Bosnia and Herzegovina Country Report - August, 2016

September 15, 2016

This report covers the main macroeconomic releases from August 1 until August 31, 2016 as well as the financial and political events that took place in Bosnia during this period.
Bosnia & Herzegovina sent a properly signed letter of intent to the International Monetary Fund (IMF) on July 31, clearing its way to sign a new agreement with the fund. If the country completes the new agreement with the fund, it will also get around €2bn in funding from the European Union in the next four years.
Dragan Covic, the Croat member of Bosnia’s tripartite presidency, said that the entity has objections to the coordination mechanism adopted at the end of July, as it does not provide equal rights to them.
The constitutional court of Bosnia’s smaller entity, Republika Srpska, ruled that neither the planned referendum over the Republic Day holiday, which has been banned by the state-level constitutional court, nor the intention of the entity to announce its own version of the 2013 census results, harm the vital interests of the Bosniaks (Bosnian Muslims). Both the referendum and the census are sources of conflict between the Republika Srpska's government and the state-level authorities.
Bosniaks (Bosnian Muslims) living in Bosnia & Herzegovina’s Serb-dominated Republika Srpska, will discuss whether to secede Srebrenica from the entity in a response to the planned referendum on the Republic Day celebration.
Russian veterinary and phytosanitary body Rosselkhoznadzor has banned imports of products from Bosnia & Herzegovina as of August 4 on lack of enough proof for their safety. As a result, Bosnia could lose around BAM50mn (€25.6mn) by the end of the year.

Key points:
• CPI deflation eased to 1% y/y in July
• The working-day adjusted industrial production edged up 0.3% y/y in July
• The foreign trade gap n arrowed 4.1% y/y to BAM3.8bn (€1.9bn) in the first seven months of 2016

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