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Bosnia and Herzegovina Economical Facts

 

Economical overview

Bosnia has had a hard time recovering after the armed conflict of the 1990s when GDP per capita fell to one fifth of what it was before the war. The transition to a market economy is also slowed by the deep political divide. As a result, lenders such as the EU and the IMF have on several occasions withdrawn promised funding.

Before the war there was an industrial base built on mining, metal industry and forestry. But Bosnia was a poor part of Yugoslavia, and the war broke down the already fragile economy, unemployment spread and the country became dependent on foreign aid. Many industries were destroyed or forced to close, either because of direct war actions or as a result of disruptions in transport and electricity and fuel supply, among others.

  • Countryaah.com: Major imports by Bosnia and Herzegovina, covering a full list of top products imported by the country and trade value for each product category.

After the end of the war, the outside world pumped in billions of dollars for reconstruction and growth was double-digit for a few years, albeit from a low level. As aid flows began to decline, growth fell sharply. Between 2000 and 2008, the economy grew by an average of 5–6 percent per year. Thereafter, growth fell due to the global financial crisis and was negative for a couple of years. A large part of the foreign investment that disappeared, and neither they nor growth have recovered to the same levels as before the crisis.

GDP per capita in purchasing power standards represents just under one third of the EU average.

  • Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including BIH which represents the country of Bosnia and Herzegovina.

Economical Facts of Bosnia and Herzegovina

Floods in 2014 (see Modern History) meant a particular setback for the economy. The costs of reconstruction are estimated to have corresponded to around 10 percent of GDP and diluted the budget deficit.

The difficulties in getting the economy to recover are greater than many predicted after the end of the war. With good access to raw materials and low production costs, Bosnia seems to have good conditions for attracting foreign investors. But political instability, corruption, and hard-to-find bureaucracy and poor coordination between various public administrations seem daunting.

Bosnia suffers from continued high unemployment, and a large part of the population lives below the poverty line. Many support themselves in the black sector, ie the informal economy with barter and exchanges that are not registered by the authorities. For many Bosnians, money that relatives abroad send home is an important income. Money shipments from abroad declined for a number of years, but in 2010–2018 stood at just over a tenth of GDP, a high figure in Europe.

A law on the sale of state-owned companies was adopted in 1998. Many small and medium-sized companies were privatized within a few years, but with the sale of large companies, things have become slower. Concerns that jobs will disappear and rivalry between the various groups of people have helped to slow down sales. There is also criticism that sales have enriched individuals and have not benefited the general public.

In 2012, the IMF granted a loan of approximately EUR 400 million over two years to alleviate the difficulties caused by the financial crisis. On the other hand, Bosnia undertook, among other things, to lose the bureaucracy, implement changes in grant and pension systems and increase the pace of privatization of state-owned enterprises. The IMF loan was considered particularly important as it would be followed by support from the EU and the World Bank. But the payments were frozen several times because of politicians' inability or unwillingness to implement promised reforms. The agreement expired in 2015 without the entire loan being paid off, leaving large gaps in the budgets for both entities. They had to turn to commercial lenders, which drew criticism partly because it was unclear who these were.

The IMF granted a new three-year support program of EUR 550 million in 2016. A payment was made before the loan was frozen in early 2017. Once again, the Bosnian leaders had failed to live up to promises of, among other things, increased fuel taxes, new banking laws and the restructuring of telecom companies for future privatization.

In connection with the corona crisis, in April 2020, Bosnia was promised a temporary IMF loan.

FACTS - FINANCE

GDP per person

US $ 5,951 (2018)

Total GDP

US $ 19,782 million (2018)

GDP growth

3.1 percent (2018)

Agriculture's share of GDP

6.0 percent (2018)

Manufacturing industry's share of GDP

12.8 percent (2018)

The service sector's share of GDP

55.6 percent (2018)

Inflation

1.1 percent (2019)

Government debt's share of GDP

34.3 percent (2018)

External debt

US $ 14 495 million (2017)

Currency

convertible marks

Merchandise exports

US $ 6,083 million (2018)

Imports

US $ 10,624 million (2018)

Current account

- US $ 829 million (2018)

Commodity trade's share of GDP

99 percent (2018)

Main export goods

wood, paper, steel, energy

Largest trading partner

Croatia, Serbia and Montenegro, Germany, Austria

2009

December

The Constitution discriminates, according to the European Court of Justice

The European Court of Human Rights states that the Bosnian constitution discriminates against ethnic minority groups, since only Bosniaks, Serbs and Croats have the right to become president or members of the upper house, the people's house. The so-called Sejdić-Finci case has been raised by two Bosnian citizens, one of whom is Roma and a Jew. After the turn of the year, Parliament voted for the constitution to be amended.

October

Biljana Plavšić is released from prison

Biljana Plavšić, president of Republika Srpska 1996-1998, is released from prison in Sweden where she served a war crime. A government airplane is sent from Republika Srpska to pick her up. In Bosnia, many war victims are upset.

The trial of Karadžić begins

Bosnian Serbs leader during the civil war Radovan Karadžić refuses to resign when the trial against him officially begins in The Hague, citing that he has not been given enough time to prepare. He has previously pleaded not guilty to the 11 charges against him, two of which involved genocide. Karadžić was arrested in Serbia in 2008 and handed over to the UN War Criminal Tribunal in The Hague.

June

The High Representative stops law

The High Representative Inzko uses his special powers and refuses legislation passed by the Parliament of the Republic of Srspska in May, which meant, among other things, that control of police and judiciary would be transferred from the national level to the two entities. Inzko points out that the law contravenes the Dayton Agreement.

New Head of Government of the Federation

Mustafa Mujezinović, of the Bosnian party SDA, is appointed new Prime Minister of the Federation. Representative Nedžad Branković resigned in May following allegations of misappropriated public funds.

May

The US vice president condemns nationalist rhetoric

US Vice President Joe Biden visits Bosnia. He strongly condemns the nationalist rhetoric that permeates politics in the country.

March

Brčko's status is determined

Parliament approves a constitutional amendment that upholds Brčko's status as a neutral and autonomous area. The international community monitoring and management of Brčko will cease from 1 September.

New High Representative is appointed

Austrian Valentin Inzko is appointed new High Representative and new EU envoy, following Miroslav Lajčák who resigned in January to become Foreign Minister of Slovakia.

 

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