COMMISSION STAFF WORKING DOCUMENT BOSNIA AND HERZEGOVINA 2015 REPORT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS EU Enlargement Strategy
Date: 2015-11-10
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Bosnia and Herzegovina, accession criteria, accession negotiations, pre-accession strategy

EUROPEAN 
COMMISSION 

Brussels, 10.11.2015  
SWD(2015) 214 final 

COMMISSION STAFF WORKING DOCUMENT 

BOSNIA AND HERZEGOVINA 
2015 REPORT  

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

EU Enlargement Strategy 

{COM(2015) 611 final} 
{SWD(2015) 210 final} 
{SWD(2015) 211 final} 
{SWD(2015) 212 final} 
{SWD(2015) 213 final} 
{SWD(2015) 215 final} 
{SWD(2015) 216 final} 

EN 

   EN 

 
 
 
 
  
 
 
Table of Contents 

1. 

INTRODUCTION....................................................................................................... 4 

1.1.  Context .............................................................................................................. 4 
1.2.  Summary of the report....................................................................................... 4 

2.  POLITICAL CRITERIA............................................................................................. 6 

2.1.  Democracy ........................................................................................................ 6 
2.2.  Public administration reform............................................................................. 9 
2.3.  Rule of law ...................................................................................................... 12 
2.4.  Human rights and the protection of minorities................................................ 20 
2.5.  Regional issues and international obligations ................................................. 26 

3.  ECONOMIC CRITERIA .......................................................................................... 29 

3.1.  The existence of a functioning market economy............................................. 30 
3.2.  The  capacity  to  cope  with  competitive  pressure  and  market  forces  within 

the Union ......................................................................................................... 35 

4.  EUROPEAN STANDARDS..................................................................................... 37 

4.1. 

Internal market ................................................................................................ 37 
4.1.1.  Free movement of goods ................................................................... 37 
4.1.2.  Movement of persons, services and right of establishment............... 38 
4.1.3.  Free movement of capital .................................................................. 40 
4.1.4.  Customs and taxation ........................................................................ 41 
4.1.5.  Competition ....................................................................................... 41 
4.1.6.  Public procurement............................................................................ 42 
4.1.7. 
Intellectual property law.................................................................... 44 
4.1.8.  Employment and social policies, public health policy ...................... 44 
4.1.9.  Education and research...................................................................... 46 
4.1.10.  WTO issues ....................................................................................... 48 
4.2.  Sectoral policies .............................................................................................. 48 
Industry and SMEs ............................................................................ 48 
4.2.1. 
4.2.2.  Agriculture and fisheries ................................................................... 49 
4.2.3.  Environment and climate change ...................................................... 50 
4.2.4.  Transport policy ................................................................................ 52 
4.2.5.  Energy ............................................................................................... 53 
4.2.6. 
Information society and media .......................................................... 54 
4.2.7.  Financial control................................................................................ 55 
4.2.8.  Statistics............................................................................................. 57 
4.3.  Justice, freedom and security .......................................................................... 58 
4.3.1.  Visa, border management, asylum and migration............................. 59 
4.3.2.  Money laundering.............................................................................. 60 
4.3.3.  Drugs ................................................................................................. 61 

2 

 
4.3.4.  Police ................................................................................................. 61 
4.3.5.  Fighting organised crime and terrorism ............................................ 62 
Judicial cooperation in civil and criminal matters............................. 63 
4.3.6. 
Annex I – Relations between the EU and Bosnia and Herzegovina ......................... 64 
Annex II – Statistical Annex ..................................................................................... 67 

3 

 
 
1. 

INTRODUCTION

1

1.1.  Context 

The  EU  initiated  in  December  2014  a  new  approach  to  Bosnia  and  Herzegovina,  which 
provides  for  the  re-sequencing  of  the  conditionalities  in  order  for  the  country  to  progress 
towards the EU and address the outstanding socio-economic challenges it faces. This led to 
the  entry  into  force  of  the  Stabilisation  and  Association  Agreement  (SAA)  between  Bosnia 
and Herzegovina and the EU on 1 June 2015. It replaced the Interim Agreement (IA) which 
had been in force since 2008. In July, the country adopted a Reform Agenda aimed at tackling 
the  difficult  socio-economic  situation  and  advancing  the  judicial  and  public  administration 
reforms.  Its  implementation  has  started.  Meaningful  progress  in  the  implementation  of  the 
Reform  Agenda  is  necessary  for  the  EU  to  consider  an  EU  membership  application  from 
Bosnia and Herzegovina. Despite these positive developments, the adoption of a decision of 
the  Republika  Srpska  National  Assembly  in  July  to  hold  a  referendum  on  the  Bosnia  and 
Herzegovina  state-level  judiciary  runs  against  the  written  commitment  signed  in  February 
which is the basis for moving ahead on the EU path. Remaining shortcomings in the judiciary 
need to be addressed in the Structured Dialogue on Justice.    

Regular  political  and  economic  dialogue  took  place  between  the  EU  and  Bosnia  and 
Herzegovina in the framework of the SAA/IA structures. However, Bosnia and Herzegovina 
has continued to refuse to adapt the trade concessions granted under its SAA/IA to take into 
account  its  bilateral  traditional  trade  with  Croatia,  following  the  accession  of  Croatia  to  the 
EU. Prolongation of the Autonomous Trade Measures beyond 2015 is conditional on Bosnia 
and Herzegovina accepting this adaptation of the SAA/IA.  

1.2. 

Summary of the report 

As  regards  to  the  political  criteria,  the  October 2014  general  elections  were  efficiently 
administered  and  held  in  an  orderly  manner  and  competitive  environment.  Bosnia  and 
Herzegovina’s Parliamentary Assembly has started to function and deliver on the legislative 
agenda.  The  adopted  Reform  Agenda,  which  set  out  major  socio-economic  reforms  to  be 
carried out, was followed by initial progress in its implementation. Cooperation between the 
State-level,  Entity-level  and  Brčko  District  parliaments  has  yet  to  be  improved.  Closer 
cooperation  and  coordination  between  all  levels  of  government  need  to  be  established,  not 
least to be able to tackle the major socioeconomic challenges.  

The  country’s  Constitution  established  a  complex  institutional  architecture  that  remains 
inefficient and is subject to different interpretations. The Constitution remains in breach of the 
European Convention on Human Rights, as stated in the Sejdić-Finci ruling of the European 
Court of Human Rights, and needs to be amended.  

The  country  is  at  an  early  stage  in  public  administration  reform,  with  a  high  level  of 
politicisation  and  poor  service  delivery.  Establishing  a  new  strategic  framework  ensuring 
appropriate political guidance to public administration reform in the country is needed.  

Bosnia and Herzegovina's judicial system has reached some level of preparation. A Judicial 
Reform  Sector  Strategy  was  adopted  and  now  needs  to  be  implemented.  In  September  at  a 

1  This  report  covers  the  period  from  October  2014  to  September  2015.  It  is  based  on  input  from  a  variety  of 
sources,  including  contributions  from  the  government  of  Bosnia  and  Herzegovina,  the  EU  Member  States, 
European Parliament reports and information from various international and non-governmental organisations. As 
a  rule,  legislation  or  measures  which  are  under  preparation  or  awaiting  parliamentary  approval  have  not  been 
taken into account. 

4 

 
 
  
                                                 
ministerial  meeting  in  the  framework  of  the  Structured  Dialogue,  the  authorities  reiterated 
their commitment to develop jointly key features of the reform of the judiciary. 

Bosnia and Herzegovina has some level of preparation in the fight against corruption. A new 
anti-corruption  strategy  and  action  plan  covering  the  years  the  2015-2019  were  adopted. 
There  was  a  substantial  increase  in  the  confiscation  of  assets.  Corruption  continues  to  be 
widespread and the political commitment on this issue has not translated into concrete results. 
The legal and institutional framework remains weak and inadequate. The lack of enforcement 
of  the  law  negatively  affects  citizens  and  institutions.  Penalties  in  force  do  not  constitute  a 
sufficient deterrent against corruption. 

Concerning  the  fight  against  organised  crime,  the  country  also  achieved  some  level  of 
preparation. While there have been a number of successful large-scale joint operations in the 
past  year,  some  including  neighbouring  countries,  coordination  and  cooperation  between  all 
institutions  throughout  the  country  needs  to  be  significantly  improved.  The  number  of  final 
convictions  remains  low.  Financial  investigations  remain  under  used.  The  lack  of  strategic 
coordination is hampering the effective delivery of police services.   

Bosnia and Herzegovina faces many challenges regarding human rights and the protection of 
minorities. The legal and institutional framework for the observance of human rights requires 
substantial  improvements  and  the  adopted  legislation  needs  to  be  effectively  implemented, 
notably regarding anti-discrimination aspects. The conditions for the exercise of the freedom 
of  expression  have  deteriorated  over  the  reporting  period.  Although  there  is  some  level  of 
preparation in this are with legal provisions generally in place, the institutional and political 
environment is not conducive to creating the conditions for full freedom of expression. The 
lesbian, gay, bisexual, transgender and intersex community continued to be subject to threats 
and attacks. Some steps were taken on the registration and housing of the Roma minority, but 
there was limited action on health, education and employment.  

The country continued to participate actively in regional initiatives and has made progress on 
good  neighbourly  relations,  including  signature  of  a  border  agreement  with  Montenegro  in 
August.  In  May,  Bosnia  and  Herzegovina  took  over  the  chairmanship  of  the  Council  of 
Europe's Committee of Ministers. 

With  regard  to  the  economic  criteria,  Bosnia  and  Herzegovina  is  at  an  early  stage  in 
developing a functioning market economy. Some progress  has been made on improving the 
business  environment,  particularly  on  easing  market  entry  and  the  granting  of  construction 
permits.  Despite  the  setback  from  the  2014  floods,  economic  growth  remained  resilient. 
However,  difficult  labour  market  conditions  have  remained  largely  unchanged,  with 
unemployment at 27.6%, rising to 62.7% among youth. In order to tackle high unemployment 
and  low  participation  rates  the  country  should  reduce  labour  market  rigidities,  including  a 
reduction  of  the  tax  wedge.  The  quality  and  sustainability  of  public  finances  have 
deteriorated.  The  business  environment  remained  weak,  impeding  a  stronger  economic 
recovery.  The  government  needs  to  improve  the  quality  of  public  sector  governance,  in 
particular  by  increasing  fiscal  space  for  growth  enhancing  capital  investment.  Furthermore, 
concrete  steps  are  needed  to  improve  its  budget  management  framework,  to  advance 
privatisation and to improve the business environment. 

Bosnia  and  Herzegovina  is  at  an  early  stage  in  achieving  the  capacity  to  cope  with 
competitive pressure and market forces within the Union. Some progress has been made on 
the  liberalisation  of  energy  markets.  However,  in  order  to  strengthen  the  country's 
competitiveness, the authorities should pay particular attention to developing a more strategic 
approach to tackling deficiencies in its training and education system; simplifying its complex 
procedure for exports and developing a transport strategy and an energy strategy. 

5 

 
Bosnia  and  Herzegovina  is  at  an  early  stage  regarding  its  approximation  with  European 
standards.  There  is  some  level  of  preparation  as  regards  public  procurement  and  internal 
market. The country is at an early stage in the transport area, but the adoption of the Transport 
Policy in July is a positive step forward towards the country benefitting from the connectivity 
agenda. However, significant efforts are needed in most of the policy areas for the country to 
further align with the EU acquis. This includes financial control as well as statistics where the 
country  is  at  an  early  stage  and  major  steps  are  needed  to  address  outstanding  priorities.  In 
this respect, the processing of the 2013 census data and the publication of the results need to 
be  completed.  Further  sustained  efforts  are  also  needed  in  particular  as  regards  justice, 
freedom  and  security  matters,  the  competition  area,  industry  and  SMEs,  agriculture, 
environment and climate change policies, energy, and information society and media.    

