\r\n\t\u00a0<\/p>\r\n
\r\n\tSince then a public drinking fountain has been installed as a temporary solution, but the tap water is still contaminated.<\/p>\r\n
\r\n\t\u00a0<\/p>\r\n
\r\n\tGlogonj\u2019s toxic water is just one of many infrastructure woes across Serbia and Bosnia and Herzegovina that authorities have promised to fix using loans from international development banks and some governments.<\/p>\r\n
\r\n\t\u00a0<\/p>\r\n
\r\n\t\tCommitment fee is a necessary harm, you cannot avoid it<\/p>\r\n<\/div>\r\n
\r\n\tAs with many of the other loans, the money hasn\u2019t been fully spent, problems remain unsolved and taxpayers are paying a double price.<\/p>\r\n
\r\n\t\u00a0<\/p>\r\n
\r\n\tOnce for not getting the services they need.<\/p>\r\n
\r\n\t\u00a0<\/p>\r\n
\r\n\tAnd twice for fees levied by banks on loans not used on time.<\/p>\r\n
\r\n\t\u00a0<\/p>\r\n
\r\n\tBetween the beginning of 2008 and June 30 2015, Serbia spent \u20ac35.2 million in fees for unused loans while Bosnia paid \u20ac12.4 million, according to research by the Center for Investigative Journalism of Serbia<\/em> (CINS). The CINS chose the almost eight-year period to get a critical mass of data to assess the extent of money unnecessary wasted on fees.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tThat \u20ac47.6 million could buy around 35.8 million meals for poor people at public kitchens in Belgrade \u2013 or keep the main soup kitchen in Tuzla in Bosnia open for 44 years, according to running costs estimated by the charities and authorities.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\t“It’s a waste of money”, said Erol Mujanovic<\/strong>, an economic analyst from Bosnia, adding that high fees were a sign of reckless borrowing by authorities unable \u2013 or unwilling \u2013 to implement projects.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\t“We go back to politics or corruption. Or both.\u201d<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tGlogonj is a microcosm of many of the inefficiencies plaguing public projects in the Balkans.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tThe village is in the municipality of Pancevo and problem with water supply was supposed to be solved with the loan from Germany\u2019s KfW<\/em> Development Bank – \u20ac25 million was intended to clean up local water and sewerage systems in mid-sized municipalities in Serbia. Pancevo got \u20ac3 million.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tUnder the contract\u2019s terms, the funds should be fully drawn down by the end of 2016. Yet by the end of last June, only half of the money had been spent and Serbia had paid \u20ac286,000 in fees for the unused part of the loan.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\t\tThat \u20ac47.6 million could buy around 35.8 million meals for poor people at public kitchens in Belgrade \u2013 or keep the main soup kitchen in Tuzla in Bosnia open for 44 years <\/span><\/p>\r\n<\/div>\r\n \r\n\tThe charges were so-called commitment fees that are typical of many development loans. The size of fees depends mostly on the amount borrowed and pace at which funds are spent. Since projects usually take place in stages, money is withdrawn in phases. Commitment fees are charged for unused parts of the loan. If money is not used on time more fees are paid. These fees come on top of normal interest charged.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tIn Glogonj\u2019s case, the project was dogged by delays from the beginning.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tManagement of the public utility company in charge of cleaning up the water supply changed six times since 2010. Property disputes thwarted construction of a proposed new reservoir, with which the project should have begun.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\t“We have given up on construction of the new reservoir because it was concluded that we have made so much progress in reducing consumption and rationalization of production between 2005 and 2015 (\u2026) that the general project is no longer applicable,” said Aleksandar Radulovic<\/strong>, who was manager of Public Utility Company Water Supply and Sanitation<\/em> Pancevo until July 2011, and reappointed last September.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tRadulovic says that frequent changes in management could have slowed the project, but not significantly.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\t\tThe fact that the penalties for non-use of loans are paid mean that all taxpayers pay for the failures of state institutions <\/span><\/p>\r\n<\/div>\r\n \r\n\tEconomists cite a raft of reasons why Serbia and Bosnia are late in carrying out important infrastructure projects: creaking administration; lumbering procurement procedures; inadequate project documentation; political interference in technical matters; poor planning; difficulty expropriating land; limited control over contractors; and general delays in meeting deadlines.