Bosnia and Herzegovina (BiH) is expected to experience economic growth in the coming year, unlike many countries in Europe, but also inflation above the long-term average. This is the conclusion after the meeting of BiH representatives, led by the Minister of Defense Zukan Helez, and the head of the International Monetary Fund (IMF). Many countries are also threatened by recession, so we checked whether it is realistic for the citizens of BiH to avoid all of this? Although we are not an over-indebted country, this information is also a wind at the back of the authorities to think about new liabilities.
This year, BiH will spend almost 450 million BAM more for the repayment of the national external debt compared to last year. BiH owes a huge amount of money to creditors, including the IMF. Liabilities to the IMF, as reported by the media, increased by almost 200 million BAM. But it does not intend to stop there.
In the past few days, Defense Minister Zukan Helez and his delegation spoke with representatives of the IMF. According to him, the mutual readiness to work on the creation of assumptions for the conclusion of a new arrangement with the IMF was expressed.
“It was pointed out that economic growth of about 4 percent in relation to GDP in real terms was recorded last year. Projections indicate that growth in 2023 could be above 1 percent, according to which BiH, unlike many countries in Europe, can avoid recession. In the end, mutual readiness was expressed for the BiH and IMF teams to work on creating assumptions for concluding a new arrangement with the IMF, Helez said.
Economists say that we are not an over-indebted country, but this year the IMF gave the most pessimistic forecast in the assessment of global economic growth. And our country is moving economically where the whole world is. Many countries are threatened with recession, can BiH, with economic growth estimates of 1 percent, really avoid it?
“We can be happy if we avoid a recession. If those forecasts of 1 percent growth come true, then we could be satisfied in a way, and what we depend on, above all, is the movement in the European Union (EU),“ stated Damir Becirovic, professor at the International Business and Information Academy Tuzla.
And this means that if the recession hits the EU countries, BiH will also be affected by the dynamics of two quarters, because Europe is our main import and export market. Expectations are that inflation will continue to be above the long-term average. Projections of the Central Bank of BiH indicate that by the end of the year inflation could fall to a level between 5 and 6 percent. At the moment, the situation in BiH is such that prices are stabilizing first because the purchasing power of citizens is getting smaller and smaller, and the second is that a great part of the workforce is leaving.
“For a currency board like our Central Bank of BiH, the best policy is to stick to our main principles as a guarantee of stability,” says Senad Softic, governor of the Central Bank of BiH.
The IMF’s forecasts are optimistic and predict economic growth in BiH of two percent this year and three percent in the next year. Can we hope for benefits for citizens, or encouragement from the authorities for new credit obligations?
