As the Standard of living Decreases in BiH: Increased Interest Rates on Loans for Households


Interest rates on short-term loans granted to the economy in the Federation of Bosnia and Herzegovina were reduced from 2.55 percent (December 31, 2019) to 2.40 percent (June 30, 2020), and on short-term loans to households were increased from 14.02 to 15, 31 percent.

When it comes to long-term loans to the economy, the interest rate was increased from 3.67 to 3.83 percent, and households from 6.74 to 6.84 percent, according to the information of the Banking Agency of the Federation of BiH.

Director of the FBiH Banking Agency Jasmin Mahmuzic said for “Avaz” that they have noticed such trends before and that there are changes in the interest rate from quarter to quarter.

”Limited credit growth and reduced volume of other business activities will result in a decrease in regular income in this and next year. The first effects are visible on the business result for the first six months compared to the same period last year, which is lower by 42 percent. The capital rate, as of June 30, 2020, is 18.2 percent and is higher by 0.3 points compared to the end of 2019. Therefore, the most important indicator related to regulatory capital is stable and significantly above the regulatory minimum of 12 percent,” explains Mahmuzic.

He states that BiH does not expect a black scenario at the beginning of next year, as it is predicted in some EU countries where the decision on the moratorium on loan repayment expires.

”This will not happen because we have foreseen with our decision that the moratorium can practically last until the end of next year. At the end of December, citizens can submit a request to be granted a moratorium for six months, and businessmen can use the possibility of a grace period of 12 months,” states Mahmuzic.

Mahmuzic added that he does not believe in the black forecasts for next year, but on the condition that everyone starts to take the economic consequences of the coronavirus more seriously.

He emphasized that the measures adopted by the Agency are not a solution to the problem, but a delay and purchase of time until the right economic measures are taken. All levels in BiH need to start working more seriously to overcome this situation.

”We act like everything is normal and it isn’t. We cannot think that the coronavirus will pass, plans must be made on how to work and do business with the coronavirus,” says Mahmuzic.

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