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SARAJEVO (Bosnia and Herzegovina), February 13 (SeeNews) – The International Monetary Fund (IMF) said on Tuesday that despite Bosnia's progress in maintaining the stability of its macroeconomic conditions, job creation has been limited, unemployment has remained high and the income convergence with the EU has stalled.
Limited progress has been made in improving budget composition and reforms of state enterprises have not progressed according to plan, while capital spending has not risen as expected largely due to financing constraints, the fund noted in a statement following the completion on February 9 of an Article IV consultation with Bosnia and Herzegovina.
Although some progress has been made in the country's business environment, institutional weaknesses and weak coverage and quality of public infrastructure remain the key factors undermining private sector development and foreign investment.
Last week, the fund said it will make available 74.6 million euro ($92.1 million) to Bosnia, after completing the first review of the country's economic performance under the Extended Fund Facility (EFF).
Following the reviews passing, the Executive Board of the fund warned that significant challenges and risks remain in Bosnia.
It emphasised that strong ownership and commitment to the EFF program objectives and targets is essential to enhance job creation, boost growth, and achieve income convergence with the European Union.
The Executive Board also underscored that priority should be given to upgrading physical infrastructure, lowering the fiscal and administrative burden on businesses, further reforming the labor market, improving governance of State-Owned-Enterprises, and enhancing competition.
The IMF executive board approved the 36-month, 553.3 million euro arrangement under the EFF for Bosnia and Herzegovina on September 7, 2016.
The fund projects that Bosnia's GDP will expand to 3.2% in 2018, after growing 2.7% last year.