2. 

POLITICAL CRITERIA 

2.1. 

Democracy 

Elections 

The  12 October 2014  general  elections  were  assessed  as  being  efficiently  administered  and 
held  in  an  orderly  manner  and  competitive  environment.  The  OSCE  Office  for  Democratic 
Institutions  and  Human  Rights  made  a  number  of  recommendations  to  further  improve  the 
electoral framework.  

General  elections  were  held  in  Bosnia  and  Herzegovina  on  12 October 2014.  The  elections 
took place in a difficult political environment and deteriorating socioeconomic conditions, as 
witnessed  over  the  last  years.  The  OSCE  Office  for  Democratic  Institutions  and  Human 
Rights (ODIHR) assessed the elections as having been efficiently administered and held in an 
orderly  manner  and  competitive  environment.  The  candidates  were  able  to  campaign  freely 
and  fundamental  freedoms  of  expression,  association  and  assembly  were  met.  The  civic 
monitoring  coalition  ‘Pod  Lupom’  reached  similar  overall  conclusions.  At  the  same  time, 
OSCE/ODIHR  issued  a  number  of  recommendations  aimed  at  improving  the  holding  of 
elections. These include reviewing constituency boundaries to uphold the principle of voting 
equality,  the  removal  of  ethnicity  and  residency-based  limitations  on  the  right  to  vote  and 
stand as a candidate and reviewing the regulatory framework for campaign finance.  

After five years of deadlock the 2010 Constitutional Court decision on Mostar’s statute needs 
to  be  implemented  as  a  matter  of  priority  to  ensure  that  the  citizens  of  Mostar  can  exercise 
their democratic rights.  

Parliament 

Bosnia and Herzegovina’s Parliamentary Assembly has started to function and deliver on the 
legislative  agenda.  Cooperation  between  the  State-level,  Entity-level  and  Brčko  District 
parliaments has yet to be improved.    

Following  the  October  elections,  the  two  chambers  of  Bosnia  and  Herzegovina’s 
Parliamentary  Assembly,  the  House  of  Representatives  and  the  House  of  Peoples,  were 
established in the new compositions in December and February respectively. The formation of 
the parliamentary committees was only completed in June. The new Rules of Procedure for 
the Parliamentary Assembly entered into force and introduced a fast-track mechanism for EU-
related  legislation.  Cooperation  between  the  State-level,  Entity-level  and  Brčko  District 
parliaments has yet to be improved. Joint meetings of the parliaments did not take place. 

6 

 
 
The Federation of Bosnia and Herzegovina’s House of Representatives and House of Peoples 
held their constitutive sessions in December and January respectively. The Federation House 
of Peoples remained short of three Serb delegates, as no more than 14 Serb delegates could be 
appointed  from  the  cantonal  assemblies.  Legislative  changes  preventing  this  issue  from 
reoccurring are yet to be adopted. The functioning of the Federation Parliament continued to 
be hampered by the lack of space in its rented premises and insufficient capacity to deal with 
European  integration-related  issues.  Coordination  with  cantonal  assemblies,  in  particular  on 
shared powers, remained problematic. 

In  November,  the  Republika  Srpska  National  Assembly  held  its  constitutive  session.  In 
February,  the  Republika  Srpska  National  Assembly  unanimously  adopted  a  written 
commitment  to  undertake  the  necessary  reforms  for  Bosnia  and  Herzegovina’s  European 
integration. In March, the Department for European Integration and International Cooperation 
was established within the Parliamentary Secretariat. This body will be in charge of providing 
support to parliamentarians in Republika Srpska. In July, upon a proposal from the Republika 
Srpska  president,  the  assembly  adopted  a  decision  to  hold  a  referendum  on  the  Bosnia  and 
Herzegovina  state-level  judiciary  and  its  jurisdiction  in  Republika  Srpska.  Such  a  decision 
runs against the written commitment signed, in February, by the representatives of all political 
parties represented in the country's Parliamentary Assembly. Questioning the existence of the 
court  and  the  prosecutor's  office  of  BiH  would  go  against  a  number  of  rulings  of  the 
Constitutional Court of Bosnia and Herzegovina, which confirmed that the establishment of 
the state level judiciary was in line with the constitution.    

The work of the Brčko District Assembly committees, including the Committee for European 
Integration, remains problematic due to frequent lack of quorum at their meetings and limited 
capacities of the District Assembly’s services. 

Governance 

Bosnia  and  Herzegovina's  institutions  made  some  progress  towards  addressing  the 
outstanding reform priorities notably with the adoption of the Reform Agenda and the start of 
its  implementation.  However,  major  challenges  remain,  including  the  need  for  closer 
cooperation and coordination at all levels of government. The Constitution remains in breach 
of the European Convention on Human Rights (the Sejdić-Finci judgment).  

The Dayton/Paris Peace Agreement (DPA) put an end to the 1992-1995 war. The country’s 
Constitution, which is Annex 4 to the DPA, established a complex institutional architecture 
that  remains  inefficient  and  which  is  subject  to  different  interpretations.  The  Constitution 
prevents  citizens  who  do  not  declare  themselves  as  one  of  the  country’s  three  constituent 
peoples  from  standing  as  candidates  for  the  Presidency  and  the  House  of  Peoples  of  the 
Parliamentary  Assembly.  This  has  been  declared  in  breach  of  the  European  Convention  on 
Human  Rights  in  the  Sejdić-Finci  judgment.  Constitutional  Court  decisions  have  yet  to  be 
fully enforced throughout the country.  

The new tripartite Presidency of Bosnia and Herzegovina initiated a written commitment to 
undertake  reforms  and  advance  the  European  integration  process.  The  written  commitment, 
whose  language  fully  reflected  the  conclusions  of  the  EU  Foreign  Affairs  Council  of 
December  2014,  was  signed  by  the  leaders  of  all  the  14  political  parties  represented  in  the 
Parliamentary Assembly, and endorsed by Bosnia and Herzegovina’s Parliament in February.  

The  new  Council  of  Ministers  was  sworn  in  at  the  end  of  March.  In  May,  the  Council  of 
Ministers adopted its 2015 work plan covering the adoption of some 65 laws related to the EU 
integration agenda.  The preparations of the Programme of EU Integration started in May. In 
July the Council of Ministers adopted the Reform Agenda. The processing of the 2013 census 

7 

 
data and the publication of the results need to be completed without further delay in line with 
recommendations of the International Monitoring Operation. Country-wide sectoral strategies 
necessary  to  fully  benefit  from  EU  pre-accession  assistance  on  transport,  energy  and  the 
environment need to be adopted as a matter of urgency. The role and capacities of the Council 
of Ministers’ Directorate for European Integration (DEI) will need to be enhanced in order to 
cope  with  the  challenges  stemming  from  the  entry  into  force  of  the  Stabilisation  and 
Association  Agreement.  The  mandate  of  the  DEI  Director  expired  in  August  2015  and  the 
vacancy was published.  

An effective coordination mechanism has yet to be put in place between the various levels of 
government  for  the  alignment,  implementation  and  enforcement  of  EU  laws.  Such  a 
mechanism is needed to enable the country to interact in an efficient manner with the EU.  

In the Federation of Bosnia and Herzegovina, a new government was appointed in March 
and  the  budget  for  2015  adopted.  The  lack  of  an  agreement  on  appointments  to  the 
supervisory  boards  of  public  companies  has  been  detrimental  to  the  work  of  the  Federation 
Government  and  led  to  the  break-up  of  the  ruling  coalition  and  a  minority  government. 
Negotiations  on  the  formation  of  a  new  government  are  pending.  A  new  labour  law  was 
adopted in July, in line with the provisions of the Reform Agenda. The Director of the new 
Federation Office for European Integration took office in February. However, the Office does 
not have enough administrative capacity to coordinate EU affairs with the rest of the country 
and  across  the  different  levels  of  government  within  the  Federation.  So  far,  the  Federation 
Government and the Cantons are not cooperating successfully on EU integration issues.  

In Republika Srpska, a new government was appointed in December. The government has 
engaged  in  economic  reforms.  In  January,  it  established  two  working  bodies,  the  board  for 
economic  system  reform  and  the  board  for  public  sector  reform,  which  were  tasked  with 
drawing up legislation in their respective areas.  

The  Brčko  District  government  held  several  specific  sessions  on  European  integration.  In 
October,  five sectoral working  groups  were  set  up  and  communication  on  EU  matters  was 
made an official part of the working procedures of the relevant institutions and bodies of the 
District. In December, a decision was adopted on procedures to harmonise legislation passed 
by Brčko District with the EU acquis. 

Entity  legislation  is  largely  in  line  with  the  European  Charter  of  Local  Self-Government. 
However,  a  lack  of  clarity  remains  in  the  division  of  powers  between  the  Entities,  Cantons 
and municipalities, with a relatively low level of financial autonomy at municipal level.  

The  Ombudsman’s  Office  continues  to  be  hampered  by  financial  and  human  resource 
constraints. The law on the reform of the Ombudsman has yet to be adopted. As of December, 
the  mandate  of  the  three  Ombudspersons  expired.  The  joint  ad  hoc  committee  of  the  BiH 
Parliamentary Assembly for appointing the new Ombudspersons was established in April and 
new rules of procedures regulating the selection process were adopted in July and are in line 
with the European standards.   

Civil society 

No  progress  was  made  in  improving  mechanisms  for  dialogue  and  cooperation  between 
government  and  civil  society  organisations.  The  legal  and  financial  framework  needs  to  be 
further improved. 

An empowered civil society is a crucial component of any democratic system and should be 
recognised and treated as such by the institutions. There have been no developments towards 
ensuring  formalised  policy  dialogue  between  the  Council  of  Ministers  and  civil  society.  A 

8 

 
national strategy on civil society has yet to be adopted. The State law on the joint registry of 
non-governmental  organisations  which  would  allow  for  the  establishment  of  a  centralised 
database has not yet been adopted. 

Political activists that emerged during the February protests 2014 remained active at the local 
level and attempted to organise and establish networks across the country to address pressing 
socioeconomic  issues.  Some  civil  society  organisations  strived  to  increase  their  capacity  to 
monitor the EU integration process and enter into dialogue  on the Reform  Agenda  with  the 
EU  and  the  authorities  across  the  country.  However,  civil  society  organisations  continue  to 
have limited capacity at grassroots level to participate in policy dialogue. 

Public  funding  for  civil  society  organisations  has  to  be  provided  in  a  transparent  way 
following clearly defined criteria. Substantial funding is mostly given to sporting associations 
and  war  veterans  in  a  non-transparent  and  unregulated  way.  Republika  Srpska  has  adopted 
initial guidelines on grant management which are obligatory for all ministries. Country wide 
legislation,  for  instance  tax  rules,  is  not  conducive  to  stimulating  private  donations  to  civil 
society organisations. 

Civilian oversight of the security forces 

The  Joint  Parliamentary  Committee  for  Security  and  Defence  was  set  up  in  April  2015. 
Mandated to scrutinise and shape Bosnia and Herzegovina’s security and defence policy, the 
Joint  Committee  should  play  an  important  role  in  steering  the  defence  reform  process. 
However the Committee held only two sessions and no substantive issues have been discussed 
so  far.  The  Parliamentary  Military  Commissioner  continued  to  oversee  the  protection  of 
human  rights  and  freedoms  in  the  armed  forces  and  Bosnia  and  Herzegovina’s  Ministry  of 
Defence.  The  armed  forces  made  substantial  progress  in  disposing  of  the  most  unstable 
ammunition  and  building  sustainable  capacity  to  manage  the  rest  of  the  stockpiles.  At  the 
same time, the widespread presence of weapons held illegally by the population and the large 
stockpiles  of  ammunition  and  weapons  under  the  responsibility  of  the  armed  forces  remain 
issues of concern.  

2.2. 

