Bosnia and Herzegovina: country overview
23 August 2012by Ina Dimireva -- last modified 30 January 2017
Bosnia and Herzegovina - along with other Western Balkans countries – was identified as a potential candidate for EU membership during the Thessaloniki European Council summit in June 2003. Since then, a number of agreements between the EU and Bosnia and Herzegovina have entered into force - visa facilitation and readmission agreements (2008), Interim Agreement on Trade and Trade-related issues (2008). The Stabilisation and Association Agreement (SAA) has been ratified and entered into force on 1 June 2015.
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Member of Schengen area: No
Political system: Republic
Capital city: Sarajevo
Total area: 51 209 km²
Population: 4.6 million
Currency: Bosnian convertible mark
Economy overview
Bosnia 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, now control most of the banking sector. The konvertibilna marka (convertible mark or BAM) - the national currency introduced in 1998 - is pegged to the euro, and confidence in the currency and the banking sector has remained stable.
Interethnic warfare in Bosnia and Herzegovina caused production to plummet by 80% from 1992 to 1995 and unemployment to soar, but the economy made progress until 2008, when the global economic crisis caused a downturn. Bosnia and Herzegovina became a full member of the Central European Free Trade Agreement in September 2007.
Bosnia's private sector is growing slowly, but foreign investment has dropped sharply since 2007. Government spending - including transfer payments - remains high, at roughly 40% of GDP, because of redundant government offices at the national, sub-national, and municipal level. High unemployment remains the most serious macroeconomic problem. Successful implementation of a value-added tax in 2006 provided a steady source of revenue for the government and helped rein in gray-market activity. National-level statistics have also improved over time but a large share of economic activity remains unofficial and unrecorded. Bosnia and Herzegovina's top economic priorities are: acceleration of integration into the EU; strengthening the fiscal system; public administration reform; World Trade Organization membership; and securing economic growth by fostering a dynamic, competitive private sector.
General
Bosnia and Herzegovina - along with other Western Balkans countries – was identified as a potential candidate for EU membership during the Thessaloniki European Council summit in June 2003.
Since then, a number of agreements between the EU and Bosnia and Herzegovina have entered into force - visa facilitation and readmission agreements (2008), Interim Agreement on Trade and Trade-related issues (2008).
Common Foreign and Security Policy and the European Security and Defence Policy
The EU continues to deploy considerable resources in Bosnia and Herzegovina within the framework of the Common Foreign and Security Policy (CFSP) and the European Security and Defence Policy (ESDP). The current EU Special Representative (EUSR), Peter Sorensen, is also Head of the Delegation of the European Union.
The EUFOR/Althea mission continues to be present in Bosnia and Herzegovina. Following an improved security situation, EU EUFOR/Althea forces were reduced from 6000 to around 2000. The mandate of the EU Police Mission (EUPM) has been extended until the end of June 2012. The EUPM continues to focus on police reform, as well as the fight against organised crime and corruption.
Useful links
Delegation of the EU to Bosnia and Herzegovina
Government of Bosnia and Herzegovina
Source: Europa, The World Factbook
