bne IntelliNews -

Bosnian Federation Prime Minister Fadil Novalic said he won’t dismiss ministers from the Democratic Front (DF), which withdrew its support for the government last week. The premier said he hopes to persuade the DF ministers to resume their work in the cabinet.

“They will not be able to watch that movie where I am replacing them. They have their party leader, he may replace them,” daily Avaz quoted Novalic as saying.

On June 4, DF withdrew its support for the government following Novalic's decision to propose a change in the procedure for appointing managers of state-controlled companies. According to the new rule, approved at a government session on June 4, the management of state-controlled companies will now be appointed by the government instead of by the respective ministries. Currently, the most attractive companies – those operating in the energy sector – are under the control of the energy ministry, headed by Reuf Bajrovic of the DF. Novalic said he is in contact with all ministers from DF, with the exception of Bajrovic.

A crisis within the Bosnian Federation’s government could have negative consequences for the national government under pro-EU Prime Minister Denis Zvizdic, which was approved on March 31, almost six months after the October 2014 elections. The government of the Bosnian Federation was approved on the same day. Should the ruling coalition fail to gain enough support after the withdrawal of the DF, both the central and the Federation’s governments may struggle and ultimately fall.

Meanwhile, local media report that the two parties that remain in the coalition, the hardline Croatian Democratic Union of Bosnia and Herzegovina (HDZ BiH) and the Party of Democratic Action (SDA), are making contradictory statements about whether they would seek a new partner to secure a majority in the parliament.

In May, the federation’s government was near collapse because of the lack of agreement between ministers from the three parties over the management of state-owned aluminium smelter Aluminij, the energy company Elektroprivreda HZ HB and the telecommunications company HT Mostar.

HDZ BiH’s cabinet members left a government session on May 14 after the cabinet cancelled discussions on the future of Aluminij, which is under HDZ control and might face bankruptcy over unpaid debts.

On May 19, the leaders of the three parties met and reached an agreement over the management of the state-owned companies. According to the agreement, the federation’s government would discuss at its next session the change of management at five or sex state-controlled firms that have negative financial results. At the same time, financial police would investigate the companies, as required by the DF.

Then, on May 22, the government decided to change the management of Aluminij and Elektroprivreda HZ HB, appointing temporary management in the two companies for a period of three months, who would then be replaced by permanent managers appointed by the shareholders of Aluminij and Elektroprivreda HZ HB.

DF ministers did not back the management changes approved on May 22, with party representatives insisting that they would not discuss the management of Aluminij and Elektroprivreda HB HZ until financial investigators looked into the cause of their poor financial situation.

As of December 2014, Aluminij’s debts stood at BAM213.8mn (€109.3mn), including BAM120.8mn liabilities to Elektroprivreda HZ HB and BAM67.3mn to financial institutions. Elektroprivreda HZ HB’s debts totalled BAM190mn as of end-June 2014.