The first session of the Standing Committee for the Financial Stability of BH was held in Sarajevo, while chaired by the Governor of the Central Bank of Bosnia and Herzegovina Kemal Kozarić, Ph.D. and  featuring the state and entities' Ministers of Finance, Directors of the entities Banking Agencies and Director of the Deposit Insurance Agency of BH.

It was concluded that the financial sector in Bosnia and Herzegovina continues to show the signs of stability, although recording the  increase of non performing loans, as well as the problems with the profitability of certain number of banks in the first quarter of this year, which may enhance the  risks in the banking sector.

The preliminary stress tests have shown that banks meet the required level of capitalization, but in case of the further worsening of the economic situation, some banks would need additional capital.

As for the fiscal policy, they pointed out that it is extremely important that budgets for 2011 are planned in realistic terms and in timely manner in order to maintain fiscal position of the governments at the planned level and to have the regular servicing to the budget beneficiaries.

One of the conclusions of the Standing Committee for the Financial Stability of BH is that reforms related to the reduction of public consumption should be continued and also that it is necessary to sign the Letter of Intention with the International Monetary Fund, as soon as possible and to continue with the Stand-by Arrangement in order to maintain credibility of this arrangement and BH.

Mr Milan Cuc, Resident Representative of the IMF to BH also attended the first session of the Standing Committee for the Financial Stability, which was established by the Decision of the BH Fiscal Council.

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