Bosnia and Herzegovina overview

Cityscape

In Bosnia and Herzegovina we focus on:

Restructuring and expansion of the local private sector: Bosnia and Herzegovina has a strong industrial heritage, an abundant supply of energy, and significant resources to support processing industries. The EBRD will target local and foreign companies for investments in the country and provide financing for restructuring and expansion of smaller local companies. We will provide SME credit lines through local banks, microfinance loans and non-financial support.

Forging closer linkages with wider regional markets: A small open economy such as Bosnia and Herzegovina's can reach its full economic potential only by integrating closely with wider regional markets. Regional integration, both physical and commercial, will become even more important in the new strategy period as Bosnia and Herzegovina now has a border with the EU as of 1 July 2013, following Croatia’s accession to the EU. The EBRD will support private investments, increased trade flows and infrastructure improvements deepening regional integration. We will encourage greater private sector involvement in public infrastructure upgrades and put a strong emphasis on improvements of standards towards EU norms.

Promoting a more efficient and sustainable use of resources: Public entities and private companies make very inefficient use of existing resources, resulting in unnecessarily high energy costs and significant environmental damage. To support more efficient and sustainable use of resources, the Bank will focus on sustainable energy investments with high demonstration effects. The Bank will provide direct financing for energy and resource efficiency improvements for large corporate clients, both in the private and public sectors, and for the restructuring and commercialisation of municipal utility companies. The Bank will continue an active policy dialogue on sustainable use of resources, using technical assistance, in close cooperation with other donors.
 
The EBRD’s latest Bosnia and Herzegovina strategy was adopted on 15 January 2014
 

EBRD forecast for Bosnia and Herzegovina’s real GDP Growth in 2016 2.7%

EBRD forecast for Bosnia and Herzegovina's real GDP growth in 2017 3.0%

Bosnia and Herzegovina’s GDP grew by 3 per cent in 2015, the strongest level of growth since 2008. This was driven by a good performance of wholesale and retail trade, manufacturing and agriculture. Growth in the first half of 2016 slowed down somewhat to 1.7 per cent year-on-year, although the industry sector continued to grow at a robust rate.

In September 2016 the IMF and the Bosnian authorities signed a three-year €553 million Extended Fund Facility (EFF). The new programme will help the governments of the two entities to fill their financing gaps. IMF financing is combined with an economic programme aiming to improve the business environment, create private sector jobs and raise the economy’s growth potential.

The country’s reform agenda, introduced in mid-2015, is also advancing, with new labour laws adopted in both entities in the past year. Major infrastructure projects are also being rolled out, helping to boost growth.

We expect GDP growth to fall slightly for 2016 as a whole to 2.7 per cent, before rising again to 3 per cent in 2017. Downside risks come from political uncertainties and ongoing weaknesses in the business environment.