Bosnia and Herzegovina: 2024 Article IV Consultation-Press Release; Staff Report

The 2024 Article IV Consultation with Bosnia and Herzegovina discusses that growth has proven resilient despite the continued fallout from the war in Ukraine. Uncertainty around the outlook is high and downside risks outweigh, including an abrupt slowdown in Europe, increased commodity price volatility, and rising domestic political tensions. On the other hand, progress on the European Union accession path could provide a reform boost, with positive spillovers. Financial sector risks should continue to be closely monitored and crisis preparedness enhanced. Bank asset classifications and loan-loss provisions should accurately reflect credit risks and losses. Temporary measures that aim to contain increases in lending rates should be allowed to lapse this year as scheduled. Transitioning to green energy and preparing for the introduction of EU carbon pricing require immediate action. The authorities should introduce carbon pricing as soon as possible. Reforms to improve governance protect financial integrity, fight corruption, and step up digitalization should be accelerated to boost growth. The oversight, transparency, and operations of public enterprises should be improved, weaknesses in public procurement addressed, and public investment management strengthened.