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Bosnia and Herzegovina Country Report - May, 2015

  • June 2015
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 27 pages

This report covers the main macroeconomic releases from May 6 until June 5, 2015 as well as the financial and political events that took place in Bosnia during this period.

The IMF said that Bosnia needs an ambitious policy agenda to accelerate growth and reduce unemployment, while maintaining macroeconomic stability. The country should focus on more reforms that would improve the business environment, attract investment, and raise the economy's growth potential.

At the same time, Ron van Rooden, who as leading an IMF mission to the country, said that Bosnia needs to complete many tasks in order to sign a new agreement with the IMF.

The European Bank for Reconstruction and Development (EBRD) lowered its 2015 growth projection for Bosnia to 2.5% in the May edition of its Regional Economic Prospects from 2.7% in the January edition. Bosnia is expected to benefit from lower oil prices. Rebuilding of flood-damaged areas should also support the economic growth in 2015 and 2016.

On the other hand, the government's Directorate for Economic planning (DEP) forecasted that Bosnia's economy should expand by 2.6% in 2015.

The ruling coalition in country's bigger entity, the Federation, collapsed after the Democratic Front (DF) withdrew its support for the government of Prime Minister Fadil Novlic. The crisis was sparked by Novalic's decision to propose to the government a change in the procedure for appointing managers of state-controlled companies, without informing the respective ministers.



Key points:

oThe working-day adjusted industrial production rose by 2.2% y/y in April, accelerating from a 0.4% y/y in March

oRetail sales, measured in constant prices, increased by 10.5% y/y in April, accelerating from a 6% y/y expansion in the previous month

oThe consolidated budget posted a surplus of BAM65.1mn (EUR33.3mn) in 2014

Table Of Contents

Bosnia and Herzegovina Country Report - May, 2015
EXECUTIVE SUMMARY5

REAL SECTOR6

1.GDP6

EBRD lowers Bosnia's 2015 GDP growth forecast to 2.5%6

Bosnia's economy to grow by 2.6% in 2015, 3.2% in 2016 - DEP6

2.Inflation7

Bosnia's Federation industrial PPI falls 0.6% y/y in April7

Bosnia's Federation CPI flattens y/y in April7

3. Industry and Trade7

Bosnia's industrial production growth speeds up to 2.2% y/y in April7

Bosnia's Serb Republic industrial production rises 2.3% y/y in April8

Bosnia's retail sales growth speeds up to 10.5% y/y in April8

Bosnia's distributive trade turnover up 4.9% y/y in Q18

Bosnia's Federation foreign trade deficit falls 3.8% y/y to EUR688mn in Jan-Apr9

Bosnia's Serb Republic foreign trade deficit falls 9.7% y/y to EUR273.8mn in Jan-Apr9

Bosnia's Federation retail sales growth improves to 6.5% y/y in April9

Bosnia's Federation distributive trade turnover up 6.3% y/y in Q110

Bosnia's Federation industrial production up 1.5% y/y in April10

Bosnia's Serb Republic distributive trade turnover down 1.7% y/y in Q110

Bosnia's Serb Republic retail trade turnover rises 4% y/y in April11

4. Tourism11

Bosnia's Serb Republic tourist arrivals rise 15.6% y/y in Jan-Apr11

5. Labour Market11

Bosnia's registered unemployment rate falls to 43.6% in March11

Bosnia's Federation number of employed up 1.5% y/y in March11

Bosnia's Federation average net wage rises 0.4% y/y in March12

Bosnia's Serb Republic average net wage up 1.6% y/y to EUR427 in April12

FISCAL SECTOR, MONETARY POLICY12

Bosnia's consolidated budget posts EUR33.3mn surplus in 201412

Bosnia's parliament approves 2015 budget draft with 12.9% lower spending12

Bosnia's indirect tax revenue rises 2.6% y/y to EUR1bn in January-April13

Bosnia's Serb Republic public revenues rise 3% y/y in January-May13

Bosnia's Federation sells out EUR15.3mn three-year T-notes issue13

Bosnia's Federation to offer EUR25.6mn in six-month T-bills, three-year T-notes in June14

Bosnia's Federation sells out EUR10.2mn six-month T-bills14

Bosnia's Federation sells out EUR15.3mn three-year T-notes issue14

Bosnia's Serb Republic sells out EUR28.6mn 5-year T-notes issue15

Bosnia's Serb Republic raises EUR7.6mn from six-month T-bills, yield rises15

FINANCIAL INTERMEDIATION15

Bosnia's bank deposits increase 6.6% y/y to EUR7.9bn at end-April15

Bosnia's bank assets growth accelerates to 3.1% y/y at end-April16

Bosnia's FX reserves rise 12.1% y/y at end-April16

Bosnia's M1 money supply growth speeds up to 9.8% y/y at end-April16

Bosnia's Federation Q1 banking system profit at EUR31.7mn17

Bosnia's Federation leasing sector posts EUR473,000 profit in Q117

EXTERNAL SECTOR17

Bosnia's external debt rises 8.7% y/y to EUR4.4bn in Q117

STRUCTURAL REFORMS, CORPORATE PLANS18

Bosnia's Brod refinery Q1 net loss up 74% y/y to EUR11.8mn18

Drug producer Bosnalijek's net profit plunges 61% y/y to EUR414,743 in Q118

Western Balkans launches new financial reporting programme to meet EU standards18

Germany's KfW lends EUR47.5mn to Bosnia for renewable energy projects19

Bosnia to launch construction of EUR256mn A1 motorway stretches in 201519

Bosnia to borrow EUR50mn from EIB for road upgrades20

EC says Bosnia needs country-wide strategies on transport, energy, environment20

Energy Community refers Albania, Bosnia, Macedonia for failing to adopt renewable action plans21

IMF urges Bosnia to introduce reforms to accelerate growth, reduce unemployment21

Bosnia needs to complete many tasks to reach new loan agreement - IMF's van Rooden22

POLITICS23

Bosnian Federation ruling coalition collapses23

Bosnia's Federation govt changes management of Aluminij, Elektroprivreda HZ HB to end political crisis24

Leaders of Bosnian ruling coalition agree on compromise over management of Federation's state-owned firms25

Bosnia's parliament approves changes in criminal code to meet MONEYVAL criteria26

Bosnia's ruling coalition faces crisis over management of Federation's state-owned firms27

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