Public administration reform 

Bosnia and Herzegovina is at an early stage with the reform of its public administration. No 
progress was achieved in the past year. The lack of broad political support for country-wide 
reforms and the fragmentation of public service are hampering efforts to carry out institutional 
and legislative reforms. A systematic approach to policy development and coordination is still 
largely lacking and the politicisation of the civil service continues to be an issue of concern.  

In the coming year, Bosnia and Herzegovina should in particular:  

→ develop, adopt and start to implement a new country-wide strategic framework for public 
administration  reform  and  ensure  appropriate  political  leadership  and  guidance  to  public 
administration reform in the country; 

→ ensure implementation of an effective human resources management system; 

→ develop a public financial management reform programme, which is clearly linked to the 
new PAR strategic framework. 

Public service and human resources management  

The public service in Bosnia and Herzegovina is fragmented, which is not conducive to the 
emergence of a unified professional civil service. The legal framework is not consistent, with 
different  laws  applying  to  the  civil  service  at  different  levels  of  government.  Moreover,  the 
laws are all amended over time in an uncoordinated fashion.  

9 

 
The principle of merit-based recruitment and promotion is enshrined in law. However, in 
practice internal competitions and transfers are preferred to external competitions, limiting the 
potential for merit-based recruitment. Recruitments to senior management positions continue 
to  be  influenced  by  political  parties  and  ethnic  considerations,  and  the  separation  between 
politics  and  public  service  is  not  properly  reflected  in  the  legislation.  The  criteria  for 
dismissals and disciplinary procedures, including possibility to appeal, are also enshrined in 
law.  In  practice  the  number  of  dismissals  is  low.  Women  are  slightly  under-represented  in 
senior  management:  30%  in  the  institutions  of  the  State,  40%  in  the  Federation,  43%  in 
Republika Srpska and 37% in Brčko District in 2014.  

Human  Resources  Management  is  fragmented  and  inefficient.  There  are  four  main  civil 
service  coordination  bodies.  The  creation  of  up  to  10  new  civil  service  agencies  in  the 
Federation  is  not  in  line  with  efficient  resource  management  and  will  only  further  risk 
fragmenting the public service. The human resources management information system and the 
central civil service registries are in place, but they are not being used to their full potential, 
either because of legal obstacles  on personal data protection or because  they do not contain 
complete information. This is a further hindrance to a unified public service.  

The remuneration system is based on the job classification of the civil service. The system is 
not  transparent  and  does  not  ensure  equal  pay  for  equal  work  because  different  salary 
regulations are in force. Public sector salaries in Bosnia and Herzegovina, including the civil 
service, are almost 40% higher than in the private sector, creating the conditions to attract and 
retain  qualified  and  competent  civil  servants.  The  right  for  professional  development  of 
public servants is not fully respected. Funding for training is mainly provided by international 
donors. Performance appraisals are regulated by law, but practical application remains weak.  

Integrity  in  public  service  is  relatively  well  addressed  through  the  adoption  of  anti-
corruption  policies  and  action  plans,  codes  of  conduct  for  civil  servants,  rules  on 
incompatibility of office and the establishment of the anti-corruption agency. There is no legal 
requirement for public sector employees to make public information on their personal assets 
and income. There is still no whistle-blower protection legislation in the Entities and Brčko 
District.  Bosnia  and  Herzegovina’s  Criminal  Code  and  the  relevant  laws  in  the  Federation, 
Republika Srpska and Brčko District do not exempt public sector employees from liability in 
cases  of  abuse  of  authority.  However,  the  number  of  individuals  prosecuted  for  abuse  of 
authority has been very low.  

Policy development and coordination  

The  policy-making  system  in  Bosnia  and  Herzegovina  is  very  fragmented.  The  basic 
institutional structure for a ‘whole-of-government’ approach and policy-making is enshrined 
in law but policy coordination is weak as the General Secretariat of the Council of Ministers 
focuses  mainly  on  procedural  issues.  The  European  integration  coordination  structure  is 
partially  in  place  in  the  country’s  institutions,  but  decision-making  and  implementation  is 
scattered.  The  main  weakness  is  the  lack  of  medium-term  harmonised  planning  at  country-
wide level.  Overall, no measures are in place to ensure the financial sustainability of sectoral 
strategies  and  programmes.  However,  a  2014  Decision  on  Mid-Term  planning,  monitoring 
and  reporting  procedure  at  the  level  of  institutions  of  BiH  provides  for  an  attempt  to  link 
policy planning with medium-term fiscal planning. 

Only some aspects of inclusive and evidence-based policy and legislative development are 
in  place.  Significant  challenges  remain  with  regard  to  developing  high-quality  policy  and 
legislative  proposals.  Lack  of  co-ordination  between  the  State  level,  the  Entities  and  Brčko 
District hampers the process of harmonisation with the EU acquis. Both inter-ministerial and 
public consultations are regulated by law, but are not systematically implemented. Regulatory 

10 

 
impact  assessments  are  enshrined  in  law  but  are  not  carried  out  systematically.  Financial 
impact  assessments  are  carried  out  for  draft  legislative  proposals  but  not  for  strategic 
documents.  

The  lack  of  country-wide  medium-term  policy  planning  is  a  serious  obstacle  to  public 
scrutiny  of  government  work.  Government  reports  that  are  available  to  the  public  do  not 
provide  information  that  would  enable  them  to  compare  achievements  with  specific  policy 
objectives.  At  the  State  level  more  transparency  is  ensured  with  publicly  available  reports, 
publication of government agendas and summaries of decisions.  

Accountability of the administration  

The  overall  organisation  of  the  public  administration  in  Bosnia  and  Herzegovina  is  not 
conducive to ensuring clear lines of accountability. The structure and powers of the different 
public administration bodies are regulated by overlapping and unclear legislative framework. 
This  has  resulted  in  blurred  accountability  and  reporting  lines,  with  over  40  institutions 
reporting directly to the Council of Ministers. There is a lack of procedures ensuring control 
over the creation of new institutions. With regard to lines of accountability within institutions, 
managerial  accountability  is  not  yet  ingrained  in  the  administrative  culture.  (See  also  4.2.7. 
Financial control) 

The  institutional  set-up  and  resources  to  protect  the  citizens'  right  to  good  administration 
are fragmented. The Ombudsman is relatively active in issuing recommendations, but the rate 
at  which  the  public  administration  implements  them  is  low.  (See  under  Governance)  The 
right to access public information is regulated at all levels. The laws are mutually consistent 
and  ensure  a  wide  scope  of  access,  but  implementation  is  not  uniform  in  practice.  When 
citizens  are  refused  access  to  public  information,  there  are  no  efficient  means  for  them  to 
appeal. There also is no independent supervisory body to review appeals and issue decisions 
and guidelines.  

On  the  right  to  administrative  justice,  the  judicial  review  of  administrative  acts  is 
decentralised and handled by general courts. Public trust in the courts is generally low. There 
are  a  number  of  laws  governing  the  public’s  right  to  seek  compensation  in  cases  of 
wrongdoing, but in the absence of a specific law on public liability, practical implementation 
is inconsistent.  

Public financial management 

A  budget  management  information  system  is  in  use  throughout  the  different  levels  of  the 
public  administration.  Budget  preparation  processes  improved  in  2014  and  budgets  were 
adopted  on  time.  However,  this  trend  did  not  continue  in  2015  due  to  delays  over  the 
formation of governments following the 2014 elections.  

Bosnia and Herzegovina has so far addressed public finances on a sub-system basis, without 
explicitly linking different areas and reform measures under a public financial management 
reform programme. A public expenditure and financial accountability assessment and other 
relevant assessments were carried out in 2014 and 2015, providing a basis for developing the 
reform  programme.  Bosnia  and  Herzegovina  has  not  yet  achieved  sufficient  budget 
transparency.  An  annual  financial  report  is  published  by  the  Ministry  of  Finance  and 
Treasury and audited by the Supreme Audit Institution. Similar provisions also apply in the 
Entities  and  in  Brčko  District.  Information  on  debt  and  guarantees  is  also  included.  In  the 
Entities and in Brčko District parliamentary approval is not required for spending by the extra 
budgetary funds. 

Service delivery to citizens and businesses 

11 

 
There  is  no  consistent  policy  on  user-oriented  administration,  as  the  responsibilities  for 
service delivery are highly decentralised. Citizen satisfaction with government services is not 
generally  measured.  Equal  access  to  services  is  not  yet  ensured.  There  is  potential  for  e-
services as over two thirds of citizens have internet access. However, further development is 
held  back  by  the  lack  of  a  country-wide  approach  and  differences  in  how  the  State,  the 
Entities and Brčko District apply the legal framework for e-signatures, develop e-government 
portals and implement the interoperability framework.  

The  current  legal  framework  provides  for  simplification  of  administrative  procedures  at 
State  level,  in  the  Entities  and  in  Brčko  District,  but  the  pieces  of  legislation  regulating  the 
special  administrative  procedures  would  need  to  be  reviewed  and  revised,  as  relevant,  to 
determine the actual level of implementation.  

Strategic framework for public administration reform  

Bosnia  and  Herzegovina  does  not  have  a  comprehensive  public  administration  reform 
strategy  in  place,  since  the  latest  strategy  expired  in  2014.  There  has  been  no  progress  on 
preparing  a  new  strategy,  mainly  due  to  lack  of  broad  political  support  and  strategic 
guidance. Despite the expiry of the strategy and its action plan, its monitoring and reporting 
structure  continues  to  operate  and  some  actions  are  being  implemented.  No  political  body 
oversees  reforms  country-wide,  but  the  Public  Administration  Reform  Coordinator’s  Office 
coordinates  the  process  within  its  limited  functions.  The  new  State-level  PAR  Co-ordinator 
was appointed in August.  Coordinators and supervisory teams are also operational at Entity 
level.  The  current  monitoring  framework  has  major  weaknesses  due  to  the  lack  of  concrete 
performance  indicators  that  would  allow  evaluating  whether  reform  objectives  had  been 
implemented. The previous strategy did not include any costing, and financial sustainability 
has not so far been ensured.  

2.3.  Rule of law 

Functioning of the judiciary 

Bosnia  and  Herzegovina's  justice  system  has  achieved  some  level  of  preparation.  Some 
progress was achieved in the last year, notably through the adoption of a justice sector reform 
strategy. In September at a ministerial meeting in the framework of the Structured Dialogue, 
the authorities reiterated their commitment to develop jointly key features of the reform of the 
judiciary. 

However, politically motivated attacks against the judiciary continued, measures to ensure full 
accountability  of  judges  and  prosecutors  remain  to  be  adopted,  there  remains  a  need  to 
develop specialised training and the efficiency of parts of the system is seriously hampered by 
a backlog and excessively lengthy proceedings. 

In addressing the shortcomings outlined below, in the coming year Bosnia and Herzegovina 
should in particular:  

→ adopt an action plan with result indicators and budgeted activities to implement the 2014-
2018 justice sector reform strategy;  

→ strengthen accountability and integrity mechanisms, particularly through a more deterrent 
disciplinary system and by adopting measures to prevent conflicts of interest;  

→ adopt a backlog reduction plan for utility-related cases;  

→ modernise the training and provide full access to court decisions. 

Strategic documents 

12 

 
An updated and country-wide justice sector reform strategy for the 2014-2018 period was 
adopted in September 2015. The accompanying action plan that includes a comprehensive set 
of concrete actions together with completion indicators and financial resources has still to be 
adopted.  In  order  to  fill  the  gaps  caused  by  the  delayed  adoption  of  the  new  strategy,  the 
institutions  responsible  for  implementing  it  need  to  achieve  tangible  results  with  consistent 
efforts and due pace.  

