Delegation From the Netherlands Visited CBBH

Delegation of the Ministry of Economic Affairs and Ministry of Foreign Affairs of the Kingdom of the Netherlands visited the Central Bank of Bosnia and Herzegovina today, October 16, 2006. They were interested in the economic outlook of the country, continuation of started reforms as well as the possibility for doing business in BH.

The CBBH Vice Governors Ljubiša Vladušić and Feriha Imamović, and Manager of the Economic Research and Statistics Division Amir Hadžiomeragić informed the delegation from the Netherlands on the situation with reforms in BH which, after the slow-down period during the pre-election campaign, should, as expected, continue with the fast pace after the constitution of the new authorities.

Banking sector, which has passed the road from transition through privatization to consolidation that is still underway, as well as the introduction of the Value Added Tax (VAT) at the beginning of this year, were stressed as examples of the successful reforms. Besides the introduction of the financial discipline, the VAT has also represented the support to exporters, so the imports coverage, which was 30% to 35% before the introduction of the VAT, has increased to 45% after the introduction of this tax.

Investors have recognized previous activities, and the foreign direct investments, which amounted to KM 4, 4 billion by 2005, show that the investment risk in BH is reducing. Inflow of foreign direct investments recorded in 2005 was KM 823 million, and the share of investments from the Netherlands in the a.m. amount is two percent. Therefore, the CBBH officials invited the Netherlands to increase their investments in BH.

The CBBH Vice Governor Ljubiša Vladušić stressed that the CBBH is trying to contribute to the favorable investment environment with the monetary policy, which resulted in low inflation and stable currency.

As the CBBH officials informed the delegation from the Netherlands, international financial institutions, above all, the International Monetary Fund, are expecting to continue cooperation with BH. The key issues in new negotiations, which are expected to take place at the beginning of next year, are adoption of the Law on Fiscal Council of BH and reduction of public spending.