Political strife in Bosnia may dry up foreign funding

Subject

The consequences of Bosnia’s political infighting.

Significance

The Bosnia-Hercegovina (BiH) House of Representatives has failed three times to amend the law on excise duties. Amendment was a key condition for Bosnia’s IMF programme, which was already in jeopardy because of intensifying political strife since September 2016. At risk is further Western funding of key infrastructure projects and the country’s very fiscal stability.

Impacts

• Blocking agreed reforms could cause Bosnia to miss its growth targets, forecast by the IMF at 3.0% in 2017 and 3.5% in 2018.
• It could also put at risk the public finances, hold up planned infrastructure projects and delay Bosnia’s EU accession process.
• Without international funding, Bosnia faces a liquidity crisis this year and next.