Governor Softić at the Summit of the Governors, Finance Ministers and Directors of Tax Admin.

June 16, 2017

The CBBH Governor, Senad Softić, Ph.D. is in Bečići, Montenegro at the Summit of Governors, Ministers of Finance and Directors of the Taxation Authorities of the region. This year's theme of the Summit is "Financial stability of the region in the new global environment", and the Governor was a panelist in the session entitled "Monetary Policy countries in the region - between the US Federal Reserve and the European Central Bank".

During his speech, the Governor especially emphasized the need for coordination between monetary and fiscal policy, and the importance of the presence of the IMF in terms of BH. "In the conditions of the Currency Board, monetary policy is ineffective in stimulating the economic activities. However, there is no doubt that, from the standpoint of financial stability, the coordination of monetary and fiscal policy is necessary, "said Governor Softić. He also explained to the participants the principle of formal cooperation between the relevant institutions in BH in the field of preserving financial stability through the Standing Committee for Financial Stability (SOFS). SOFS is the main forum for the assessment of threats to financial stability, where the CBBH and banking agencies are responsible for assessing the systemic character of the financial crisis.

In connection with the presence of the IMF in Bosnia and Herzegovina, the Governor explained the basic characteristics of the current arrangement with the Fund. The Governor said that the "Servicing of the existing amount of foreign debt is unquestionable with or without arrangement with the Fund, but that without structural reforms decided by the Government, at long term perspective, BH economy would be in a worse position as a result of slower growth of potential output. In addition, the arrangement with the Fund is currently seen by the international community and rating agencies as a stabilizing factor in Bosnia and Herzegovina, and it is the condition for arrangements with other international institutions. Thus, even without the Fund,  BH would be able to finance its liabilities, but we would have much less fiscal space to stimulate economic growth through government investment and consumption. Consequently, without the implementation of reforms to which we are committed and the Letter of Intent, we would be at the approximate level of development where we are now. "

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