Srpska, local self-government units and
social security funds and the provision of funds for the debt repayment, keeping records on the
debt, guarantees and securities, as well all other issues related to the debt, guarantees and
securities of the Republic of Srpska, local self-government units and social security funds.

The law defines the framework for borrowing, by which the top limit for the amount of long-term
and short-term debt of the Republic of Srpska was determined, as well as the lower limit of
exposure of the Republic of Srpska arising from the given guarantees.

The authorization for each borrowing and issuance of the guarantees of the Republic of Srpska is
the jurisdiction of the National Assembly of the Republic of Srpska.

The issue of bonds on the basis of the internal debt of the Republic of Srpska, consisted of the
war damage, old foreign currency savings and other general unpaid liabilities of the Republic of
Srpska Budget incurred to 31 December 2002, is defined by the following regulations: the Law
on Internal Debt of the Republic of Srpska ("Official Gazette of the Republic of Srpska", number
1/12, 28/13 and 59/13), the Law on the Settlement of Liabilities Arising from the Old Foreign
Currency Savings ("Official Gazette of Bosnia and Herzegovina", number 28/06, 76/06, 72/07
and 97/11), the Law on Conditions and Manner of Settlement of Liabilities Arising from Old
Foreign Currency Savings by the Issue of Bonds in the Republic of Srpska ("Official Gazette of
the Republic of Srpska", number 1/08).
3.3.
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
3.3.
These issues of bonds present the manner of settlement of the existing debt, and as such they
do not affect the increase in the debt, while the liquid bonds (with which the funds are
collected by public offering) create the new debt in the moment of issue.
ECONOMIC INDICATORS
The structure of economy according the participation in gross domestic product (GDP) for 2011
and 2012

In 2011 the nominal GDP in the amount of BAM 8 682.4 million was achieved, and the real
growth was 0.8%. The following activities had the largest share in the structure of GDP of the
Republic of Srpska in 2011:
1) industry (mining and quarrying, processing industry, production and supply of
electricity, gas, steam and air conditioning), 15.3% of GDP;
2) trade, 12.1% of GDP;
3) agriculture, forestry and fishery, 10.2 % of GDP;
4) public administration and defence, compulsory social insurance, 10.1% of GDP
5) information and communications, 4.9% of GDP;
6) real estate business, 4.8% of GDP;
7) the activity of heath care and social work, 4.8% of GDP;

In 2012 the estimate nominal GDP is BAM 8 594.2 million, and the rate of real growth is 1.0%. The following activities had the largest share in the structure of GDP of the Republic of
Srpska in 2012:
1) industry (mining and quarrying, processing industry, production and supply of
electricity, gas, steam and air conditioning), 14.2% of GDP;
2) trade, 12.2% of GDP;
3) public administration and defence, compulsory social insurance, 10.2% of GDP
4) agriculture, forestry and fishery, 9.7 % of GDP;
5) information and communication, 5.1% of GDP;
6) the activity of heath care and social work, 5.0% of GDP
7) real estate business, 4.9% of GDP;
3.4.
Source: The Republic of Srpska Institute of Statistics
PUBLIC INVESTMENTS

Because of a great importance which the Government gives to the increase in investment and
employment, which is important for the economic development of the Republic of Srpska, not
only on a shot-term basis, but also on a long-term basis, the Government agreed and provided the
funds for the investments in the amount of BAM 1.6 billion in the period from 2014-2016 (of
which BAM 1.5 billion for the investments in social and economic development, and BAM 0.1
billion for the investments in the strengthening of administrative and technical capacities).
Within the agreed investments in the period from 2014-2016 the biggest investments will be in
the sector of traffic and transport infrastructure - 38.4% of all investments, then the sector of
health and social protection with 18.1%, the sector of industry, energy and mining with 17.0%
and the sector of agriculture, forestry and water management with 15.4% and other sectors with
11.1% of total investments.

In addition to the above, the additional investments in the amount of BAM 4.3 billion were
announced-planed as the priority, for which the activities for the closing of financial constructions
are being implemented. Of the planned investments, the sector of industry, energy and mining
was emphasised as the most important priority - primarily the sector of energy which relates to
67.0% of all investments, then the sector of traffic infrastructure with 25.0%.
3.5.
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
3.5.
4.
At the same time, starting with the economic possibilities of the Republic of Srpska and the
commitment of the Republic of Srpska Government to protect and preserve work positions, as
well as to provide the support to the economy and to stimulate the investments, the program for
the support to investments and creation of new work positions was adopted under which the new
investments are directly stimulated from the Republic of Srpska budget. On the basis of the first
public call, the Government, at the session held on 18 April 2013, adopted the "Decision on the
provision of funds for the support to the investments and employment" in the total amount of
BAM 14.308 million for four business subject which with the agreements on the provision of
funds were concluded.
PUBLIC FINANCES AND TRADE
TAX SYSTEM

