International Monetary Fund. Monetary and Capital Markets Department
Since 2014, the CBBH has been exposed to a negative spread on the reinvestment of the reserve requirements. Until 2014, the CBBH remunerated reserve requirements on the basis of the returns achieved on their reinvestment in the euro area money market. In 2014, when the European Central Bank (ECB) cut the deposit facility rate below zero, the CBBH decided not to follow the ECB in the remuneration of reserve requirements and to floor such remuneration to zero. Subsequently, in 2016, the CBBH decided to remunerate excess reserves at 50 percent of the ECB deposit facility rate and to continue remunerating reserve requirements at 0 percent. This exposes the CBBH to a negative spread of about 0.25 percent and 0.45 percent between the reinvestment yield and the remuneration of excess reserves and reserve requirements, respectively.
Based on a new database of State-Owned Enterprise (SOE) financial statements, we find that
SOEs in Bosnia and Herzegovina are mostly in poor financial shape. We estimate the overall
size and composition of the SOE sector, and identify individual companies that affect fiscal
and macroeconomic performance. Financial analysis suggests that SOEs are not contributing
enough to the economy. We also review the SOE governance framework and find that
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.