Bosnia and Herzegovina Country Report - July , 2016

Bosnia and Herzegovina Country Report - July , 2016
This report covers the main macroeconomic releases from July 6 until August 5, 2016 as well as the financial and political events that took place in Bosnia during this period.
Bosnia & Herzegovina has pledged to undertake a number of reforms aiming to improve fiscal and banking stability in order to strike a new deal with the International Monetary Fund (IMF), according to the country’s letter of intent that is yet to be signed by two of three authorities.
Meanwhile, Bosnia & Herzegovina failed to send a properly signed letter of intent to the International Monetary Fund (IMF) by the deadline that expired on July 21, losing the chance to sign a new agreement with the fund.
Ten days later, on July 31, Bosnia sent a properly signed letter of intent to the IMF) on July 31, clearing its way to sign a new agreement with the fund.
The use of €50mn in funding wired to Investment and Development Bank (IRB) - the state development bank of Bosnia & Herzegovina’s smaller entity, Republika Srpska - from the European Investment Bank (EIB) is being investigated.
The government of Bosnia & Herzegovina’s smaller entity – Republika Srpska – has adopted a special law on analysing and announcing its own version of the 2013 census results. The entity refused to acknowledge the results announced by the state-level statistics office on June 30, claiming that the methodology used for processing of the data was wrong.
While thousands of Bosnians gathered to commemorate the victims of the Srebrenica massacre on July 11, many Bosnian Serbs including top politicians still deny that this was the bloodiest massacre since the Holocaust. The genocide was not marked by officials in Republika Srpska – the Serb-dominated smaller entity that makes up Bosnia & Herzegovina together with the Muslim-Croat Federation.

Key points:
CPI deflation held at .5% y/y in June
The retail sales, measured at constant prices, increased by 3.5% y/y in May
The foreign trade gap narrowed 2.1% y/y to BAM3.2bn (€1.6bn) in the first half of 2016

1.GDP 6
Bosnia’s GDP growth holds at 2.1% y/y in Q1 6
GDP growth in Bosnia’s Republika Srpska cools to 2.2% y/y in Q1 6
2. Inflation 7
Bosnia’s CPI deflation stays at 1.5% y/y in June 7
Bosnia’s industrial producer prices flatten in June 7
Bosnian Federation's industrial PPI declines by 2% y/y in June 8
Bosnian Federation's CPI deflation eases to 1.5% y/y in June 8
Deflation in Bosnia’s Republika Srpska holds at 1.6% y/y in June 8
Industrial producer prices in Bosnia’s Republika Srpska rise 3.3% y/y in June 9
3. Industry and Trade 9
Bosnia’s retail sales growth slows to 3.5% y/y in May 9
Bosnian Federation’s industrial production rises 8.5% y/y in June 9
Bosnian Federation’s retail sales ease annual fall in June 10
Industrial production growth in Bosnia’s Republika Srpska slows in June 10
Retail sales growth in Bosnia’s Republika Srpska improves in June 11
4. Tourism 11
Foreign tourist arrivals in Bosnia rise 13.7% y/y through May 11
Bosnia’s Republika Srpska reports 16.3% y/y increase in foreign tourist arrivals in H1 11
Foreign tourist arrivals to Bosnian Federation fall 7.9% y/y in June 12
5. Labour Market 12
Bosnia’s average net wage turns to growth in May 12
Unemployment rate in Bosnia to fall to 25.4% in 2016, labour force survey shows 13
Number of unemployed in Bosnia falls 3.4% y/y in May, statistics office says 13
Bosnian Federation's real net wage rises 2.6% y/y in May 13
Bosnia’s registered unemployment rate falls to 41.7% in May 14
Unemployment rate in Bosnia’s Republika Srpska to reach 24.8% in 2016, survey shows 14
Real wage grows 1.8% y/y in June in Bosnia’s Republika Srpska 15
Bosnia’s indirect tax revenue rises 1.75% y/y to €1.87bn 15
Bosnian Federation’s H1 public revenues rise 11.2% y/y 15
Bosnian Federation’s H1 budget revenue at 38% of end-year target 16
Bosnia’s Republika Srpska sells out €20.5mn 5-year T-bond issue 16
Bosnia’s Republika Srpska 7-mo public revenues fall 1% y/y 16
Bosnia’s M1 money supply grows 11.5% y/y at end-May 17
Bosnia’s FX reserves grow 7.3% y/y at end-May 17
Bosnia’s bank assets slow annual growth in May to 3.7% 18
Bosnian bank deposits grow 7.7% y/y at end-May 18
Bosnia’s foreign trade deficit narrows 2.1% y/y in H1 18
Bosnian Federation’s H1 foreign trade gap expands 4% 19
Bosnian Federation’s public debt stays at €3.2bn in H1 19
Foreign trade deficit in Bosnia’s Republika Srpska narrows 17% y/y in H1 20
Bosnia pledges to cut public sector, strengthen banking system to get IMF deal 20
Bosnian Federation likely to further lower price for state's stake in Sarajevo Osiguranje 22
IMF urges Bosnia to send letter of intent within days to get new loan deal 22
EBRD lends Bosnia €65mn for road upgrades 23
Serbia’s Delta Holding to build €60mn shopping centre in Bosnia 23
Agram Group reportedly offers €10.2mn for Bosnian insurer Sarajevo Osiguranje 24
Suspected misuse of EIB funds probed in Bosnia’s Republika Srpska 25
Bosnian parliament rejects legislation to save public broadcaster BHRT 26
Bosnian Federation to offer stake in drug producer Bosnalijek on Sarajevo bourse 26
Bosnian utility EPBiH to launch project for new unit at Tuzla TPP by year-end 27
Bosnia to lose out on new IMF deal after failing to send letter of intent 28
Attempt to sell state's stake in Bosnian drug producer Bosnalijek fails on lack of bidders 29
Bosnia clears way to much needed loan deal with IMF 29
World Bank lends Bosnian Federation €58mn for road sector modernisation 30
Russia bans imports from Bosnia on lack of production security 31
Bosnian Federation offers state stake in tobacco maker Fabrika Duhana Sarajevo for sale 31
Bosnian court says Republika Srpska’s banking regulator illegally withholds data on Banka Srpske 32
IMF delays new €550mn loan deal with Bosnia 33
Bosnia’s Republika Srpska reportedly to call referendum on banned Republic Day holiday 34
Bosnia’s Republika Srpska to announce own version of 2013 census results 35
Srebrenica massacre commemoration reveals rift between Bosnian entities 36
Bosnia’s Republika Srpska could sign SAA adjustment, RS President Dodik says 37
President of Bosnia’s Republika Srpska sets referendum date for Sept 25 38
Bosnia allows EU members to import duty-free agricultural products 39
Constitutional court of Bosnia’s Republika Srpska to rule on referendum, census results 40
Bosnian Croats seek amendments before supporting coordination mechanism in parliament 41
Bosnia denies receiving information on Russia import ban

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