BH Balance of Payments for the First Quarter of 2006.

The current account deficit for the first quarter of 2006 was KM 222 million and represents the lowest level of quarterly current account quarterly deficit recorded in the last four years, which is visible from the data on Balance of Payments for the first quarter of 2006, published by the Central Bank of Bosnia and Herzegovina (CBBH).

In comparison with the same period of the last year, the current account deficit of the BH Balance of Payments was cut in half (it is by KM 203 million, or by 48% lower), while in comparison with the previous quarter, current deficit is five times lower.

“Such current account deficit recorded in the first quarter is very encouraging and it indicates that the significant reducing of the current account deficit could occur in comparison with previous years, which is very significant for the stability of BH economy. The trade imbalance will, probably, somewhat worsen as the year progresses, but the positive trend on the export side show us that the total balance should be improved”, stressed CBBH Governor Kemal Kozarić.

Such improvement of the balance of payment flows is the result of the significant improvement of goods exchange of BH with the rest of the world. The foreign trade goods deficit was KM 1, 089 billion and it represents the lowest deficit in goods exchange since 2001, which is the time when the compilation of the Balance of Payments statistics has commenced. In comparison with the first quarter of 2005, the goods deficit has reduced by KM 310 million, that is, by 22%.

The services account in the BH current account has recorded a surplus of KM 187 million, which represents the level which is close to the level recorded in the same period of last year. The largest contributors to this surplus are income from tourism and incomes from construction works abroad and from the communication services.

The observed period is also characterized with the low level of surplus in the financial account, which is the result of reducing of cash and deposits, which are the part of the foreign liabilities of commercial banks, and increasing of the CBBH foreign reserves. Over the observed period, cash and deposits of non-residents decreased by KM 135 million, while the CBBH foreign reserves increased by KM 242 million.

In the first quarter of 2006, the new foreign debt of the Government Sector was KM 34 million, and at the same time, repayment of loans’ principal was KM 37 million, which shows that the total foreign debt of the Government Sector decreased over this quarter.

Looking at the Balance of Payments statistics, Governor Kozarić stressed: “In order to estimate foreign position of the country, it is very important to have the reliable statistics of the Balance of Payment and the CBBH is investing the great efforts in order to improve it. Still, the handicap is the large level of understatement of the official Gross Domestic Product (GDP), which creates the distorted image of the level of the current account deficit in the international comparisons. It is much more realistic to talk about our current account deficit of around 15% of the GDP, instead of 22% and more, which was recently mentioned”.

More detailed data on the BH Balance of Payments with the description of the implemented methodology of compilation of the Balance of Payments statistics can be found on the CBBH web site (http://www.cbbh.ba/en/statistics.html).