BH Macroeconomic Indicators and Results of Operations of the CBBH for 2008

Trend of the sustainable economic growth continued in 2008, as in the previous years and according to the assessments it amounted to 5, 5%.

Because of the power resources and food prices increase at the global market, which influenced also the increase of prices in BH, the inflation in Bosnia and Herzegovina for the first six months increased and achieved its maximum of 9,9% in July, 2008.  Reducing of power resources and food prices caused reducing of the inflation by the end of the year. Average annual inflation amounted to 7,4% while the annual inflation, measured in December of 2008 compared to December 2007, amounted 3, 8%.

External debt of Bosnia and Herzegovina has been regularly served and it amounted KM 4,19 billion or 16,7 of the GDP.

In the last year, deficit of current account amounted KM 3,6 billion or 14,6 % of the GDP, which is mostly the consequence of the high foreign exchange trade deficit, amounting to  slightly less than ten billion KM. The second economic problem is unemployment rate, which amounted 23, 4% (measured according to the international standards). Lower inflow of the direct foreign investments was also recorded in 2008 and amounted KM 1, 3 billion.

Trend of credit growth was continued last year, but with the significant slowing down by the end of the year. Total amount of credits by the end of year amounted KM 14, 5 billion and it was the increase of 21,7% comparing to the end of 2007. The increase of credits to corporate by 27, 7% rate was recorded, while the rate for households was 17, 8%.

According to its financial results, the CBBH concluded 2008 with the foreign currency reserves amounting to KM 6, 3 billion. Net excess foreign currency reserves amounted KM 560 million as of December 31, 2008.

The CBBH changed the foreign reserves investment policy. Namely, the foreign exchange reserves were removed from commercial banks into the central banks of the European Union and Bank for the International Settlements (BIS) in Basle and this protected CBBH from the potential losses from the foreign exchange reserves investment. While doing this the CBBH firstly had in mind the security of its investments, i.e. the need to ensure the foreign currency reserves, and then the need to make the profit.

The last year achieved profit of the CBBH amounted KM 199,4 million, out of which KM 119,6 million will be transferred to the budget of the BH institutions by the beginning of April 2009, according to the CBBH Law. 

Since October, 2008, when the commercial banks, because of the deposits withdrawal were under the pressure, the CBBH has undertaken several measures in order to strengthen their liquidity.

As the first step, the interest rate of reserves requirement was reduced from 18 to 14%. Then, the new credit lines withdrawn from abroad by the commercial banks were taken out of the basis for required reserves calculation.

By our last decision we introduced the differentiated required reserves rate, according to which the required reserves rate on the fix term deposits with the maturity over one year, was reduced from 14 to 10%. The required reserves rate on deposits with the maturity up to one year, which are included in the basis for calculation of the required reserves, remains at 14%.

The CBBH reminds the public also on some of the most significant activities which were implemented during the last year:  by the beginning of the last year the electronic inter banking market of gyro and cash money became operational; also the platform for clearing of international payments between BH, Serbia and Monte Negro became operational, by which the payment system between these countries became  faster and cheaper; Memorandum on the banking supervision coordination and cooperation principles and on the data and information exchange was singed between the CBBH and Entities Banking Agencies; the CBBH was the host of  20^th  Governors' Club of  the Central Banks of  Countries  of Central Asia, Black Sea Region and Balkan;  the CBBH withdrawn the  KM 1 banknote from circulation.

As the state agent in area of credit rating assignment, the CBBH intermediated between two international rating agencies and state institutions during credit rating assignment to Bosnia and Herzegovina. Moody's Investor Service confirmed the same credit rating to Bosnia and Herzegovina, B2 with stable outlook, while the Standards & Poor's assigned   B+ credit rating with the stable outlook, which is one more level higher rating than the one assigned by Moody's Agency. 

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