Management bodies 

The  High  Judicial  and  Prosecutorial  Council  (HJPC)  is  the  key  institution  administrating 
the  judiciary  throughout  the  country.  It  enjoys  institutional  independence  and  of  its  15 
members,  11  are  appointed  from  among  fellow  judges  and  prosecutors.  The  four  remaining 
members are appointed by the Council of Ministers, the Parliamentary Assembly and one per 
each bar association in the Entities.  

The  HJPC  manages  the  entry  of  judges  and  prosecutors  into  judicial  careers  and  is  also 
responsible  for  overseeing  appraisals  and  career  development.  While  the  HJPC  is  generally 
allocated  a  budget  commensurate  with  its  immediate  priorities,  its  secretariat  needs  to  be 
given adequate resources.  

Judicial scrutiny of most of the HJPC's decisions on appointments or dismissals does not exist 
as it is possible only for violation of constitutional and human rights as result of disciplinary 
proceedings.  The  HJPC  is  only  required  to  produce  and  publish  on  its  website  the  annual 
activity reports it submits to the executive and legislative branches. In 2015 the HJPC decided 
to open its sessions to the public, though there are some restrictions.  

There  remain  shortcomings  in  the  legal  framework  governing  the  HJPC.  These  need  to  be 
addressed  based  on  the  opinion  of  the  Venice  Commission  and  relevant  recommendations 
issued  by  the  European  Commission  as  part  of  the  EU-Bosnia  and  Herzegovina  Structured 
Dialogue on Justice.  

Independence and impartiality 

The  principles  of  judicial  independence  and  prosecutorial  autonomy  are  set  out  in  the 
legislation at all levels and enshrined in Entity Constitutions but not in the State Constitution. 
While  external  and  internal  independence  and  autonomy  have  a  legal  basis,  there  is  no 
effective  oversight  for  their  implementation.  There  are  no  formal  procedures  carrying 
penalties  against  undue  influence  or  threats  to  judicial  independence.  The  HJPC  can  only 
issue public statements or provide a non-binding opinion if a judge or prosecutor complains or 
if  a  threat  contains  elements  of  a  criminal  offence.  As  a  result,  unlawful  and  politically 
motivated  attacks  against  the  judiciary  continue  without  proper  legal  or  constitutional 
protection. The new Law on the HJPC should also address these problems, in the absence of 
constitutional guarantees for judicial independence at State level.   

Legal safeguards exist in case of transfer of judges or prosecutors without their consent. These 
are laid down mainly in the rules on disciplinary proceedings. Appeals for a final disciplinary 
decision  of  the  HJPC  on  transfer  are  possible  only  where  there  are  violations  of  human  or 
constitutional rights. As regards the principle of immovability, over the reporting period, the 
HJPC  decided  in  only  one  case  to  apply  a  transfer  without  consent,  as  an  alternative  to  the 
removal  requested  by  the  Office  of  the  Disciplinary  Prosecutor.  The  ‘case  management 
system’  performs  random  allocation  of  incoming  cases  to  judges,  while  court  presidents 
decide on parameters for case distribution. Regarding the withdrawal of cases from judges, 
despite the existence of an automated case allocation system, court presidents are entitled to 
reassign  a  case  in  order  to  guarantee  impartiality.  In  such  cases,  the  HJPC  monitors  the 
rationale  behind  each  reassignment.  Impartiality  is  also  protected  by  exemption  and 

13 

 
disqualification  mechanisms  under  the  procedural  laws  in  force.  If  judges  fail  to  disqualify 
themselves in such situations this constitutes grounds for disciplinary action. Several judges 
have been sanctioned on this basis.  

Accountability 

Although the Office of the Disciplinary Prosecutor is an autonomous body, it is functionally 
dependent on the HJPC. The two-instance disciplinary procedure guaranteed by the law is 
also  subject  to  final  scrutiny  by  the  HJPC,  which  has  the  right  to  revoke  the  disciplinary 
penalty  imposed  at  second  instance.  However,  the  number  of  serious  disciplinary  penalties 
remains  low.  Codes  of  ethics  for  judges  and  prosecutors  exist,  but  there  is  no  formal 
enforcement mechanism. An ethics committee established within the HJPC has the power to 
issue  consultative  opinions  and  oversee  implementation  of  the  codes  but  has  no  power  to 
initiate disciplinary cases. A breach of a code of ethics does not constitute a formal reason to 
initiate  disciplinary  action.  Moreover,  decisions  of  the  Disciplinary  Prosecutor  cannot  be 
appealed against.  

Other  aspects  of  accountability  are  at  an  early  stage  or  do  not  exist.  The  integrity  of  legal 
practitioners  is  only  checked  when  candidates  apply  for  judicial  vacancies.  Declarations  of 
assets  are  required  for  all  judges  and  prosecutors,  but  no  institution  verifies  their  accuracy. 
The  issue  of  conflicts  of  interest  in  the  judiciary  has  raised  additional  concerns  regarding 
integrity and accountability. The rulebook on conflicts of interest for the members of HJPC, 
which  has  introduced  a  clear  set  of  safeguards  to  prevent  situations  of  conflict  of  interest, 
should be extended to the functioning of the entire judiciary. The new law on HJPC should 
work on providing clear rules that can be applied to the functioning of the entire judiciary.  

Professionalism and competence 

Procedures regulating entry or advancement in judicial careers based on merit and promotion 
are  in  place,  with  the  focus  on  candidates'  professionalism  and  competencies,  which  are 
assessed against objective indicators. For appointments to any position in the judiciary that 
would  represent  a  promotion  for  a  judge  or  prosecutor,  candidates  are  evaluated  in 
accordance  with  the  criteria  stipulated  in  the  Law  on  the  HJPC  i.e.  job  performance  in  the 
lower-level  position  or  results  in  the  entrance  exam  and  written  test  (for  candidates  from 
outside the judiciary).  However, there is no effective and systematic application of objective 
criteria  for  final  appointments  to  posts  of  judicial  office  holders  and  management-level 
positions.  Dismissal  is  also  regulated  by  objective  criteria  under  the  Law  on  the  HJPC, 
although very few dismissals have actually occurred.  

Quality of justice 

Training  for  judges  and  prosecutors  in  Bosnia  and  Herzegovina  is  provided  through  the 
judicial and prosecutorial training centres in the Entities. These centres also provide induction 
training  for  new  members  of  the  judiciary  when  they  are  appointed.  Training  standards, 
methodology  and  delivery  need  upgrading,  particularly  on  building  specific  capacities  to 
handle complex cases, such as in cases of human trafficking, financial and organised crimes. 
Management  training  and  training  for  specialised  judicial  or  prosecutorial  functions  are  not 
systematically  provided.  The  country  has  observer  status  in  the  European  Judicial  Training 
Network.  

Monitoring of the day-to-day activities of courts and prosecutors’ offices takes place through 
the ‘case management system’, which includes an individual and institutional quota system. 
In  addition  to  biannual  and  annual  statistical  reports  submitted  to  the  HJPC,  all  courts  and 
prosecutors’ offices produce an annual activity report, which is submitted to their respective 
Ministry  of  Justice  and  to  the  HJPC.  The  budget  allocated  to  courts  and  prosecutors’ 

14 

 
offices  and  the  HJPC  amounts  to  119  million  euros,  i.e.  0.85%  of  GDP  of  Bosnia  and 
Herzegovina.  

Since the introduction in 2010 of the 'Online Access to Court Cases' web service, lawyers and 
parties  in  court  proceedings  across  the  country  can  access  relevant  information  online.  The 
system  recorded  more  than  100  000  entries  over  the  reporting  period.  The  working  of  the 
courts  has  become  significantly  more  transparent,  though  general  access  to  court  decisions 
remains  limited  to  interested  parties  and  requires  payment  of  a  fee.  Selected  decisions  are 
available  electronically  and  are  easily  accessible  for  judges  and  prosecutors.  More  work  is 
needed  to  ensure  that  the  working  of  the  courts  is  fully  transparent.  This  should  include 
improving  the  availability  of  decisions  while  respecting  data  protection  legislation  and 
improving conditions for recording court proceedings.  

In the absence of a State-level supreme court, consistency of jurisprudence is ensured only 
within the Entities and Brčko District, but not across the various levels of authority. Regular 
meetings  are  held  of  joint  panels  of  the  highest-level  courts  throughout  the  country.  These 
have  helped  to  achieve  better  harmonisation  of  case  law  in  civil  matters  but  not  yet  in 
administrative  or  criminal  law.  Public  access  to  online  jurisprudence  is  limited  to  the 
information  published  by  the  courts  themselves  on  their  web  pages,  while  judicial 
professionals wanting to access full case law have to request a specific access code and pay a 
subscription fee.  

On  availability  of  alternative  dispute  resolution  methods,  commercial  arbitration  and 
judicial conciliation are regularly used, while the use of in-court and out-of-court mediation 
needs to be further promoted. Mediation is rarely promoted by judges. Only five cases went to 
mediation  in  the  reporting  period  compared  with  5  418  cases  adjudicated  using  judicial 
conciliation,  thus  amounting  to  barely  1%  of  cases  solved  through  alternative  dispute 
resolution methods. Aligning Bosnia and Herzegovina legislative framework with the relevant 
EU legislation and achieving a more significant reduction in case backlog through the use of 
mediation needs to be further enhanced.  

Efficiency 

The average length of proceedings in 2014 was just over seven years for all courts across the 
country. In 2014, there were 428 701 incoming cases and 472 213 solved cases in all courts 
across the country. This gives a clearance rate (i.e. the ratio of solved cases to newly filed 
cases)  of  110%.  With  the  bulk  of  the  backlog  consisting  of  1  700  000  unpaid  utility  bills 
cases, the HJPC and legislative bodies in the Entities are aiming to reduce this by providing 
support  for  the  introduction  of  alternative  solutions  to  courts,  such  as  private  bailiffs  or 
enforcement officers on special assignment. However, these have not yet produced significant 
results in reducing the backlog. 

The package of reforms provided by the HJPC and other relevant stakeholders to improve the 
efficiency of justice has helped to bring about a progressive reduction in the backlog of cases. 
This  included  solving  the  oldest  cases  through  the  implementation  of  ‘plans  to  resolve  old 
cases  in  courts’  and  the  Rulebook  on  orientation  measurements  for  the  work  of  judges  and 
legal  assistants  of  the  courts  in  Bosnia  and  Herzegovina.  The  backlog  of  non-utility-related 
cases in the last two years was decreased by more than 40 000 cases out of a total of 406 227 
old  cases,  which  is  a  direct  result  of  actions  by  the  HJPC  to  improve  judicial  efficiency. 
During 2014, the average duration of unresolved non-utility-related civil cases before courts 
of first instance in Bosnia and Herzegovina, measured in days, was also reduced by 27 days 
compared  with  2012.  The  courts  solved  85  941  old  cases  in  2014,  achieving  80%  of  their 
target, 7% more than in 2013.  

15 

 
Fight against corruption  

Bosnia and Herzegovina has some level of preparation in the fight against corruption. Some 
progress has been achieved in the past year. However, the legal and institutional framework 
remains weak and inadequate. The lack of enforcement of the law negatively affects citizens 
and  institutions.  As  a  general  pattern,  the  penalties  in  force  are  not  enough  of  a  deterrent 
against corruption. 

Corruption continues to be widespread and the political commitment on this subject has not 
translated  into  concrete  results.  In  the  coming  year,  Bosnia  and  Herzegovina  should  pay 
particular attention to: 

→ ensuring that sufficient funds from the budget are allocated to the anti-corruption strategy 
and implementing its action plan; 

→  establishing  outstanding  prevention  and  monitoring  bodies  at  the  relevant  levels  of 
government  and  ensuring  their  functioning,  under  the  coordination  of  the  Agency  for  the 
Coordination of the Fight against Corruption and Prevention of Corruption; 

→  improving  the  legislative  framework,  particularly  for  political  party  financing,  asset 
declarations and protection of whistle-blowers; 

→  bringing  in  tougher  penalties  on  the  prevention  and  combat  of  corruption  in  order  to 
achieve more of a deterrent effect. 

