The IMF has reached a staff agreement with Bosnia and Herzegovina on an arrangement under the Extended Fund Facility and on 24 May 2016 published a press release including the statements of IMF staff teams.
The economy of Bosnia is recovering and growth is expected to reach 3% in 2016. Inflation has remained low with internal and external imbalances easing in recent years. There are however still vulnerabilities in the banking system.
The economic program to be followed has been agreed between Bosnia and the IMF. The goals of the economic program are to attract investment, create private sector jobs and raise the potential for economic growth. Public debt will be eased by gradual fiscal consolidation. There will also be measures to safeguard financial stability and revive credit growth.
The planned measures include improving the functioning of the labor market; restarting the privatization and restructuring of state owned enterprises. The tax burden will be shifted away from labor. The IMF considers that tax laws and regulations should be harmonized as they apply to different entities so there is a lower administrative burden on business and no double taxation.
The process of fiscal consolidation would include improving tax collection with better cooperation between tax agencies. There would also be better targeting of social assistance to vulnerable groups including pension reform.