4.1.
Tax system is consisted of all types of taxes i.e. public revenues. The Basic division of taxes is
the following:
 Direct taxes i.e. taxes connected with economic power, through the possession of the
property and income. These taxes are the jurisdiction of the Republic of Srpska. The
legislation which regulates the field of direct taxes in the Republic of Srpska are the
following:
o The Law on Personal Income Tax ("Official Gazette of the Republic of Srpska", No.
91/06, 128/06, 120/08, 71/10 and 1/11);
o The Law on Corporate Income Tax ("Official Gazette of the Republic of Srpska", No.
91/06, 57/12);
o The Law on Real Estate Tax ("Official Gazette of the Republic of Srpska", No.
110/08 and 118/08);
o The Law on Taxes for Using, Keeping and Carrying Goods ("Official Gazette of the
Republic of Srpska", No. 37/01 and 35/07).

Indirect taxes are the taxes connected with the consumption (VAT, excises, custom duties,
etc.) Indirect taxes in 2005 were transferred on the level of Bosnia and Herzegovina. The
regulations which regulate this area are adopted by the Parliamentary Assembly of BiH and
are applicable in the whole territory of BiH:
o The Law on Value Added Tax ("Official Gazette of BiH", No. 9/05, 35/05 and
100/08);
o The Law on Excises in BiH ("Official Gazette of BiH", No. 49/09),
o The Law on Customs Policy in BiH ( "Official Gazette of BiH", No. 57/04, 51/06,
93/08 and 76/11);
o Law on Customs Tariff ("Official Gazette of BiH", No. 58/12).
BUDGET SYSTEM

The budget system of the Republic of Srpska is regulated by the Law on Budget System of the
Republic of Srpska ("Official Gazette of the Republic of Srpska", No. 121/12). The law regulates
the preparation, planning, method of development and adoption of the Republic of Srpska budget,
the budget of municipalities and cities and financial plan of funds, and the implementation of the
budget of the Republic, the budget of municipalities and cities and financial plan of funds, as well
as the borrowing and the management of debt and budget accounting, control and audit of the
budget of the Republic, municipalities and cities, and financial plan of funds.

The document of framework budget of the Republic of Srpska is adopted by Government of the
Republic of Srpska. The budget of the Republic of Srpska and consolidated statement on the
imp0lementation of the Republic of Srpska Budget is adopted by the National Assembly of the
Republic of Srpska. The adopted documents are published on the web page of the Government of
the Republic of Srpska www.vladars.net, under segment of the Ministry of Finance.
4.2.
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PUBLIC DEBT

Total debt of the Republic of Srpska includes the public debt of the Republic of Srpska, the
debt of public companies and the Republic of Srpska Investment and Development Bank and
public sector institutions. The public debt of the Republic of Srpska is the debt of the Republic
of Srpska, the debt of local self-government units and the debt of social security funds.
Pursuant to the Law on Borrowing, Debt and Guarantees of the Republic of Srpska the total
debt at the end of fiscal year cannot be higher than 60% of the achieved GDP in that year, and
the public debt at the end of fiscal year cannot be higher than 55% of the achieved GDP in that
year.

Public debt of the Republic of Srpska on 31 December 2012 amounts BAM 3 770.22 million,
compared to GDP1 43.87%, while the total debt is BAM 4 668.99 million, compared to GDP
54.33% , and is consisted of:
o the debt of the Republic of Srpska (budget) in the amount of BAM 3 131.49 million;
o the debt of the local self-government units in the amount of BAM 354.84 million;
o the debt of the social security funds in the amount of BAM 283.89 million;
o the debt of public companies and the Investment and Development Bank in the amount
of BAM 898.78 million.

Total debt of the Republic of Srpska on 31 December 2012 amounts BAM 4 668.99, and on
the basis of origin is consisted of:
 foreign debt in the amount of BAM 2 653.16 million, and is consisted on
o the debt of the Republic of Srpska (budget) in the amount of BAM 1 721.38 million of
BAM;
o the debt of the local self-government units in the amount of BAM 33.00 million;
o the debt of public enterprises and the Republic of Srpska Investment and Development
Bank in the amount of BAM 898.78 million.
4.3.