Track record 

In  2014,  there  were  a  total  of  158  investigations  at  State  level  into  financial  crimes  and 
corruption, out of which 103 (65%) have been closed, and 53 sent to the Prosecutor’s Office 
of  Bosnia  and  Herzegovina.  There  has  been  no  final  conviction  in  high  profile  cases  in  the 
reporting period. From 1 October 2014 to 31 July 2015 there were a total of 304 confirmed 
indictments  country-wide,  resulting  in  209  convictions.  Most  of  the  convictions  related  to 
the offence of embezzlement in office.  

Audit  reports  and  tax  administration  reports  are  not  used  in  a  systemic  way  to  fight 
corruption.  Cases  are  often  leaked  to  the  press,  at  which  point  they  then  tend  to  become 
politicised.  The  political  authorities  should  ensure  that  law  enforcement  bodies  are  fully 
empowered  to  act  effectively  and  impartially  when  investigating  corruption  allegations. 
Financial  investigations  are  not  yet  systematically  launched  in  cases  of  corruption  and 
organised crime. Since the creation in 2010 of the only agency dedicated to asset confiscation 
in the Republika Srpska, in 16 cases an amount of around 7 775 000 euros was confiscated. 
2014 alone saw the confiscation of assets worth around 7 325 000 euros.  

There  is  no  track  record  of  effective  control  of  political  party  and  electoral  campaign 
financing  and  relevant  GRECO  (Group  of  states  against  corruption)  recommendations  still 
need  to  be  addressed  on  this  point.  Asset  declarations  are  governed  by  separate  and 
uncoordinated  pieces  of  legislation,  making  their  implementation  ineffective,  including  the 
penalties imposed.  

Amendments  to  the  State  law  on  conflicts  of  interest  established  a  new  parliamentary 
commission  to  decide  on  conflict  of  interest  cases. There  were  no  cases  at  State  level  or  in 
Brčko District. In Republika Srpska, 116 cases were processed, and in 10 cases a conflict of 
interest was found.  

Different laws govern access to information, but common flaws were reported, including the 
lack of automated statistical information. 218 access to information complaints were referred 
to the Ombudsman in 2014. Following the entry into force of the law on whistle-blowers in 

16 

 
2014, two individuals were granted the status of  whistle-blowers. However, the  law  covers 
only the State-level public sector. 

Institutional framework 

Although  the  anti-corruption  agency's  mandate  is  essentially  focused  on  prevention  and 
coordination,  recent  amendments  entrusted  the  agency  with  new  powers  on  whistle-blower 
protection and conflicts of interest. Its budget has constantly increased since inception in 2009 
and the staffing is at a satisfactory level. At entity level, the Republika Srpska has appointed 
in April 2015 a dedicated body.  The mandate of the prevention body within the Federation 
needs  to  be  reconfirmed.  Cantons,  where  most  of  the  areas  at  risk  are,  have  limited  or  no 
legislation and no bodies dedicated to preventing corruption. Moreover, there is no policy in 
place to prevent corruption in the private sector. 

On law enforcement, the capacity to investigate economic, financial and public procurement-
related  crimes  remains  weak.  Relations  between  the  police  and  the  prosecution  services  in 
combating  corruption  still  need  to  be  improved.  Greater  specialisation  is  needed  within  the 
police and judiciary in order to fight corruption. The law establishing specialised departments 
within  the  Federation's  Prosecutor’s  Office  and  the  Supreme  Court  of  the  Federation  to 
prosecute  corruption  and  organised  crime  cases  entered  into  force  in  February.  However, 
these bodies are not yet in place while the cantons have ceased to prosecute corruption cases 
above  a  certain  threshold,  thus  creating  a  legal  vacuum.  There  is  still  no  effective  criminal 
justice policy, including as regards penalties which are not deterrent. 

Rules  on  personal  data  protection  by  the  police  are  not  sufficient  and  generally  not 
implemented,  while  penalties  for  breaches  are  not  dissuasive.  Rules  on  the  immunity  of 
members  of  parliaments  in  criminal  procedure  and  procedures  governing  the  lifting  of 
immunity are in place. 

Legal framework 

Passive and active corruption are criminalised under the criminal codes at all levels. However, 
a number of GRECO recommendations on improving the legal framework have not received 
any  attention.  Bosnia  and  Herzegovina  is  party  to  the  UN  Convention  against  corruption, 
but  has  chosen  not  to  criminalise  illicit  enrichment.  The  country  ratified  the  Council  of 
Europe  Anti-corruption  Conventions  but  has  not  ratified  the  OECD  Convention  on 
Combating Bribery of Foreign Public Officials in International Business Transactions.  

Amendments  to  the  State  law  on  conflicts  of  interest  are  still  not  in  line  with  international 
standards because there are no independent bodies in charge of processing conflict of interest 
cases.  In  Brčko  District,  the  authorities  have  entrusted  the  task  of  deciding  on  conflict  of 
interest cases to the Brčko District Election Commission. The Federation has not yet amended 
the law to determine the body that will decide in conflict of interest cases. 

The verification of declared assets is not effective and penalties are not serving as a deterrent. 
The law on financing of political parties and electoral campaigns has not been adjusted in line 
with GRECO recommendations. The country has no legislation governing lobbying and rules 
on the protection of whistle-blowers are at a very early stage. 

Strategic framework 

A  new  Bosnia  and  Herzegovina  anti-corruption  strategy  and  action  plan  covering  the 
2015-2019 period was adopted in April. However, no specific budget has been allocated for 
its  implementation.  Provision  has  been  made  for  regular  revision  of  the  action  plan,  which 
should  enable  it  to  undergo  adjustments.  Similar  documents  for  the  2013-2017  period  have 
also  been  adopted  in  Republika  Srpska.  To  overcome  the  fragmentation  of  powers  and  the 

17 

 
various  administrative  layers,  the  fight  against  and  the  prevention  of  corruption  require  the 
identification  of  dedicated  and  specialised  structures  at  all  levels  of  government  with 
appropriate  coordination  channels  and  a  holistic  vision.  Strategic  documents  need  to  be 
improved by including notably a solid risk assessment and clear identification of benchmarks. 
Monitoring and implementation in most of the cases remain weak. 

Fight against organised crime 

The fight against organised crime has reached some level of preparation. Some progress has 
been made over the past year. 

Coordination  and  cooperation  between  all  institutions  throughout  the  country  needs  to  be 
significantly improved. The number of final convictions remains low. Financial investigations 
remain under used. The lack of strategic coordination is hampering the effective delivery of 
police  services.  To  remedy  the  systemic  shortcomings,  Bosnia  and  Herzegovina  should  pay 
particular attention in the coming year to:  

→ strengthening the framework for inter-agency cooperation among law enforcement bodies 
to  allow  for  the  establishment  of  specialised  multi-agency  investigation  teams  for  complex 
cases  involving  organised  crime,  economic  crime  and  corruption  and  to  make  it  possible  to 
dismantle criminal networks; 

→  regulating  mutual  access  to  databases  and  the  exchange  of  information  between  law 
enforcement agencies and prosecutors’ offices; 

→ developing effective asset confiscation and recovery systems at all levels. 

Track record 

The number of first instance convictions for organised crime is 22. Even though the number 
of cases concerning fighting human trafficking in the reporting period increased, the number 
of  final  convictions  for  organised  crime  remains  low.  The  country  remains  a  source,  transit 
and  destination  country  for  trafficking,  mostly  of  women  and  children,  for  various  types  of 
exploitation.  

The  number  of  convictions  for  money  laundering  decreased.  Anti-money  laundering 
legislation  still  needs  to  be  implemented  in  an  effective  way  by  all  relevant  institutions, 
including financial and non-financial sector and supervisory bodies.  

There is no policy for carrying out serious financial investigations on a systematic basis and 
the  precautionary  freezing  of  assets  during  the  early  phase  of  investigations  is  not  often 
applied. There are frequent leaks to the press, violating the confidentiality of investigations. 
The  joint  counter  terrorism  task  force  is  not  functioning  properly  and  its  capacity  has  to  be 
further strengthened. 

Institutional and operational capacity  

Bosnia and Herzegovina has 16 531 police officers, or 4.3 per 100 000 inhabitants. A major 
reform  of  the  police  was  carried  out  in  2008  and  new  institutions  still  need  further 
consolidation.  Undue  political  influence  over  police  top  managers  and  overlapping 
competences  hamper  the  proper  delivery  of  police  services  in  some  areas.  Command 
structures  remain  opaque,  with  overlapping  powers,  partly  due  to  the  country’s  complex 
administrative  set-up.  While  clear  criteria  for  the  recruitment,  evaluation  and  promotion  of 
police officers are in place, they are not yet being implemented in a fair and transparent way, 
particularly for the appointment of senior police officials. Curricula for initial and in-service 
training are being developed by police academies and training institutions. Their capacity to 

18 

 
provide specialised training is, however, limited. A working arrangement between Bosnia and 
Herzegovina and the European Police College (CEPOL) was signed in November.  

Specialised  anti-terrorism,  human  trafficking,  drugs,  cybercrime  and  financial 
investigations  units  are  broadly  in  place  at  State  and  Entity  level,  though  with  limited  or 
insufficient capacities. A Financial Investigation Unit remains to be set up in the Federation. 
The interoperability of the police equipment notably radio communication systems need to be 
improved.  

Relations  between  prosecutors’  offices  and  the  police  require  structural  improvements  to 
guarantee  a  more  effective  judicial  follow-up.  The  system  for  electronic  data  exchange  of 
police and prosecution registries is operational, although some technical aspects of the system 
are  being  updated  and  improved.  Better  regulation  continues  to  be  needed  on  determining 
access  rights  to  data  and  databases.  Provisions  governing  personal  data  protection  in  the 
police sector are not sufficient and generally not implemented, while sanctions for breaches 
are  not  deterrent.  Operational  inter-agency  cooperation  takes  place  on  a  case-by-case  basis 
and still needs to be improved. Negotiations with Europol on an Operational Agreement were 
concluded in December 2014 but the Agreement has not yet been signed. 

Statistics  on  investigations,  prosecutions  and  convictions  for  criminal  offences  are  collected 
from the judiciary throughout the country in an automated fashion and centralised using the 
HJPC’s  case  management  system.  However,  the  qualitative  analysis  of  cases  has  yet  to  be 
introduced.  There  is  no  operational  country-wide  DNA  database  and  the  DNA  profiling 
capacity remains limited, while the swift exchange of forensic data with other countries does 
not exist. 

Joint minimum standards on civil possession and the carrying of weapons were adopted in 
July with a view to harmonise laws within the country and with existing EU and international 
standards. Capacity to combat money laundering is weak.  

On human trafficking, the country still needs a victim approach and a multidisciplinary and 
comprehensive  strategy.  This  would  be  mainly  based  on  improved  police-prosecution 
cooperation,  data  exchange  and  investigations.  There  are  serious  delays  in  the  Federation’s 
implementation of its assets seizure legislation because its Agency for Management of Seized 
Assets is not operational. 

Legal framework 

The legal framework is fairly well developed, but legal loopholes and lack of implementation 
limit  its  efficiency.  The  country's  four  Criminal  Codes  are  largely  in  line  with  the  acquis, 
although the penalties imposed are not enough of a deterrent. A number of shortcomings in 
criminal  investigations  need  to  be  addressed,  including  through  strategic  guidance  and 
operational  priority-setting  mechanisms  to  ensure  that  special  investigative  means  are  used 
efficiently  and  through  rules  on  how  to  implement  them,  where  these  are  missing.  The 
legislation on the confiscation of criminal assets is partially aligned with the acquis. However, 
provisions  on  minimum  standards  governing  asset  seizure  have  yet  to  be  consistently 
incorporated  into  legislation  across  the  country.  Recommendations  by  the  Financial  Action 
Task  Force  on  Money  Laundering  (FATF)  are  partially  reflected  in  anti-money  laundering 
legislation, but the implementation of this legislation remains insufficient. In June an action 
plan  for  addressing  deficiencies  in  the  system  to  combat  money  laundering  and  terrorism 
financing was adopted.  

