Bosnia and Herzegovina: 2025 Article IV Consultation-Press Release; Staff Report; Staff Supplement; and Statement by the Alternate Executive Director for Bosnia and Herzegovina
September 4, 2025
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Heightened political tensions are slowing reforms and progress toward EU
accession. Growth has been resilient, but inflation has accelerated recently following a
rapid decline in 2024. Fiscal policy in 2025 has turned expansionary, driven by
discretionary measures; spending composition has deteriorated. Larger deficits in both
entities (FBiH, RS) are expected to be financed mainly through foreign borrowing. The
currency board (CBA) coverage ratio continues to rise, and the financial sector remains
healthy and profitable amid high household credit growth. Nevertheless, central bank
independence is under pressure. Furthermore, large increases in the minimum wage risk
undermining competitiveness and encouraging labor market informality.
accession. Growth has been resilient, but inflation has accelerated recently following a
rapid decline in 2024. Fiscal policy in 2025 has turned expansionary, driven by
discretionary measures; spending composition has deteriorated. Larger deficits in both
entities (FBiH, RS) are expected to be financed mainly through foreign borrowing. The
currency board (CBA) coverage ratio continues to rise, and the financial sector remains
healthy and profitable amid high household credit growth. Nevertheless, central bank
independence is under pressure. Furthermore, large increases in the minimum wage risk
undermining competitiveness and encouraging labor market informality.
Subject: Capital spending, Expenditure, Financial institutions, Loans, Securities, Social security contributions, Taxes
Keywords: Capital spending, Europe, General government statement, Global, invitation to opposition party, Loans, RS president, RS's share, Securities, share of road toll reserve, Social security contributions
Pages:
83
Volume:
2025
DOI:
Issue:
252
Series:
Country Report No. 2025/252
Stock No:
1BIHEA2025001
ISBN:
9798229023283
ISSN:
1934-7685
