1. EXECUTIVE SUMMARY 5 2. POLITICS 6 Bosnia’s government adopts SAA adjustment protocol 6 EU General Affairs Council recommends launch of application procedure for Bosnia 6 99.8% vote in favour of Republic Day holiday in Republic Srpska referendum 7 Bosnian prosecution starts investigation into Republika Srpska’s banned referendum 9 President of Republika Srpska to sue Bosnian president, challenge constitutionality of Independence Day 10 Bosnia suspends chief prosecutor on suspicion of favouring Republika Srpska president 12 3. MACROECONOMIC OVERVIEW 13 IMF executive board approves €553.3mn loan deal with Bosnia 13 4. REAL SECTOR 14 4.1. GDP, forecasts 14 World Bank raises Bosnia’s 2016 GDP growth forecast to 2.8% 14 4.2. Inflation 15 CPI deflation in Bosnia deepens to 1.2% y/y in August 15 4.3. Industry and trade 16 4.3.1. Industrial production 16 Bosnia’s industrial production growth accelerates to 7.2% y/y in June 16 Bosnia’s industrial production growth decelerates to 0.3% y/y in July 17 4.4. Labour and retail 18 4.4.1. Unemployment and wages 18 Bosnia’s registered unemployment rate falls to 41.6% in June 18 Wages dip in Bosnia but rebound expected by year-end 19 4.4.2. Retail 19 Bosnia’s retail sales growth accelerates to 4.9% y/y in June 19 5. EXTERNAL SECTOR AND TRADE 20 5.1. Balance of payments 20 Bosnia’s Q1 current account gap expands 64.9% y/y to €183.3mn 20 5.2. Trade 21 Bosnia’s 8-mo foreign trade deficit narrows 3.3% y/y 21 5.3. Foreign direct investment (FDI) 21 Bosnia’s net FDI more than doubles y/y to €66.7mn in Q1 2016 21 5.4. External debt 22 Bosnia’s foreign debt falls 0.2% y/y to €4.4bn at end-June 22 5.5. Foreig reserves 22 Bosnia’s FX reserves grow 8.9% y/y at end-July 22 6. PUBLIC SECTOR 23 6.1. Budget 23 Bosnia’s H1 consolidated budget revenue at 55% of end-year plan 23 Bosnian Republika Srpska's H1 budget revenue at 97% of plan 24 Bosnia’s indirect tax revenue rises 3% y/y to €2.18bn 24 Bosnian Republika Srpska's public revenues stay flat y/y through August 25 6.2. Government debt 25 Bosnia’s Republika Srpska sells out €20.5mn 7-year T-bond issue 25 Bosnia’s Republika Srpska raises €7.7mn in 6-month T-bills 26 7. FINANCIAL SECTOR AND CAPITAL MARKETS 26 8.1. Banking system 26 Bosnia’s M1 money supply grows 14.7% y/y at end-July 26 Bosnian bank deposits grow 7.1% y/y at end-July 27 Bosnia’s bank assets grow 3.6% y/y in July 27 Share of non-performing loans in Bosnia falls to 12.1% in Q2 28 8.2. Credit ratings 29 S&P affirms Bosnia’s B/B rating with stable outlook 29 8. INDUSTRY AND SECTOR NEWS 29 Bosnia formally asks Russia to lift ban on imports 29 9. MAJOR CORPORATE NEWS 30 KfW to borrow Bosnia €60mn for construction of Hrgud wind park 30 Croatia's INA offers €2.15mn for remaining 33% stake in Bosnia's Energopetrol 30 Bosnia probes MOL CEO over Energopetrol privatisation 31 BAT-funded CID buys 39.9% of Bosnian tobacco maker FDS for €21.8mn 32 Bosnian Energopetrol's management says INA’s buyout bid acceptable 34 Bosnia’s opposition SDP BiH files claim against Federation’s PM Novalic on sale of stake in tobacco firm FDS 34
Bosnia and Herzegovina Country Report - September, 2016 Description
Bosnia and Herzegovina Country Report - September, 2016
This report covers the main macroeconomic releases from September 1 until September 30, 2016 as well as the financial and political events that took place in Bosnia during this period.
The EU General Affairs Council decided on September 20 to recommend to the European Council to launch the procedure for granting Bosnia & Herzegovina candidate status, rewarding the country for its efforts to move towards its EU future despite internal tensions and disagreements.
The International Monetary Fund (IMF) approved a three-year extended arrangement with Bosnia & Herzegovina for an amount equivalent to SDR443.042mn (€553.3mn). The IMF will immediately disburse around €79.2mn to Bosnia, and the remainder will be available in 11 installments subject to quarterly reviews.
The World Bank has improved its projection for Bosnia & Hercegovina’s economic growth in 2016 to 2.8% from 3% last year, which should result in the creation of new jobs.
99.8% of voters in Bosnia & Herzegovina’s Republika Srpska supported the celebration of Republic Day, despite the holiday being declared unconstitutional by the state-level constitutional court.
Bosnia & Herzegovina’s state-level prosecution has launched an investigation into the September 25 referendum in Republika Srpska, and has reportedly summoned the president of the entity, Milorad Dodik, for questioning.
The High Judicial and Prosecutorial Council of Bosnia and Herzegovina (VSTV BiH) said on September 28 it has temporary suspended chief prosecutor Goran Salihovic, following a request from the country’s Office of Disciplinary Council (UDT). The council provided no explanation, but local news outlet Klix.ba wrote on the same day that the chief prosecutor has been investigated on suspicion of abuse of office, apparently benefitting the president of Republika Srpska, Milorad Dodik.
CPI deflation slightly deepened to 1.2% y/y in August
The working-day adjusted industrial production increased 7.2% y/y in June
The foreign trade gap narrowed 3.3% y/y to BAM4.36bn (€2.23bn) in the first eight months of 2016