19 

 
 
 
Strategic framework 

The 2014-2016 strategy on the combat of organised crime is in place. However, its action 
plans have still be adopted and implemented. Inspired by the Europol methodology, a Serious 
and Organised Crime threat Assessment is in place, providing a strategic picture of organised 
crime  in  the  country.  However,  its  findings  have  not  yet  been  translated  into  a  coherent 
national security policy based on clear priorities. 

A  strategy  for  the  prevention  and  fight  against  terrorism  for  the  2015-2020  period  was 
adopted  in  July  but  an  action  plan  implementing  the  strategy  has  yet  to  be  adopted.  The 
strategy to combat money laundering and drug abuse and its accompanying action plan have 
expired, and the new strategic framework has not yet been adopted. Bosnia and Herzegovina 
lacks  a  comprehensive  overall  strategic  approach  to  address  the  issue  of  cybercrime  and 
cyber security threats. Existing capacities to combat cybercrime and respond to cyber security 
threats need to be strengthened. 

Fight against terrorism 

Bosnia  and  Herzegovina  has  been  seriously  affected  by  the  phenomenon  of  foreign  fighters 
and  radicalisation.  In  April,  the  police  station  in  Zvornik  was  attacked  by  a  lone  gunman, 
resulting in one police officer being killed and another two injured. The attacker was killed in 
the exchange of fire. The reason for the attack is being investigated by the State Prosecutor’s 
Office.  In  July,  Bosnia  and  Herzegovina’s  Council  of  Ministers  adopted  its  2015-2020 
strategy for the prevention and fight against terrorism for the period. The strategy follows the 
model of the EU’s counter terrorism strategy and is structured around four major principles: 
prevention, protection, pursuit and response. Action plans remain to be developed. Cases of 
hate speech need to be addressed more forcefully. The phenomenon of foreign fighters needs 
a  dedicated  approach  by  the  intelligence  and  law  enforcement  community  and  a  coherent 
judicial policy towards offenders. 

2.4. 

Human rights and the protection of minorities 

The legal and institutional framework for the observance of human rights requires substantial 
improvements.  No  progress  was  achieved  over  the  past  year  in  addressing  country  wide 
reforms conducive to creating the conditions for the effective exercise of some human rights. 
Conditions for the exercise of the freedom of expression have deteriorated.  

Shortcomings particularly affect the following areas: 

•   Effective protection of human rights is undermined by the uneven implementation of the 
anti-discrimination  legislation  and  the  absence  of  a  country-wide  anti-discrimination 
strategy.  

•   The country is still missing an effective free legal aid system to guarantee efficient access 

to justice.  

•   The lesbian, gay, bisexual, transgender and intersex community continued to be subject to 

threats and attacks.  

•   Socio-economic integration of the Roma minority continues to be undermined by limited 

action on health, education and employment.  

Bosnia  and  Herzegovina  (BiH)  has  ratified  all  major  European  and  international  human 
rights instruments. The UN Human Rights Council Universal Periodic Review took place in 
November,  with  Bosnia  and  Herzegovina  receiving  167  recommendations.  However,  the 
country has not yet implemented recommendations from the previous cycle, including those 

20 

 
on anti-discrimination, inclusive education, gender-based violence, harmonisation of law and 
policy at all Entity levels and criminal code reform on war crimes.  

Since September 2014, the European Court of Human Rights (ECtHR) has found that the 
country violated the European Convention on Human Rights (ECHR) in one case relating to 
the right to a fair trial and protection of property.  A total of 842 new applications have been 
allocated to a decision-making body, bringing the number of pending applications to 808. The 
remaining  outstanding  cases  relate  mainly  to  re-possession  of  occupancy  rights,  missing 
persons and discrimination on the ethnic grounds of ethnicity. Some progress has been made 
in  implementing  the  Court’s  judgments,  while  action  plans  foreseeing  preparatory  steps  for 
the  implementation  of  the  Sejdić-Finci  and  Zornic  cases  were  adopted  by  the  Council  of 
Ministers in September. 

On  the  promotion  and  enforcement  of  human  rights,  the  Ombudsman  continues  to  be 
affected  by  a  lack  of  adequate  human  and  financial  resources  to  perform  its  functions  as 
national human rights institution. In 2015 training related to the ECHR and ECtHR case law 
for judges, prosecutors, legal associates and advisers of the Constitutional Court and the Court 
of Bosnia and Herzegovina focused in particular on the right to a fair trial.  

On the right to life, the provision on death penalty in the Constitution of Republika Srpska 
needs to be repealed. 

On the prevention of torture and ill treatment, Bosnia and Herzegovina has still not put in 
place  an  independent  national  preventive  mechanism  against  torture  aligned  with  the 
procedures  of  the  Optional  Protocol  to  the  Convention  against  Torture  and  Other  Cruel, 
Inhuman  or  Degrading  Treatment  or  Punishment  (OPCAT).  There  has  been  no  progress  on 
the adoption of legislation on the rights of civilian victims of torture during the war. There are 
reports of ill treatment of suspects in some police stations and of prisoners in some detention 
facilities. Such cases need to be properly investigated and preventive measures taken. 

Legislation  on  the  prison  system  is  partially  harmonised  throughout  the  country.  In 
November, the psychiatric institution in  Sokolac, intended to provide mandatory psychiatric 
treatment requested during criminal proceedings was opened. There is no overall strategy for 
correctional  systems  as  responsibility  for  the  execution  of  criminal  sentences  is  a  shared 
competence  between  the  State  and  the  Entities.  The  adoption  of  a  new  law  on  execution  of 
criminal  sanctions  in  the  Federation  to  ensure  harmonisation  with  State-level  law  and 
international standards is still pending. The continuous backlog in the execution of criminal 
sanctions  in  the  Federation  remains  a  matter  of  concern.  Existing  penitentiary  legislation 
needs  to  be  aligned  with  European  including  Council  of  Europe  standards  and  effectively 
implemented.  No  official  coordination  mechanism  has  been  set  up  between  the  country's 
prison  administrations.  The  quality  of  healthcare  services  in  prisons  remains  deficient  and 
continues to be affected by insufficient resources and medical staff.  

Protection  of  personal  data  in  Bosnia  and  Herzegovina  is  partially  harmonised  with  the 
European  standards.  Staffing  of  the  Agency  for  Personal  Data  Protection  needs  to  be 
strengthened.  The  number  of  complaints  that  were  addressed  by  the  agency  increased  from 
107  in  2013  to  140  in  2014.  It  continued  training  civil  servants  at  State  and  Entities  level. 
However,  there  were  attempts  to  alter  the  general  personal  data  protection  regime  by 
introducing  contradictory  provisions  in  the  special  laws.  There  is  no  legal  obligation  to 
consult the agency on draft laws that include provisions on personal data. 

The constitutional and legal guarantees on the freedom of thought, conscience and religion 
are generally fulfilled. However, cases of discrimination on religious grounds continue to be 

21 

 
reported.  There  have  been  incidents  targeting  religious  symbols,  clerics,  believers  and 
religious property. 

Freedom of expression  

There  is  some  level  of  preparation  on  the  right  to  freedom  of  expression.    However,  the 
country  has  been  backsliding  in  this  area.  Although  the  legal  provisions  are  generally  in 
place, the institutional and political environment  is not conducive to creating the conditions 
for  full  freedom  of  expression.  The  financial  stability  of  the  system  of  public  service 
broadcasting remains to be addressed. Political pressure and intimidation towards journalists 
continued  during  the  reporting  period.  Transparency  on  media  ownership  continues  to  be 
lacking.  Recent  legislative  developments  in  Republika  Srpska  raise  concerns  over  possible 
limitation of online freedom of expression. 

In the coming year, Bosnia and Herzegovina should particularly pay attention to: 

→ ensuring proper follow-up on cases of threats to journalists; 

→ securing depoliticisation, financial and institutional stability and editorial independence for 
the Public Service Broadcasters; 

→ finalising the reform of the broadcasting system and harmonising relevant entity legislation 
with legislation at State level. 

Intimidation of journalists 

Political and financial pressure on the media continued in the reporting period. Intimidation 
and  threats  against  journalists  and  editors  and  polarisation  of  the  media  along  political  and 
ethnic lines continued during and after the October general elections. Cases were recorded of 
political  statements  putting  pressure  on  journalists  and  police  raids  on  media  outlets.  In 
December 2014, the police of Republika Srpska and the Sarajevo Canton raided the offices of 
a news portal over a criminal investigation involving the Prime Minister of Republika Srpska. 
The  courts  subsequently  ruled  that  the  raid  was  unlawful  and  in  violation  of  both  the 
European Convention on Human Rights and national law. The follow-up by the authorities to 
threats to media freedom and journalists has been insufficient. Cases were reported of verbal 
attacks by politicians towards journalists.  

Legislative environment 

Legal provisions guaranteeing freedom of expression are in place. However, there are serious 
concerns  that  the  implementation  of  the  newly  adopted  Republika  Srpska  Law  on  Public 
Peace and Order may limit the freedom of expression online and possibly affect freedom of 
assembly and association. The implementation of the Freedom of Access of Information Act 
remains  uneven  and  is  frequently  limited  by  the  right  to  privacy  and  the  protection  of  the 
commercial  interests  of  companies  dealing  with  governments,  without  running  the  test  of 
public interest.   

Implementation of legislation/institutions 

The  appointment  of  the  new  Director  General  of  the  Communications  regulatory  agency  is 
pending.  The  political,  institutional  and  financial independence  of  the  agency  remains  to  be 
secured.  

Bosnia  and  Herzegovina’s  Communications  Regulatory  Agency  adopted  in  2012  rules 
requiring internet service providers to apply appropriate technical measures to disable access 
to internet addresses that were found to be harmful or illegal and would pose threats to safe 

22 

 
internet  use.  Criminal  offences  listed  in  the  Additional  Protocol  to  the  international 
Convention on Cybercrime have yet to be incorporated into the criminal codes.  

Republika  Srpska’s  Law  on  Public  Peace  and  Order,  adopted  in  February,  raises  concerns 
about the potential for arbitrary implementation of certain of its provisions related to online 
social  networks.  The  law  opens  up  the  possibility  for  potential  abuses  through  vague 
provisions  related  to  minor  offences  committed  on  the  internet  and  the  setting  of  a  low 
standard of proof in proceedings for minor offences.  

Public Service Broadcaster 

The  independence  of  the  three  public  broadcasters  within  the  country’s  public  broadcasting 
system  remains  to  be  ensured.  The  public  broadcasters  in  the  two  Entities  were  exposed  to 
political influence through political appointments to managerial positions.  

The  Federation  Parliament  failed  to  appoint  members  to  the  steering  committee  of  Radio-
Television of the Federation of Bosnia and Herzegovina (RTVFBiH). The Director General of 
RTV FBiH remained in a caretaker role, which opened the door to political influence.  

The  steering  committee  of  Republika  Srpska’s  public  service  broadcaster  Radio  Televizija 
Republike  Srpske  (RTRS)  remained  politically  affiliated,  which  increased  political  control 
over  RTRS  and  undermined  editorial  independence.  Entity  laws  on  public  broadcasting 
services are not harmonised with State-level law.  

The  statute  of  the  State-level  public  service  broadcaster  Radio  and  Television  of  Bosnia-
Herzegovina  (BHRT)  has  yet  to  be  amended.  The  adoption  of  the  public  broadcasting 
corporation’s  statute  is  pending  and  public  broadcasting  system  reform  has  yet  to  be 
completed. All types of broadcasting are licensed by the Communications Regulatory Agency 
in  accordance  with  the  law  on  communications.  The  financial  sustainability  of  the  public 
service broadcasting system remains to be ensured. 

