Resistance to Privatization of Government-Controlled Companies Remains Strong, Report Says

A comprehensive set of reforms in Bosnia, known as the Reform Agenda, needs to be kick-started again in 2018, an annual analysis suggested. The main short-term priority in 2018 is to get the International Monetary Fund loan program back on track and complete the long-delayed first review by implementing the necessary prior actions, said the European Bank for Reconstruction and Development in its 2017-2018 transition report.

According to the report, key investment climate improvements should be targeted and implemented. Bosnian authorities have shown a willingness to engage in reforms in this area, the EBRD said; however, the challenge now is to improve the dialogue between the authorities and the private sector on investment-related issues and to deliver results in areas such as procurement reform, enhancing tax administration, and improving business registration.

Bosnia was accused of breaking Energy Community rules over thermal power plants under construction

The Bank said that the major privatizations in the Federation entity – recommended in the previous report – continue to be stalled. In March 2017, the Federation government launched a tender for the sale of its stake in the insurance company Sarajevo Osiguranje. The attempt failed due to lack of interest. However, resistance to this privatization and others within the Federation remains strong, the Bank said. There are no plans yet to commit to privatizing the telecommunications companies BH Telekom and HT Mostar, and the launch of due diligence for both companies – another prior action for the IMF program – has not started.

Bosnia has belatedly agreed to join the Western Balkans Transport Community, but it will be vital to accelerate reforms in order to benefit from the international support for infrastructure projects that promote regional connectivity.

Growth has remained positive in recent years despite adverse shocks

The Energy Community has re-introduced sanctions against Bosnia in April, due to the country’s failure to adopt necessary legislation regarding the transmission of electricity and gas at state level. Bosnia was also accused of breaking Energy Community rules over thermal power plants under construction. The Energy Community secretariat has launched a case on the environmental impact assessment of a planned coal-burning plant), saying that the plant’s environmental impact assessment procedure was not carried out in compliance with Energy Community rules. Also, the Energy Community secretariat ordered Bosnia in February to revise the permit for another coal-burning plant, thus accepting a complaint by a Sarajevo-based environmental watchdog against Bosnia’s decision to grant permission for the construction of the plant.

Macroeconomic performance has been resilient, according to the analysis. Growth has remained positive in recent years despite adverse shocks and a difficult investment climate, and short-term indicators in 2017 on industry and exports continue to move in a positive direction.

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