Press Release No. 14/569

Press Release: Statement at the Conclusion of an IMF Mission to Bosnia and Herzegovina

December 12, 2014

An International Monetary Fund (IMF) mission, led by Mr. Ron van Rooden, visited Banja Luka and Sarajevo during December 3-12, 2014, to assess recent economic developments and continue discussions on policies for the eighth review under Bosnia and Herzegovina’s Stand-By Arrangement (SBA). At the conclusion of the visit, Mr. Ron van Rooden made the following statement:

“The economic recovery appears to be more resilient than previously thought to the impact of the natural disaster that hit Bosnia and Herzegovina last May. Industrial production and exports have picked up and tax revenues have continued to recover. Even though growth is expected to reach close to 1 percent this year, the outlook remains subject to considerable uncertainty, including due to the limited disbursements of donor support for the reconstruction effort. Risks of a jobless recovery remain high as the roots of unemployment are predominantly structural.

“The financial sector remains well capitalized and stable at the aggregate level, having withstood the impact the impact of the floods well. The mission welcomes the authorities’ swift response in addressing problems identified in a small bank, including through close coordination within the Standing Committee for Financial Stability.

“The mission discussed progress in implementing policies agreed under the SBA that are aimed at containing current government spending, including the costs of privileged pensions; improving tax compliance and fighting tax fraud; strengthening financial sector stability and enhancing banking supervision. Prompt implementation of these policies would pave the way for consideration of the eighth review under the SBA by the IMF Executive Board in January 2015.”