Economic factors 

The transparency of media ownership remains limited and is partly ensured through the court 
registration of businesses that own the media. Full information is not easily accessible due to 
problematic legal provisions hampering systematic insight into the ownership structure. This 
is especially problematic for online media, which are often not registered as media businesses. 
There is a lack of rules governing government financing of the media. Public broadcasters that 
are  not  part  of  the  public  broadcasting  system  are  financed  from  municipal  and  canton 
budgets  and  remain  under  strong  political  influence.  At  Entity  level,  the  Government  of 
Republika Srpska funds both public and private media. Lack of transparency and clear criteria 
in  the  distribution  of  subsidies  are  a  serious  concern.  In  addition,  media  integrity  is  also 
harmed by the advertising practices of public companies controlled by political parties.  

Professional organisations, Professional conditions 

The  Bosnia  and  Herzegovina  Journalists’  Association  has  continued  to  lead  civil  society 
efforts  in  the  country  to  secure  freedom  of  expression  and  freedom  of  the  media,  the 
protection of journalists and media integrity. The complaint commission of the Press Council 
of  Bosnia  and  Herzegovina  continued  to  work  and  mediate  between  the  readers  and  the 
media, securing that readers' complaints are addressed by the editors.   

An  increased  level  of  unity  and  solidarity  among  journalists  across  the  country  over  the 
protection of journalists' rights and privileges was noted after the December police raid on a 
news portal.  

23 

 
On  the  freedom  of  assembly  and  association,  cases  of  attacks  and  intimidation  against 
human  rights  activists  continue  to  be  reported.  Such  cases  are  often  not  adequately 
investigated and prosecuted by the authorities.  

On property rights, there are 72 ongoing administrative disputes before the Court of Bosnia 
and Herzegovina in which the Commission for real property claims of displaced persons and 
refugees is a respondent party.  

On  non-discrimination  policies,  no  steps  were  taken  to  develop  an  anti-discrimination 
strategy at State level. The anti-discrimination law has not been amended to include age and 
disability as grounds for discrimination, nor have its provisions been adequately reflected or 
transposed  into  labour  law  or  higher  education.  A  working  group,  co-ordinated  by  the 
Ministry  of  Human  Rights  and  Refugees  and  tasked  with  the  revision  of  the  anti-
discrimination law was formed in August. Implementation of the 2009 anti-discrimination law 
is  hampered  by  procedural  hurdles  and  low  levels  of  knowledge  of  the  law.  A  total  of  144 
judicial cases of discrimination were pending as of August. Hate  crime  and  hate  speech  are 
not covered by the Federation’s criminal law. Most hate incidents targeted returnees, LGBTI 
persons or were ethnically motivated. Information about hate crime acts is not systematically 
collected or tracked. 

The  Sejdić-Finci  ruling  of  the  European  Court  of  Human  Rights  has  still  not  been 
implemented, meaning that people not belonging to one of the three constituent peoples are 
still  not  allowed  to  stand  for  in  the  House  of  Peoples  and  the  Presidency  of  Bosnia  and 
Herzegovina. The Supreme Court of Federation passed two judgments and the Supreme Court 
of the Republika Srpska rendered one judgement in cases of discrimination in 2015. There is 
still a lack of consistent and comprehensive collection of data on discrimination.  

Legal provisions providing equality between women and men are broadly in place but are 
not  being  implemented  in  an  effective  manner.  Cooperation  between  the  State  Agency  and 
Entity  Centres  for  Gender  Equality  remained  good.    Implementation  of  gender  policies  in 
Bosnia  and  Herzegovina  is  hampered  by  the  fragmentation  of  powers  and  the  multiple 
institutional  bodies,  as  well  as  by  limited  budgetary  resources.  To  date,  financing  is  not  in 
place  to  continue  running  the  2009-2014  Financial  Mechanism  for  Implementation  of  the 
Gender action plan of Bosnia and Herzegovina.  

A strategy for implementing the Council of Europe Convention on preventing and combating 
violence against women and domestic violence for the period 2015-2018 was adopted in July. 
Legislation  on  safe  houses  is  not  adequately  implemented  and  lacks  sufficient  funding, 
undermining  protection  and  assistance  to  women  victims  of  violence.  There  is  no 
comprehensive  State-level  legal  framework  on  sexual  assault  and  rape  and  no  appropriate 
compensation  mechanism  in  place  for  victims.  There  is  no  effective  data  collection 
mechanism  for  monitoring  domestic  violence  and  no  specialised  police  units.  Women’s 
political participation across the country has slightly improved. In the 2014 general elections, 
19.03 % of candidates elected at all levels were women. 

On the rights of the child, Bosnia and Herzegovina’s Council of Ministers adopted in June 
the 2015-2018 action plan for children, which provides a mechanism for the overall protection 
the  child. 
of  children  and  complies  with 
Institutionalisation of children with disabilities remains high and only a very low proportion 
of them are in pre-school education. Use of foster care and alternative solutions needs to be 
further promoted. The exploitation of children and child begging remain issues of concern and 
violence against children continues to be widespread. Reporting of violence against children 
remains  weak,  resulting  in  few  cases  being  brought  before  the  courts  and  no  such  specific 

the  UN  Convention  on 

the  rights  of 

24 

 
cases  were  reported  to  the  Ombudsperson.  Data  collection  on  violence  against  children 
remains weak. No awareness-raising activities on rights of the child were organised. 

A national strategy against juvenile offending has yet to be adopted. The legal framework on 
juvenile  justice  is  in  place  but  has  still  not  been  harmonised  across  the  country.  The 
Federation law on protection and treatment of children and juveniles in criminal proceedings 
entered  into  force  in  February  2015  but  pre-conditions  for  its  full  implementation  including 
relevant  by-laws  are  not  in  place.  Separate  units  for  juveniles  exist  in  prisons  and  juvenile 
educational-correctional facilities, but the absence of separate units during pre-trial detention 
and in police stations across the country continues to be a serious concern. The alternatives to 
juvenile  detention  laid  down  by  law  contine  to  be  underused  and  there  is  insufficient 
coordination between the responsible authorities. The Orašje educational-correctional facility, 
while  ready  for  immediate  use,  is  not  running  due  to  problems  with  its  electricity  supply. 
Child-friendly  proceedings  in  civil  and  administrative  cases  are  still  not  ensured  in  a 
harmonised and non-discriminatory way and measures for child victims and witnesses, while 
in place, are not systematically applied.  

On the integration of people with disabilities, no steps were taken to change the entitlement 
system for rights and benefits to base it on needs instead of status. Inequalities remain in the 
level  of  rights  granted  by  the  different  Entities  and  implementation  of  the  legislative 
framework for social protection remains limited.  

On  the  rights  of  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons,  the 
2015  LGBTI  Merlinka  festival  was  held  with  no  incidents  and  with  appropriate  police 
protection.  Bosnia  and  Herzegovina  was  one  of  the  signatories  of  the  Joint  Statement  of 
Ministers of the region at the 2015 IDAHO (International Day against Homophobia) forum. 
The anti-discrimination law needs to be amended as it does not include a clear definition of 
gender  identity  and  sexual  orientation  and  refers  to  sexual  expression  and/or  orientation  as 
grounds of discrimination. The Republika Srpska and Brčko District criminal codes need to 
be amended to include gender identity and sexual orientation as grounds for hate speech.  

Despite an increase in violence, attacks and threats towards LGBTI persons and human rights 
defenders, only a limited number of cases are reported to the police. In September, Bosnia and 
Herzegovina’s  Constitutional  Court  ruled  on  a  violation  of  the  freedom  of  assembly  in  the 
case  of  the  October  2008  Queer  Sarajevo  Festival  when  a  dozen  individuals  were  attacked, 
but  there  has  been  no  criminal  prosecution  of  the  attack  on  the  2014  Merlinka  Queer  Film 
Festival.  Transgender  persons  are  a  particularly  marginalised  group  and  no  measures  are 
planned for legal gender recognition. 

On labour and trade union rights, the fragmentation of the legal framework and the absence 
of  a  harmonised  approach  to  social  allowances  hamper  effective  exercise  of  social  rights 
across the country. 

On  procedural  rights,  the  legal  and  institutional  framework  for  free  legal  aid  remains 
incomplete,  un-harmonised  and  discriminatory,  as  basic  pre-conditions  for  free  legal  aid  do 
not exist at all levels, including the State level. Minimum common standards for free legal aid 
should be harmonised between the various levels of authority and incorporated into the legal 
framework,  where  missing.  Non-governmental  organisations  continued  to  actively  provide 
free legal aid without any harmonised country-wide regulation. The Free Legal Aid Network, 
a platform for cooperation between civil society and government agencies, helped to provide 
specialised  training  and  awareness-raising  on  free  legal  aid.  Communication  between 
prosecutors'  offices  and  victims'  associations  improved.  In  the  absence  of  a  national 
transitional  justice  strategy,  compensation  for  wartime  gross  human  rights  violations  is 

25 

 
achieved through civil actions. As a result, the right to compensation continues to be upheld in 
an uneven manner.  

The legal framework for the protection of minorities is largely in place and in line with the 
Council  of  Europe  Framework  Convention  for  the  Protection  of  National  Minorities. 
However,  the  lack  of  coordination  between  the  State  and  Entity  levels  continued  to  hamper 
implementation of the law on national minorities.  

The presence and participation of national minorities in public debates and the media remain 
low.  The  effectiveness  and  impact  of  national minority  councils  at  State  and  Entity  level  is 
hindered  by  insufficient  resources  and  lack  of  political  leverage  in  decision-making. 
Politicised appointment procedures also undermine the legitimacy and ability of the councils 
to  operate  properly.  In  November,  the  Federation  Supreme  Court  confirmed  the  2012  first 
instance verdict that the 'two schools under one roof' in Stolac constitutes ethnic segregation 
of pupils. Progress in eliminating the ‘two schools under one roof’ phenomenon continues to 
be  slow  and  the  number  of  mono-ethnic  schools  has  not  decreased.  The  common  core 
curriculum is not yet applied throughout the country. 

Bosnia  and  Herzegovina  held  the  most  recent  chairmanship  of  the  Decade  for  Roma 
Inclusion,  which  concluded  in  September  2015.  The  third  Roma  inclusion  seminar,  held  in 
Sarajevo in June 2015, adopted specific recommendations in all five key policy priority areas. 
Significant  progress  was  achieved  towards  completing  the  civil  registration  process.  As  of 
September,  only  77  identified  persons  at  risk  of  statelessness  remained  to  be  registered.  On 
education,  free  textbooks  for  Roma  children  in  primary  school  continued  to  be  provided  to 
some Roma pupils. The drop-out rate has slightly decreased, but the number of Roma children 
included  in  the  education  system  needs  to  be  significantly  increased.  Further  housing  was 
provided to Roma in need in 60 municipalities. The assistance provided included co-financing 
by local authorities, including for those affected by the May 2014 floods. However, access to 
infrastructure is not provided to all rebuilt housing. 

Roma remain the country’s most vulnerable and disadvantaged minority. The lack of reliable 
data hampers effective policy-making. A more comprehensive and integrated approach needs 
to be adopted for the social inclusion of Roma. The action plans on health and employment 
have not yet been fully implemented. Health insurance coverage for Roma needs to improve 
significantly. The number of unemployed Roma remained high and their access to the labour 
market remains hampered by the lack of suitable qualifications.  

