Bosnia and Herzegovina: Selected Issues
IMF Staff Country Reports, October 28, 2015
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- Bosnia and Herzegovina: Selected Issues
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Bibliographic details
- Published: October 28, 2015
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513578835.002
Main findings on public spending
- The size of the public sector in Bosnia and Herzegovina (BiH) is one of the largest in the region.
- The large public sector largely reflects a complex and highly decentralized governance structure.
- BiH allocates a greater share of public resources to current spending items, notably wages and social transfers.
- Poorly targeted social benefits create adverse incentives affecting informality and labor force participation.
Analysis of spending composition and implications
- Current spending priorities (wages and social transfers) limit fiscal space for investment in human and physical capital.
- Decentralization contributes to fragmentation of spending responsibilities and hampers efficiency.
- Incentive effects from the social benefit system reduce labor market participation and sustain informality, undermining potential growth.
Policy recommendations
- Refocus public spending toward human and physical capital to enhance economic growth.
- Increase spending efficiency across levels of government, addressing fragmentation from decentralization.
- Reform social benefit targeting to remove adverse incentives that discourage labor force participation and encourage informality.
Source: IMF Staff Country Report — Bosnia and Herzegovina: Selected Issues
Content in this bundle
- Bosnia and Herzegovina: Selected Issues; IMF Country Report 15/299; October 9, 2015