o




internal debt in the amount of BAM 2 015.84 million, and is consisted on
the debt of the Republic of Srpska (budget) in the amount of BAM 1 410.11 million of
BAM;
o the debt of the local self-government units in the amount of BAM 321,83 million;
o the debt of the social security funds in the amount of BAM 283.89 million;
Internal debt of the Republic of Srpska (budget) is:
o projected internal debt (old foreign currency savings, war damage and general
obligations) in the amount of BAM 1 190.61 million;
o debt incurred by the issue of treasury bonds of the Republic of Srpska in the amount of
BAM 69.50 million;
o debt incurred by the issue of the long-term bonds of the Republic of Srpska in the
amount of BAM 150.00 million.
Foreign and internal debt has been regularly paid off, and on the basis of that, in 2012 in the
Main Treasury Book the amount of 327.97 million was registered for expenditures. Of the
mentioned amount BAM 152.10 million relates to the repayment of foreign debt, and BAM
161.44 million for the repayment of internal debt, while for the repayment of the internal debt
of the social security funds-indirect debt is BAM 14.42 million.
Internal debt on 31 December 2011 is BAM 1 440.71 BAM, which relates to:
o projected internal debt (old foreign currency saving, war damage and general obligation)
in the amount of BAM 1 266.71 million:
o debt incurred by the issue of treasury bonds of the Republic of Srpska in the amount of
BAM 54 million;
o debt incurred by the issue of the long-term bonds of the Republic of Srpska in the
amount of BAM 120 million.
Internal debt has been regularly paid off and during 2011, BAM 117.17 million was paid.
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FOREIGN TRADE

The scope of foreign trade of the Republic of Srpska in 2011 was BAM 7 138.3 million. Of that
amount, BAM 2 560.8 million relates to import, while BAM 4 577.5 million for export. Foreign
trade deficit in 2011 was BAM 2 016.7 million, and the coverage of import by export was 55.9%.
The results of the comparison of the data on the achieved import and export in the period January December 2011 with the same period 2010 were the following:
a) the scope of foreign trade exchange was higher by 14.6%;
b) the export higher for 17.9%;
c) the import higher for 12.9%.
Compared to the achieved GDP during 2010, the export was 29.5% of GDP, while the import was
52.8% of GDP.

The scope of foreign trade exchange of the Republic of Srpska in 2012 was BAM 6 861.9 million.
Of that amount, BAM 2 374.3 million relates to import, while BAM 4 487.5 million for export.
Foreign trade deficit in 2011 was million 2 113.2 BAM, and the coverage of import by export was
52.9%.
The results of the comparison of the date on the achieved import and export in the period January December 2012 with the same period 2011 were the following:
d) the scope of foreign trade exchange was lower for 3.9 %;
e) the export lower for 7.3 %;
f) the import lower for 2.0 %.
Compared to the achieved GDP during 2011, the export was 27.1% of GDP, while the import was
51.1% of GDP.
4.4
FOREIGN EXCHANGE RESERVE


4.5

Foreign exchange reserves are kept for the whole BiH and are regulated by the Central Bank
of BiH;
At the end of 2011, the level of gross foreign exchange reserves of BiH amounted BAM 6.42
billion;
At the end of 2012, the level of gross foreign exchange reserves of BiH amounted BAM 6.51
billion.
Source: Central Bank of BiH
REVENUES AND EXPENDITURE


4.6


Total revenues in the Budget of the Republic of Srpska for 2011 were BAM 1 780.76 million,
of which BAM 1 544.39 million were domestic revenues, and the remaining part were
revenues from financing.
Total expenditures in the Budget of the Republic of Srpska for 2011 were BAM 1 747.76
million. In the Main Treasury Book the liabilities of budget users incurred to 31 December
2011 were registered, for which there were no available budget funds in 2011, in the amount
of BAM 62.53 million.
In 2012 the planned budget revenues and proceeds were achieved in the amount of BAM 1
814.33 million, of which BAM 1 555.84 were budget incomes.
Budget expenditures and expenses in 2012 were BAM 1 802.51 million. In the Main Treasury
Book the liabilities of budget users incurred to 31 December 2012 were registered, for which
there were no available budget funds in 2012, in the amount of BAM 84.63 million.
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5.
IMPORTANT CHANGES

5.1.
6.
COURT, ADMINISTRATIVE AND ARBITRATION PROCEEDINGS

6.1.
7.

The Republic of Srpska fulfils all the obligations arising from administrative, court and
arbitration proceedings, in accordance with legislation.
The funds for the enforcement of final court ruling are planned every year in the Republic of
Srpska budget.
DOCUMENTATION AVAILABLE FOR THE INSIGHT

7.1.
The data contained in point 4 of this Prospectus were taken from laws and by-laws and
documents adopted by the Republic of Srpska Government and Republic of Srpska national
Assembly.
On the website of the Republic of Srpska Government www.vladars.net, under segment
Ministry of Finance, the following documents are available: the Republic of Srpska budget,
document of framework budget, consolidated statement on the implementation of budget,
information about debt, economic policy.
/SEAL:
REPUBLIC OF SRPSKA
MINISTRY OF FINANCE
BANJA LUKA/
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MINISTER
/handwritten signature/
Zoran Tegeltija PhD