Bosnia and Herzegovina Country Report - February, 2015

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Bosnia and Herzegovina Country Report - February, 2015

This report covers the main macroeconomic releases from February 6 until March 5, 2015 as well as the financial and political events that took place in Bosnia during this period.
Bosnia’s parliament has approved the nominated by the tripartite presidency Denis Zvizdic as the country’s new Prime Minister. Several days later, the parliament adopted on February 23 a statement declaring the country’s pro-European Union commitment, which includes a plan for political and economic reforms that should speed up its path toward EU membership.
The EBRD plans to approve financing for new projects worth between €100mn and €200mn in Bosnia in 2015, according to head of the bank in the country, Jan Braun. EBRD will provide financing to 10-20 projects.
Bosnia’s government said it expects a real economic growth of 3.4% in 2015, which should further accelerate to 4.1% next year and 4.4% in 2017 thanks to expected lower trade deficit.
On the corporative front, Bosnia's largest power utility Elektroprivreda BiH (EP BiH) said it plans to invest BAM2.1bn (€1.1bn) in different projects in 2015-2017, using own funds and external financing. The company will invest in production, distribution, supply, and trade operations, capital infrastructure, mining and other joint projects.
Serbia’s energy firm NIS, controlled by Russia’s Gazprom Neft, has confirmed commercial stocks of oil in a well in Bosnia’s Serb Republic.

Key points:
• CPI deflation deepened further to 0.9% y/y in January from 0.4% y/y in December
• The retail sales, measured in constant prices, increased by 8.3% y/y in January, speeding up from a 3.8% y/y rise in the previous month due to higher growth of sales of non-food products and automotive fuel
• The distributive trade turnover increased by 3.7% y/y in Q4, accelerating from a revised 2.5% y/y rise in Q3

Table of Contents

EXECUTIVE SUMMARY 5
REAL SECTOR 6
1. GDP 6
Bosnia sees 2015 GDP growth at 3.4% 6
2.Inflation 6
Bosnia’s Federation industrial PPI falls 1.1% y/y in January 6
Bosnia’s CPI deflation deepens to 0.9% y/y in January 6
Bosnia’s Federation CPI falls 0.7% y/y in January 7
Bosnia’s Serb Republic CPI deflation deepens to 1.3% y/y in January 8
3. Industry and Trade 8
Bosnia’s Serb Republic industrial production inches up 0.3% y/y in January 8
Bosnia's Federation industrial production declines 1.7% y/y in January 9
Bosnia’s retail sales growth accelerates to 8.3% y/y in January 9
Bosnia’s Federation retail sales growth slows to 6.4% y/y in January 9
Bosnia’s Serb Republic retail trade turnover falls 5.8% y/y in January 10
Bosnia’s distributive trade turnover up 3.7% y/y in Q4 10
Bosnia’s Federation distributive trade turnover up 5.1% y/y to €2.6bn in Q4 10
4. Tourism 11
Foreign tourist arrivals to Bosnia rise 1.5% y/y in 2014 11
Bosnia’s Federation tourist arrivals rise 21.4% y/y in January 11
Bosnia’s Serb Republic tourist arrivals rise 22.6% y/y in January 11
5. Labour Market 12
Bosnia’s registered unemployment rate stays at 43.6% in December 12
Bosnia’s number of unemployed falls 1.2% y/y in December – stats office 12
Bosnia’s Federation number of employed up 2.3% y/y in December 12
Bosnia’s average net wage up 0.7% y/y to €431 in December 12
Bosnia’s Federation average net wage edges up 0.2% y/y in December 13
Bosnia’s Serb Republic average net wage edges up 0.2% y/y to €415.2 in January 13
FISCAL SECTOR, MONETARY POLICY 13
Bosnia’s Serb Republic public revenues rise 7% y/y in January-February 13
Bosnia's Serb Republic to introduce two-tier VAT to ease socially vulnerable groups 13
Bosnia’s Federation plans €30.7mn in 182-day T-bills issue in Q1 2015 14
Bosnia's Serb Republic raises €7.6mn from six-month T-bills, yield drops 14
FINANCIAL INTERMEDIATION 14
Bosnia’s FX reserves rise 10.6% y/y at end-December 14
Bosnia’s bank assets growth slows to 4.4% y/y at end-December 15
Bosnia’s bank deposits increase 8.4% y/y to BAM15.5bn at end-December 15
Bosnia’s M1 money supply growth speeds up to 9.4% y/y at end-December 16
EXTERNAL SECTOR 16
Bosnia’s external public debt rises 9.4% y/y to €4.1bn at end-2014 16
Bosnia’s foreign trade deficit shrinks 5.8% y/y in January 17
Bosnia’s Federation foreign trade deficit narrows 7.2% y/y to €124.5mn in January 17
Bosnia’s Serb Republic foreign trade deficit falls 3.8% y/y to €27.6mn in January 18
STRUCTURAL REFORMS, CORPORATE PLANS 18
Bosnia’s Serb Republic to set up a fiscal council 18
Bosnia’s Elektroprivreda BiH plans to invest €1.1bn in 2015-2017 18
Bosnia’s power firm RiTE Gacko plans to launch 300 MW thermal plant project in 2015 18
EBRD to approve up to €200mn to Bosnia for new projects in 2015 19
Serbia’s energy firm NIS confirms commercial oil stocks in Bosnia’s Serb Republic 19
Bosnia’s parliament adopts pro-EU declaration 19
Bosnia's Serb Republic to invest €5.6bn in energy projects by 2030 20
Bosnia’s Federation to launch sale of 14 companies in 2015 20
Bosnia’s Elektroprivreda RS, EBRD to discuss cooperation in renewable energy projects 21
Bosnia’s SDA party nominates Dino Konakovic for Federation’s Prime Minister 21
Bosnia adopts 2015-2017 economic reforms programme 21
Bosnia’s parliament elects pro-EU Denis Zvizdic for Prime Minister 23
China's Tianjin seeks to invest €511mn in energy projects in Republica Srpska 23
Bosnia's Brod refinery says its 2014 net loss nearly halves to €12.9mn 24

Number of pages: 24
Release Date: Fri, 06 Mar 2015