Bosnia and Herzegovina declared sovereignty in October 1991 and independence from the former Yugoslavia on 3 March 1992 after a referendum boycotted by ethnic Serbs. The Bosnian Serbs - supported by neighboring Serbia and Montenegro - responded with armed resistance aimed at partitioning the republic along ethnic lines and joining Serb-held areas to form a "Greater Serbia." In March 1994, Bosniaks and Croats reduced the number of warring factions from three to two by signing an agreement creating a joint Bosniak-Croat Federation of Bosnia and Herzegovina. On 21 November 1995, in Dayton, Ohio, the warring parties initialed a peace agreement that ended three years of interethnic civil strife (the final agreement was signed in Paris on 14 December 1995).
Southeastern Europe, bordering the Adriatic Sea and Croatia
coal, iron ore, bauxite, copper, lead, zinc, chromite, cobalt, manganese, nickel, clay, gypsum, salt, sand, timber, hydropower
Population - distribution
the northern and central areas of the country are the most densely populated
Bosnian (official) 52.9%, Serbian (official) 30.8%, Croatian (official) 14.6%, other 1.6%, no answer 0.2% (2013 est.)
SARAJEVO (capital) 318,000 (2015)
- Conventional long form
- Conventional short form
- Bosnia and Herzegovina
- Local long form
- Local short form
- Bosna i Hercegovina
- Geographic coordinates
- 43 52 N, 18 25 E
- Time difference
- UTC+1 (6 hours ahead of Washington, DC, during Standard Time)
- Daylight saving time
- +1hr, begins last Sunday in March; ends last Sunday in October
has not submitted an ICJ jurisdiction declaration; accepts ICCt jurisdiction
Bosnia and Herzegovina has a transitional economy with limited market reforms. The economy relies heavily on the export of metals, energy, textiles, and furniture as well as on remittances and foreign aid. A highly decentralized government hampers economic policy coordination and reform, while excessive bureaucracy and a segmented market discourage foreign investment. Foreign banks, primarily from Austria and Italy, control much of the banking sector, though the largest bank in the Republika Srpska entity is a private domestic one. The konvertibilna marka (convertible mark) - the national currency introduced in 1998 - is pegged to the euro through a currency board arrangement, which has maintained confidence in the currency and has facilitated reliable trade links with European partners. In 2016, Bosnia began a three-year IMF loan program that requires Bosnia to meet economic reform benchmarks to receive future funding installments.
- External debt stocks
- US$ 12,887,025,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -740,991,344
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 8,664,939,042
- Exports of goods and services
- US$ 5,592,914,658
- Total Merchandise Trade
- FDI, net inflows
- US$ 259,405,862
- Commercial Service Exports
- US$ 1,700,111,548
wheat, corn, fruits, vegetables; livestock
steel, coal, iron ore, lead, zinc, manganese, bauxite, aluminum, motor vehicle assembly, textiles, tobacco products, wooden furniture, ammunition, domestic appliances, oil refining
- metals, clothing, wood products
- Slovenia 16.6%, Italy 16%, Germany 12.2%, Croatia 11.6%, Austria 11.2%, Turkey 5.3% (2016)
- machinery and equipment, chemicals, fuels, foodstuffs
- Croatia 19.3%, Germany 13.9%, Slovenia 13.8%, Italy 10.9%, Austria 5.7%, Hungary 5.2%, Turkey 4.5% (2016)
- Country Risk Rating
- A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high.
- Business Climate Rating
- The business environment is mediocre. The availability and the reliability of corporate financial information vary widely. Debt collection can sometimes be difficult. The institutional framework has a few troublesome weaknesses. Intercompany transactions run appreciable risks in the unstable, largely inefficient environments rated B.
- IMF financial aid
- Substantial remittances from workers abroad
- Signing of the Stabilization and Association Agreement between EU and Balkans
- Limited diversity in exports
- High unemployment
- Size of the informal sector
- Shortcomings in terms of infrastructure and business climate
- Institutional and ethnic fragmentation
Growth in 2017 is likely to remain steady at a moderate level. The key driving forces will be private consumption and investment. Inflation is expected to return in 2017, acting as a brake on any growth in consumption by reducing real wages. Remittances from workers abroad will however remain at a high level, despite a slowing in the rate of growth (2.9 % in 2017 compared with 5.1 % in 2016), and rising employments are likely to mitigate the wage effect on consumption. Public investment should continue on its upwards trajectory that has begun in 2016 and made possible thanks to finance provided by the European Bank for Reconstruction and Development, Kreditanstalt für Wiederaufbau, the German development bank, and the IMF. Private investment is expected to remain at a low level against its potential and will continue to be limited in a changeable business climate and an inflexible employment market, although significant investments in tourism and energy sector infrastructures were made. There is likely to be a steady but limited growth in exports, reflecting the slow pace of the recovery in the European Union. The contribution of foreign trade to growth should however be negative with consumption stimulating increased imports. The service sector should help boost growth thanks to the performances of the trade, information systems and financial services sectors.
The public accounts will remain in slight deficit in 2017. The reduction in the budget deficit has been achieved under the consolidation plan launched in 2015 and including improvements in tax collection. The budgetary consolidation has however been hindered by institutional complexity and the dispersal of expertise between the central State and the two Entities that form the Federation. In September 2016, the IMF agreed a three-year 555 million Euro Extended Arrangement. This plan should make it possible for the government to carry out reforms, whilst easing the financial constraints on the country. Thanks to this Arrangement, it should be possible to cut the level of public debt.
The current account deficit will continue at a high level in 2017. With the growth in imports resulting from strong domestic demand, the trade deficit (28.2% of GDP) will widen. Remittances from workers abroad and international grants will, as usual, help partly offset the trade deficit. FDI (2.9% of GDP) and short-term private sector debt (up 3.6% against 2016) will also have a significant positive impact on the balance of payments. Its currency reserves are likely to hold at a comfortable level, equal to approximately 7 months of imports.
Following the 1995 Dayton Accords, Bosnia Herzegovina was divided into two distinct autonomous entities: The Federation of Bosnia-Herzegovina, predominately Bosniak (Muslim) and Croat, and the Serb Republic of Bosnia. The State is headed by a collegial Presidency that is representative of the three "constitutive peoples" with an alternating presidency every 8 months. The Constitution grants only very limited powers to the central State and responsibility for foreign and monetary policy, transport and defense. The complexity of public administration has resulted in deficiencies in terms of governance and weakened the power of the central executive.
Municipal elections were held in October 2016. There has been very little change in the political stratification following these, with the positions of the nationalists confirmed in each of the entities. The political instabilities remain, with the Bosniak Muslim politicians attempting to increase the role of the central government, whilst Croat politicians strive to establish their own autonomous entity, and the Serb politicians work to block the legislative process. The announcement of the extension of the IMF program should help to encourage the Croat and Serb parties to fulfill their commitments in terms of the fiscal reforms to be implemented. There will be general elections for both the federal Presidency and the two entities in October 2018. These elections are likely to be a critical test for the current governments and should pass judgement on their performances in terms of the implementation of the reforms agreed as part of the Stabilization and Association Agreement.