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\t“Commitment fee is a necessary harm, you cannot avoid it”, said Edin Tokic<\/strong> from the Ministry of Finance and Treasury of Bosnia and Herzegovina. He adds that there are not many ways to come up with the funds for infrastructure projects, so the state has to accept the rules of the creditors.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tSvitlana Pyrkalo<\/strong>, a spokeswoman for the European Bank for Reconstruction and Development<\/em> (EBRD), said the fees were a normal part of doing business with development banks since the lending institutions have to cover operating costs.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tCreditors that levy commitment fees include the EBRD, Germany\u2019s KfW<\/em>, Austria\u2019s Raiffeisen Bank<\/em> and governments of some countries.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\t\u201cThese fees do create an incentive to the client, in this case governments, to utilise the funding in a timely manner,\u201d Pyrkalo said.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tSuch incentives clearly failed in parts of Serbia and Bosnia, where unemployment rates are 18 percent and 28 percent, respectively, and gross domestic product is among Europe\u2019s lowest.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tCINS reporters filed freedom of information requests to Bosnian and Serbian financial institutions, analyzed hundreds of pages of public records, and found that in dozens of cases authorities were late implementing infrastructure projects, often due to poor planning.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tThe result was far higher commitment fees than needed in a part of Europe where every euro, dinar and mark counts.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tRoads, power plants, waterworks, education, health, rail transport, agriculture \u2013 fees for unused loans have hit all sectors.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\t\tDuring 2013 and 2014, \u20ac268,463 of commitment fees were paid for the construction of Sarajevo roundabout, Photo: CINS<\/p>\r\n<\/div>\r\n \r\n\tIn both Serbia and Bosnia, the bulk of fees on unused loans have come from transport infrastructure projects.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tBetween the beginning of 2009 and the end of 2014, Bosnia paid \u20ac5.79 million in fees for six road construction projects \u2013 about 1.44% of the total value of loans for the road works.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tOver the past seven and a half years, Serbia has paid more than \u20ac13 million in fees for nine roads construction projects \u2013 about 1.1% of the loans\u2019 worth.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tOsman Lindov<\/strong>, a professor at the Faculty of Transport and Communication<\/em> of the University of Sarajevo, said Bosnia had enough money for infrastructure projects, but institutions do not implement them because the people in charge, which are not prepared and competent enough, do not realize that without good traffic communication there is no serious economic development.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tDelays in construction of Bosnia\u2019s Corridor Vc, a north-south motorway, cost \u20ac3.76 million in fees. Implementation of an EBRD loan of \u20ac205 million started in 2009. The money was supposed to be used by 2012, but the deadline was extended for two more years.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tPublic company Highways of Federation<\/em> was in charge of implementing the loan. The company has only existed since 2011. In a written reply to CINS, it said the fact it had previously been only a directorate within the Ministry of Transport and Communications slowed things down when it came to withdrawing the money.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tCorridor Vc<\/em> is part of an international highway network and construction of the Bosnian stretch has been fraught with problems. The project was set in motion before the precise route had even been finalized. On one section of the corridor, the main contractor was changed three times.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n \r\n\tSince 2013, the Prosecutors\u2019 Office of Bosnia and Herzegovina has been investigating the payment of fees and failure to use loans for roads construction, primarily Corridor Vc<\/em>. The Prosecutors\u2019 Office declined to answer questions on the status of the investigation.<\/p>\r\n \r\n\t\u00a0<\/p>\r\n\r\n\tAll about commitment<\/h2>\r\n
\r\n\tMoney for nothing<\/h2>\r\n
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