Key developments and challenges

The major challenge in Bosnia and Herzegovina remains constitutional reform, without which further progress towards a more efficient state, implementation of a comprehensive reform and growth agenda and EU approximation will be difficult to achieve.

The privatisation process has virtually come to a stand-still in recent years, depriving the entities of much-needed privatisation revenues, in particular in the Federation of Bosnia and Herzegovina (FBH).¹ The sale of major companies in the aluminium, construction, telecommunications and trade sectors remains a priority.

The International Monetary Fund (IMF) stand-by arrangement (SBA) signed in July 2009 remains on track. The agreement includes a commitment by the authorities to public sector reform, in particular in the FBH, and continued implementation of politically difficult cuts to benefits and public sector wages.