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Overview

  • Country Context

    The political system in BiH is complex, reflecting the provisions of the country’s constitution developed to end ethnic conflict, as well as subsequent changes to the system introduced under the guidance of the international community through the Office of the High Representative.

    In July 2015, the Council of Ministers of BiH, Government of Republika Srpska (RS), and Government of the Federation of Bosnia and Herzegovina (FBiH) adopted a joint program of structural reforms known as the reform agenda. This reform agenda presents a rare window of opportunity for structural reforms in BiH, underpinned by a broad national consensus on the country’s critical challenges and priorities and the sustained support of key development partners.

    BiH’s key economic challenge is the imbalance of its economic model: public policies and incentives are skewed toward the public rather than the private sector, consumption rather than investment, and imports rather than exports.

    The country needs to shift to a business environment conducive to private investment that supports both vibrant small and medium-sized enterprises and the growth of larger companies, facilitates export performance and productivity improvements, and generates much-needed private sector employment.

    At the same time as addressing these imbalances in the economic model, the country must also ensure the sustainability and inclusiveness of future growth.

  • Strategy

    To design this new strategy, a systematic diagnostic analysis was carried out to clarify the challenges that BiH faces on the road to growth and prosperity and to identify possible solutions.The WBG Country Partnership Framework for 2016–20 provides analysis, advice, and financing to accelerate the implementation of reforms designed to promote economic growth.

    The fundamental conclusion is that BiH can attain sustainable growth that will benefit broad groups of society only if it takes decisive steps to make the public sector leaner and more efficient and to unleash the growth and job creating potential of the private sector.

    Through the strategic framework, the WBG supports reforms in three areas:

    • Increasing public sector efficiency and effectiveness
    • Creating conditions for accelerated private sector growth
    • Building resilience to natural shocks


    Key Engagement

    Improving Road Connectivity and Safety in BiH. A €58 million International Bank for Reconstruction and Development (IBRD) loan for the Federation Road Sector Modernization Project was approved in August 2016, cofinanced by the European Investment Bank and the World Bank. This project is the first Bank operation in the transport sector in BiH since 2007, reflecting a renewed focus on connectivity and the need to strengthen key economic infrastructure as the country advances toward EU accession.

    The project aims to improve road connectivity and safety for users along selected roads and to strengthen capacity for sustainable management of the main road network in FBiH. Fully 178 kilometers of main roads will be rehabilitated, including three tunnels and nine bridges. Additionally, the construction of the new route M17.3 (Neum-Stolac road) should stimulate growth in the southern parts of BiH through improved accessibility to the Adriatic coast, boosting tourism development and creating jobs.

    In addition to infrastructure works, the project will support the Public Enterprise Roads FBiH in its efforts to improve the financial sustainability of these and future investments and to streamline climate resilience and road safety considerations into road design and construction, ensuring a better understanding of the network’s potential vulnerabilities to extreme weather and climate change.

    The project is the first phase of the BiH Transport Sector Modernization Program and will be implemented in FBiH. The Program, organized as a series of projects, will flexibly support the longterm development of transport in BiH, allowing for subsequent phases to be developed in other parts of the country as technical and financial opportunities arise.

  • View All Active Projects

    Project Spotlight

    Better than Before - Rebuilding in Bosnia and Herzegovina

    In May 2014, unprecedented rainfall in BiH affected more than 1 million people (25% of the population), and the resulting heavy flooding caused estimated damages and losses equivalent to nearly 15% of the country’s GDP.

    In a country where one- fifth of the workforce is employed in agriculture, river floods inundated newly plowed fields and ravaged 81 municipalities, severely disrupting the economy and imperiling livelihoods. The World Bank participated in a systematic recovery needs assessment, led by the BiH authorities and supported also by the EU and the United Nations. The assessment provided a basis for developing effective rehabilitation measures for infrastructure and services in the affected areas.

    In response to the crisis, the Bank promptly met the Government’s request to provide financial support for emergency goods and the rehabilitation of highpriority infrastructure by approving a US$100 million from the WBG’s Crisis Response Window. The project was declared effective within a record two and a half months after approval.

    Key project results to date:

    • Overall, by delivering emergency recovery goods and supporting the rehabilitation of regional and local infrastructure, the project has benefited over 580,000 people in flood affected areas. It is estimated that 51% of beneficiaries are women.
    • The project has already recovered about 248 infrastructure facilities to pre-flood condition, thus exceeding the end target of 200.

LENDING

Bosnia and Herzegovina: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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In Depth

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Economic Update

Western Balkans Regular Economic Report

This is a semi-annual report on recent economic developments and economic outlook in the Western Balkans.

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Engagement Strategy

Country Partnership Strategy

The latest strategy for working with the country outlines key development priorities for the period of 2016-2020.

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Featured Project

BiH Employment Support Program

What does the future of the BiH labor market hold? Read in this summary.

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Regional Economy

The Western Balkans Labor Market

Countries in the region have created roughly 300,000 jobs since 2010. But more needs to be done to address high unemployment.