Political party financing is one of the most poorly regulated fields in the election process in Bosnia and Herzegovina (BiH). Laws and laws and regulations that monitor political party financing are obsolete, incomplete, with insufficient scope, stipulating "extremely low sanctions which allow potential violations to occur without adequate consequences. Certain segments that refer to the topic of political party financing are not regulated by a legal framework. For example, abuse of public funds for party purposes, regulation of work regarding linked legal entities in partial or complete ownership of political parties, or highly ranked party officials are not regulated by a legal framework.
BiH did not fulfill the majority of recommendations of the Group of States against Corruption (GRECO), which relate to the political party financing segment. Within the third evaluation cycle on “Political Party Financing”, GRECO provided a total of 9 recommendations to BiH authorities which relate to the improvement of political party financing. Just one recommendation was implemented satisfactory, five partially, and three not at all.
There are a lot of recorded, often practically proven, problems and shortcomings of the legal framework both content-wise and in a technical sense for financial operations of business parties (recording and reporting on incomes, expenditures, debts, etc.), reporting on financial operations (lack of transparency, violation of reporting deadlines, etc.), and financial operations control (lack of capacities, lack of coordination, untimely control, not sanctioning corruptive political influence, etc.). (listed further in this Summary).
All of the above shows the necessity to improve legislation in the field of political party financing, which is an integral segment of improvement for the entire election process, which BiH and its citizens have long waited for.
Key findings of the “Analysis of post-election financial reports of political parties on the election campaign for General Elections 2018 (with analysis per political parties)” are as follows:
One third (34%) of political parties didn’t submit post-election financial reports on the election campaign for General Elections 2018 or submitted them after the deadline, which is an improvement in comparison to Local Elections 2016 when 57% of political parties failed to do it
General Elections 2018 election campaign expenditures were 9.6 million BAM (14% of the allowed limit), which is about 2.6 million BAM more than was spent on Local Elections 2016 election campaign
In the campaign, political parties spent most of the funds in the cost category of “Other propaganda costs” (26% of total expenditures of all political parties, i.e., as much as 2.5 million BAM) – in this cost classification the spending of the public money, which is the majority of their funding, is not transparent. This cost category has been increased more than three times in comparison to the Local Elections 2016 (filing expenditures under this category is hiding real costs of political parties in an election campaign)
Political parties gained revenue in all categories of 15.6 million BAM during the analyzed reporting period
As much as 70% of political party revenues during the analyzed reporting period come from the budgets of different levels of authority, i.e., the citizens mostly finance the political parties
Political party expenditures during the analyzed reporting period, including the election campaign and administrative-operative expenditures, were 19.8 million BAM and are higher by 4.2 million BAM than the recorded revenue – practically, that means that parties operated at a “loss” of 4.2 million BAM during the General Elections 2018 election campaign
Political subjects reported total debt of 8.6 million BAM during the analyzed reporting period
19 parliamentary political parties on the state and entity level, which are a part of a special analysis sample, achieved total revenue of 13.8 million BAM during the analyzed reporting period
Total expenditures of 19 selected political parties for the said reporting period were 17.6 million BAM and are higher by 3.8 million BAM than the recorded revenue
19 political parties in the selected sample of this analysis covered a total of 88% of achieved revenue of all political parties that participated in the General Elections 2018 (total of 69 political parties)
It is those parties with the most funds at their disposal that win the most votes and mandates in elections for state and entity Parliaments; in simple terms – you get what you pay for
Top 5 political parties per achieved revenue are Party of Democratic Action (SDA), Independent Social-Democratic Alliance (SNSD), Social-Democratic Party (SDP BiH), Alliance for Better Future (SBB) and Croat Democratic Community BiH (HDZ BiH) – those are, with Serb Democratic Party (SDS) in the sixth place, also the only political parties that achieved a revenue over one million BAM
Top 5 political parties per recorded expenditures are Party of Democratic Action (SDA), Social-Democratic Party (SDP BiH), Alliance for Better Future (SBB), Serb Democratic Party (SDS) and Independent Social-Democratic Alliance (SNSD)– those are, with on Croat Democratic Community BiH (HDZ BiH) in the sixth place, also the only political parties that spent over one million BAM during the reporting period, including the election campaign
19 political parties from the sample reported total debt of 7.5 million BAM, which takes around 88% of total debt of all political parties.