The growth in remittances from abroad remains constant, as evidenced by data from the second quarter of this year when more than 1.1 billion BAM arrived in Bosnia and Herzegovina (BiH). In total, 1.97 billion BAM was sent over six months.
According to the Central Bank of BiH (CBBiH), total current transfers in the second quarter of this year amounted to about 1.5 billion BAM, an increase compared to the first quarter when they were 1.2 billion. Total current transfers for the half-year exceeded 2.6 billion BAM.
Of the total current transfers in the second quarter, 1.1 billion BAM was categorized as personal transfers, i.e., remittances from abroad. Compared to the first quarter, there was a significant increase in remittances, as more than 857 million BAM were sent to BiH in the first three months, according to the CBBiH.
Looking at the half-year period, 1.97 billion BAM was sent to BiH in six months this year, compared to 1.76 billion BAM during the same period last year.
“The remaining 373.8 million BAM pertains to other current transfers, of which 331.19 million BAM are pensions from abroad,” noted the CBBiH, adding that this too saw growth compared to the first quarter.
However, the CBBiH does not have data on which countries send the most remittances to BiH, as there is still no official breakdown by country.
“It can be said that the remittances mainly come from Western Europe, Scandinavia, and North America, where the BiH diaspora is most concentrated,” they stated.
Predrag Mlinarevic, a professor at the Faculty of Economics at the University of Istocno Sarajevo, emphasized in an interview that remittances from abroad are a crucial determinant of local consumption.
“Annually, they amount to between four and five billion BAM, making up about 20% of the disposable income of our citizens. Since consumption is the main component of aggregate demand in our economy, the importance of remittances for economic growth is evident. Remittances also help finance our trade deficit, placing us among the countries with a smaller current account deficit than their foreign trade deficit,” explained Mlinarevic.
According to him, the main issue with remittances lies in the fact that BiH does not fully utilize the potential of its diaspora.
“We haven’t sufficiently focused on encouraging investments from our diaspora that could significantly contribute to sustainable economic growth by boosting production and employment. The experiences of countries like Ireland, which structurally transformed its economy towards technologically advanced production with higher added value through diaspora investments, can be instructive. They attracted diaspora investments by creating a favorable tax environment and investing in education, enabling technology transfer and economic transformation,” he elaborated.
Marin Bago, president of the consumer association “Futura” from Mostar, previously stated that the money coming from abroad is significant.
“We don’t have detailed information on who is sending this money and to whom it is going, but I assume our diaspora is helping their families to invest in something, buy something… And, of course, it’s a substantial amount. Without it, everything in BiH would certainly be different,” said Bago.
