1. EXECUTIVE SUMMARY 5 2. POLITICS 6 Bosnian Croats seek amendments before supporting coordination mechanism in parliament 6 Constitutional court of Bosnia’s Republika Srpska clears way to census, referendum on Republic Day 6 Bosnian leaders agree on coordination mechanism for interaction with EU 8 Bosniak president asks constitutional court to halt Republika Srpska referendum 8 Serbian president holds crisis meeting over Republika Srpksa referendum 9 3. MACROECONOMIC OVERVIEW 12 Bosnia clears way to much needed loan deal with IMF 12 Bosnia to unlock €2bn funds from the EU if it strikes deal with IMF 13 4. REAL SECTOR 13 4.1. GDP, forecasts 13 Bosnia’s GDP seen to rise by 3.1% in 2016 13 4.2. Inflation 13 CPI deflation in Federation of Bosnia and Herzegovina softens to 1% y/y in July 14 CPI deflation in Bosnia softens to 1% y/y in July 14 Bosnia’s industrial producer prices fall 0.5% y/y in July 15 Bosnian Federation's industrial PPI deepens annual fall in July 16 4.3. Industry and trade 17 4.3.1. Industrial production 17 Bosnia’s industrial production growth accelerates to 7.2% y/y in June 17 Bosnia’s industrial production growth decelerates to 0.3% y/y in July 18 Bosnian Federation’s industrial production turns to 1.7% y/y fall in July 18 4.4. Labour and retail 19 4.4.1. Unemployment and wages 19 Bosnia’s registered unemployment rate falls to 41.7% in May 19 Bosnia’s average net wage growth decelerates in June 20 Number of registered unemployed in Bosnia down 4% y/y in June 20 4.4.2. Retail 21 Bosnian Federation’s retail sales ease annual fall in June 21 Bosnia’s retail sales growth accelerates to 4.9% y/y in June 22 Bosnian Federation’s retail sales turn to growth in July 23 5. EXTERNAL SECTOR AND TRADE 24 5.1. Balance of payments 24 Bosnia’s Q1 current account gap expands 64.9% y/y to €183.3mn 24 5.2. Trade 24 Bosnia’s foreign trade deficit narrows 4.1% y/y in January-July 24 5.3. Foreign direct investment (FDI) 25 Bosnia’s net FDI sinks 34.8% in 2015 25 5.4. External debt 25 Bosnia’s foreign debt grows 2.9% y/y to €4.5bn at end-2015 25 5.5. Foreig reserves 26 Bosnia’s FX reserves grow 10.9% y/y at end-June 26 6. PUBLIC SECTOR 27 6.1. Budget 27 Bosnia’s Republika Srpska 7-mo public revenues fall 1% y/y 27 Bosnia’s indirect tax revenue rises 1.75% y/y to €1.87bn 27 Bosnian Federation’s 7-mo public revenues rise 10.3% y/y 28 6.2. Government debt 28 Bosnia’s Republika Srpska sells out €20.5mn 5-year T-bond issue 28 Bosnian Federation sells out €10.2mn 3-month T-bills issue, yield turns negative 29 7. FINANCIAL SECTOR AND CAPITAL MARKETS 29 7.1. Banking system 29 Bosnia’s M1 money supply grows 14.2% y/y at end-June 29 Bosnia’s bank assets grow 3.9% y/y in June 30 Bosnian bank deposits grow 7.3% y/y at end-June 30 7.2. Credit ratings 31 Bosnia is rated B/B by S&P, B3 by Moody’s 31 8. INDUSTRY AND SECTOR NEWS 31 World Bank lends Bosnian Federation €58mn for road sector modernisation 31 Russia bans imports from Bosnia on lack of production security 32 Bosnia denies receiving information on Russia import ban 32 Bosnia to lose €25.6mn from Russia import ban 33 Russia to send phytosanitary inspectors to Bosnia on August 18 33 9. MAJOR CORPORATE NEWS 34 Bosnia’s Telekom Srpske H1 cons net profit shrinks 34.5% y/y to €13.7mn 34 Bosnian Federation offers state stake in tobacco maker Fabrika Duhana Sarajevo for sale 34 Foundation stone of €2.3bn Buroj Ozone resort to be laid in Bosnia on September 19 35 VW, Bosnian supplier resolve dispute that halted production in 6 VW plants 35 Bosnia’s Sarajevo bourse postpones auction of Fabrika Duhana Sarajevo stake
Bosnia and Herzegovina Country Report - August, 2016 Description
Bosnia and Herzegovina Country Report - August, 2016
This report covers the main macroeconomic releases from August 1 until August 31, 2016 as well as the financial and political events that took place in Bosnia during this period.
Bosnia & Herzegovina sent a properly signed letter of intent to the International Monetary Fund (IMF) on July 31, clearing its way to sign a new agreement with the fund. If the country completes the new agreement with the fund, it will also get around €2bn in funding from the European Union in the next four years.
Dragan Covic, the Croat member of Bosnia’s tripartite presidency, said that the entity has objections to the coordination mechanism adopted at the end of July, as it does not provide equal rights to them.
The constitutional court of Bosnia’s smaller entity, Republika Srpska, ruled that neither the planned referendum over the Republic Day holiday, which has been banned by the state-level constitutional court, nor the intention of the entity to announce its own version of the 2013 census results, harm the vital interests of the Bosniaks (Bosnian Muslims). Both the referendum and the census are sources of conflict between the Republika Srpska's government and the state-level authorities.
Bosniaks (Bosnian Muslims) living in Bosnia & Herzegovina’s Serb-dominated Republika Srpska, will discuss whether to secede Srebrenica from the entity in a response to the planned referendum on the Republic Day celebration.
Russian veterinary and phytosanitary body Rosselkhoznadzor has banned imports of products from Bosnia & Herzegovina as of August 4 on lack of enough proof for their safety. As a result, Bosnia could lose around BAM50mn (€25.6mn) by the end of the year.
CPI deflation eased to 1% y/y in July
The working-day adjusted industrial production edged up 0.3% y/y in July
The foreign trade gap n arrowed 4.1% y/y to BAM3.8bn (€1.9bn) in the first seven months of 2016