This Selected Issues and Statistical Appendix paper on Bosnia and Herzegovina provides background information for the 1999 Article IV Consultation with Bosnia and Herzegovina. The economy has been dominated by a small number of large state-owned enterprises. A central policy was settled during the preparation of the privatization framework under which the competence to privatize was assigned to the entities. Major tax policy reforms will be needed over the medium term to address the deficiencies of the present tax system, and to lay the foundation for long-term economic growth, driven mainly by private sector development.
Christine J. Richmond, Ms. Dora Benedek, Ezequiel Cabezon, Bobana Cegar, Mr. Peter Dohlman, Michelle Hassine, Beata Jajko, Piotr Kopyrski, Maksym Markevych, Mr. Jacques A Miniane, Mr. Francisco J Parodi, Gabor Pula, Mr. James Roaf, Min Kyu Song, Mariya Sviderskaya, Rima Turk, and Mr. Sebastian Weber
The Central, Eastern, and South Eastern European (CESEE) region is ripe for a reassessment of the role of the state in economic activity. The rapid income convergence with Western Europe of the early 2000s was not always equally shared across society, and it has now slowed dramatically in many countries of the region.
This Technical Assistance Report assesses the current government finance statistics compilation environment in Bosnia and Herzegovina (BiH), particularly the classification of institutional units and debt data compilation based on the Government Finance Statistics Manual and European System of National and Regional Accounts frameworks. It was found that a full list of public sector units in BiH does not currently exist. The Central Bank of Bosnia and Herzegovina (CBBH) is in a good starting position to compile the public sector debt data. The results of its work on financial balance sheets should enable the CBBH to produce general government debt data in a relatively short term.
This Technical Assistance Report discusses the recommendations made by the IMF mission to assist the statistical authorities of Bosnia and Herzegovina (BiH) with setting up a register of public sector units and further enhancing the debt data based on the framework of the Government Finance Statistics Manual 2014 and European System of National and Regional Accounts. It is recommended that the three statistical institutes (BiH Agency for Statistics, Institute of Statistics, and the Institute of Statistics of the Federation of BiH) should draw up a provisional list of government controlled entities before the sectorization project starts in October 2015. The list should comprise all entities where government exercises some influence.
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.