State-Owned Enterprises in Bosnia and Herzegovina: Assessing Performance and Oversight

IMF Working Papers, September 20, 2019

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Based on a new database of State-Owned Enterprise (SOE) financial statements, SOEs in Bosnia and Herzegovina are mostly in poor financial shape.
Financial analysis suggests that SOEs are not contributing enough to the economy.
Governments do not exercise their ownership function in line with WB/OECD guidelines.
Reforms to the governance frameworks are necessary to foster transparency and improve accountability.
More fundamental reform of the SOE sector might increase overall GDP by 3 percent per year.

The paper estimates the overall size and composition of the SOE sector and identifies individual companies that affect fiscal and macroeconomic performance.

Analysis is based on a new database of SOE financial statements.
The SOE sector is characterized as mostly in poor financial shape.
The study assesses SOE contribution to the economy and identifies financial shortcomings that imply limited contribution.

The SOE governance framework is reviewed against WB/OECD guidelines.
Finding: governments do not exercise their ownership function in line with WB/OECD guidelines.
Recommendation: reforms to governance frameworks to foster transparency and improve accountability.

Strengthen ownership frameworks and exercise ownership functions consistent with WB/OECD guidance to improve oversight and performance.
Implement governance reforms to increase transparency and accountability of SOEs.
Consider more fundamental sectoral reform given potential macroeconomic gains (noted potential increase in overall GDP by 3 percent per year).