Bosnia and Herzegovina Country Report - July , 2016

August 6, 2016

This report covers the main macroeconomic releases from July 6 until August 5, 2016 as well as the financial and political events that took place in Bosnia during this period.
Bosnia & Herzegovina has pledged to undertake a number of reforms aiming to improve fiscal and banking stability in order to strike a new deal with the International Monetary Fund (IMF), according to the country’s letter of intent that is yet to be signed by two of three authorities.
Meanwhile, Bosnia & Herzegovina failed to send a properly signed letter of intent to the International Monetary Fund (IMF) by the deadline that expired on July 21, losing the chance to sign a new agreement with the fund.
Ten days later, on July 31, Bosnia sent a properly signed letter of intent to the IMF) on July 31, clearing its way to sign a new agreement with the fund.
The use of €50mn in funding wired to Investment and Development Bank (IRB) - the state development bank of Bosnia & Herzegovina’s smaller entity, Republika Srpska - from the European Investment Bank (EIB) is being investigated.
The government of Bosnia & Herzegovina’s smaller entity – Republika Srpska – has adopted a special law on analysing and announcing its own version of the 2013 census results. The entity refused to acknowledge the results announced by the state-level statistics office on June 30, claiming that the methodology used for processing of the data was wrong.
While thousands of Bosnians gathered to commemorate the victims of the Srebrenica massacre on July 11, many Bosnian Serbs including top politicians still deny that this was the bloodiest massacre since the Holocaust. The genocide was not marked by officials in Republika Srpska – the Serb-dominated smaller entity that makes up Bosnia & Herzegovina together with the Muslim-Croat Federation.

Key points:
• CPI deflation held at .5% y/y in June
• The retail sales, measured at constant prices, increased by 3.5% y/y in May
• The foreign trade gap narrowed 2.1% y/y to BAM3.2bn (€1.6bn) in the first half of 2016

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