According to the Ministry for Human Rights and Refugees, as of September, there are still 84 
500  internally  displaced  persons  and  6  795  refugees  in  Bosnia  and  Herzegovina.  Some 
action  was  taken  to  tackle  the  issue  of  sustainable  return,  particularly  in  connection  with 
employment, education, social protection and healthcare at local level through the initiative of 
the ministry.  The revised strategy for the implementation of Annex VII to the Dayton/Paris 
Peace  Agreement  still  lacks  coordinated  implementation  and  appropriate  allocation  of 
resources.  The  lack  of  infrastructure,  particularly  for  electricity,  needs  to  be  addressed. 
Returnees  continue  to  face  obstacles  in  access  to  healthcare  and  their  sustainable  return 
continues  to  be  hampered  by  the  lack  of  employment  opportunities.  Over  7  500  people  are 
still accommodated in 45 collective centres across the country. 

2.5.  Regional issues and international obligations 

The  implementation  of  the  Dayton/Paris  Peace  Agreement  continued.  The  government  of 
the  entity  Republika  Srpska  continued  to  hold  joint  sessions  with  the  Government  of  the 
Republic of Serbia under the framework of the Special and Parallel Relations agreement. The 

26 

 
two governments committed themselves to several joint infrastructural projects and planned to 
further strengthen their cooperation across all sectors.  

Bosnia  and  Herzegovina’s  cooperation  with  the  International  Criminal  Tribunal  for  the 
former Yugoslavia (ICTY) continued to be assessed as satisfactory in most areas. However, 
the Office of the Chief Prosecutor of the ICTY has expressed concern that the State Prosecutor's 
Office  did  not  sufficiently  follow  up  on  repeated  requests  to  complete  the  processing  of  war 
crimes cases partly investigated by the Tribunal and transferred to the jurisdiction of Bosnia and 
Herzegovina  in  2008  for  further  investigation  and  possible  prosecution  (the  ‘Category  II’ 
cases),   

Concerning  the  domestic  prosecution  of  war  crimes,  further  progress  was  registered  in 
tackling  the  large  backlog  of  war  crimes  cases,  in  particular  following  the  launch  of  the 
European  Union's  extraordinary  budget  support  to  judiciaries  at  all  levels  of  the  country, 
under  the  guidance  of  the  Supervisory  Body  for  Monitoring  the  Implementation  of  the 
National  War  Crimes  Strategy.  The  number  of  indictments  increased,  with  98  confirmed 
indictments against 177 suspects in 2014. In the first half of 2015, courts in BiH confirmed 44 
indictments  against  86  suspects.  The  reduction  in  the  backlog  was  achieved  as  planned,  but 
the  State-level  authorities  failed  to  allocate  regular  public  funds  complementing  EU 
assistance. The adoption of the country-wide justice sector reform strategy for the 2014-2018 
period  in  September  2015  allows  Bosnia  and  Herzegovina  to  meet  the  condition  for  the 
release of the second tranche of the EU direct budget support.  

Improvements were noticeable in the prosecution of cases of wartime sexual violence, due to 
an  increased  specialisation  by  prosecutors,  judges,  police  investigators  and  witness  support 
staff. The courts completed 6 war crimes cases involving sexual violence over the reporting 
period. However, more efforts are needed to end impunity particularly against the backdrop of 
a large number of potential cases. A comprehensive legal and policy framework to improve 
the  status  of  victims  of  rape  and  sexual  violence  has  still  to  be  achieved.  A  State-level 
programme to improve the status of victims of war crimes involving sexual violence has yet 
to be adopted. 

Further  progress  on  providing  in-court  victims  and  witnesses  support  remained  possible 
primarily thanks to international financial support. The long-term sustainability of the system 
was  called  into  question  by  the  obvious  lack  of  domestic  budget  support.  Psychological 
support  to  victims  and  witnesses  before,  during  and  after  war  crimes  trials  remained 
insufficient. 

The implementation of the national war crimes strategy objectives continued. This involved in 
particular the reallocation of cases by the State judiciary to other judicial levels, and the State 
judiciary taking over 40 complex cases from other jurisdictions. However, the initial deadline 
to  have  the  most  complex  cases  solved  by  2015  has  not  be  met.  Additional  efforts  by 
authorities  at  all  levels  remain  necessary  in  order  for  the  strategy  to  be  successfully 
implemented.  Conclusions  issued  by  the  strategy’s  supervisory  body  have  yet  to  be 
consistently implemented by the authorities.  

The  2003  Bosnia  and  Herzegovina-US  bilateral  immunity  agreement  granting  exemptions 
from  the  jurisdiction  of  the  International  Criminal  Court  continued  to  be  in  force.  The 
agreement  is  not  compliant  with  the  EU  Common  Positions  on  the  integrity  of  the  Rome 
Statute  or  the  related  EU  guiding  principles  on  bilateral  immunity  agreements.  Bosnia  and 
Herzegovina still needs to align with the EU position on this issue.  

Bosnia and Herzegovina, Serbia, Croatia and Montenegro have continued to closely cooperate 
under the Sarajevo Declaration Process, which aims to find sustainable solutions for 74.000 

27 

 
people who became refugees and displaced persons as a result of the armed conflicts in the 
former Yugoslavia during the 1990s. All countries need to further step up efforts to deliver on 
the  implementation  of  the  agreed  housing  solutions.  Bosnia  and  Herzegovina  made  some 
progress  on  implementing  the  regional  housing  programme  with  the  delivery  of  19  housing 
solutions  out  of  the  1,868  approved  so  far.  Efforts  are  needed  to  further  ensure  a  quality 
beneficiary selection process conducive to a speedy implementation of the housing projects. 

The  unresolved  fate  of  missing  persons  from  the  conflicts  of  the  1990s  remains  a 
humanitarian concern in the Western Balkans. As of February 2015, a total of 10 814 persons 
were still missing according to the International Committee of the Red Cross. Of these, 7 019 
cases  relate  to  the  conflict  in  Bosnia  and  Herzegovina.  Ascertaining  the  fate  of  missing 
persons remains vital for reconciliation and stability in the region.  Bosnia and Herzegovina’s 
Missing  Persons  Institute  continued  to  lack  sufficient  support  from  the  authorities  and  was 
subject to further reductions in its budget and political pressures. A reform of the institute is 
pending. A support fund for the families of missing persons, which is provided for by the Law 
on  Missing  Persons,  has  still  not  been  established.  The  lack  of  local  forensic  capacity, 
especially in the Federation, continued to hamper the process of identifying missing persons. 

Regional cooperation and good neighbourly relations form an essential part of Bosnia and 
Herzegovina's  process  of  moving  towards  the  EU.  The  country  continued  to  participate 
actively  in  regional  initiatives,  including  the  South-East  European  Cooperation  Process,  the 
Regional  Cooperation  Council,  the  ‘Western  Balkans  Six’  initiative  and  the  Energy 
Community Agreement. In May 2015, Bosnia and Herzegovina took over the chairmanship of 
the Council of Europe Committee of Ministers. It continued to actively support the RECOM 
(Coalition for Reconciliation Commission) and Igman initiatives on regional reconciliation.  

A fresh impetus has been given to regional cooperation through the 'Berlin process' and the 
Western Balkan Six initiative notably regarding the EU’s connectivity agenda.  In April, the 
Western Balkan Six countries reached an agreement on the core transport network and in June 
2015  on  extending  three  Trans-European  Transport  Networks  core  corridors  to  the  Western 
Balkans. They also identified the priority projects to be implemented by 2020. The countries 
agreed  to  implement  before  the  next  summit  in  Paris  a  number  of  'soft'  measures  such  as 
aligning and simplifying border crossing procedures, road safety and maintenance schemes. 

On  regional  judicial  cooperation,  the  fight  against  impunity  in  the  area  of  war  crimes 
resulted  in  its  first  arrests  and  issuing  of  indictments  in  line  with  the  Protocol  of  the 
Prosecutor's Office of Bosnia and Herzegovina and the Office of the War Crimes Prosecutor 
of  the  Republic  of  Serbia  on  Cooperation  in  Prosecution  of  Perpetrators  of  War  Crimes, 
Crimes  against  Humanity  and  Genocide.  Similar  Protocols  signed  with  the  Croatian  and 
Montenegrin Prosecutor’s Offices are yet to produce concrete results. 

In March  2015, Bosnia and Herzegovina ratified  an  agreement  on  the  exchange  and  mutual 
protection of classified information with Albania In July an agreement allowing their citizens 
to travel between the two countries with ID cards only was signed. 

An  agreement  on  the  exchange  and  mutual  protection  of  classified  information  was  ratified 
with  the  former  Yugoslav  Republic  of  Macedonia  in  March.  Overall  relations  continue  to 
develop. 

An  Agreement  on  cooperation  in  consular  protection  and  visa  issues  with  Montenegro  was 
ratified in March 2015. A bilateral border agreement with Montenegro was signed in August 
which largely improved bilateral relations. 

Relations  with  Serbia  remained  good.  The  chair  of  Bosnia  and  Herzegovina’s  Presidency 
visited  Belgrade  and  the  Serbian  Prime  Minister  visited  Sarajevo  in  May.  Serbian  Prime 

28 

 
Minister  was  attacked  during  the  Srebrenica  genocide  commemoration  in  July  by  some 
participants and investigations are ongoing to find the perpetrators. A few days later, the three 
members  of  the  Presidency  travelled  to  Belgrade  upon  the  invitation  of  the  Serbian  Prime 
Minister.  

There  are  no  official  relations  with  Kosovo,  as  Bosnia  and  Herzegovina  does  not  recognise 
Kosovo  as  an  independent  state.  The  Ministry  of  Foreign  Affairs  maintained  its  practice  of 
issuing individual short-term visas to citizens of Kosovo only if they have an invitation from a 
in  Bosnia  and 
foreign  diplomatic  mission  or 
Herzegovina, or for humanitarian reasons. An amendment to normalise the visa procedure for 
all citizens of Kosovo remained pending. 

international  organisation  accredited 

Bilateral relations with Turkey are good. An agreement on military financial cooperation and 
its  implementing  protocol  were  ratified  in  June  2015.  Member  of  the  Presidency  Bakir 
Izetbegovic paid an official visit to Turkey in March 2015. A visit to Bosnia and Herzegovina 
by the Turkish President took place in May 2015.   

Relations  with  Croatia  remained  good.  Members  of  the  Presidency  of  Bosnia  and 
Herzegovina  took part in the inauguration of the Croatian President, who subsequently paid 
her first visit abroad to Bosnia and Herzegovina. The Croatian Prime Minister visited Bosnia 
and Herzegovina in December 2014. The agreement signed by Bosnia and Herzegovina with 
Croatia in June 2015 in Brussels on border crossings, border traffic and free transit together 
with the joint statement should enable the smooth transport of goods form Croatia in transit 
through the Neum corridor in accordance with the applicable acquis. No progress was made 
towards  resolving  further  outstanding  bilateral  issues,  including  property  issues  and  border 
demarcation.  

3. 

 ECONOMIC CRITERIA 

Key economic figures 

Gross domestic product per capita (% of EU28 in PPS) 

GDP growth (%) 

2013 

29 

2.5 

2014 

28 

1.1 

Unemployment rate (female; male) (%) 

27.6 (29.1; 26.7)  27.6 (31.2; 25.3) 

Economic activity rate for persons aged 20–64: proportion 
of the population aged 20–64 that is economically active 
(female; male) (%) 

58.7 (45.1; 72.1)  59.2 (46.0; 72.4) 

Current account balance (% of GDP) 

Foreign direct investment (FDI) (% of GDP) 

-5.7 

1.6 

-7.6 

3 

Source: Eurostat 

In  line  with  the  conclusions  of  the  European  Council  in  Copenhagen  in  June  1993,  EU 
accession  requires  the  existence  of  a  functioning  market  economy  and  the  capacity  to  cope 
with competitive pressure and market forces within the Union. 

The monitoring of these economic criteria should now be seen in the context of the increased 
importance  of  economic  governance  in  the  enlargement  process.  In  order  to  improve  their 
economic  governance,  in  2015  the  enlargement  countries  were  asked  to  prepare  Economic 

29 

 
 
Reform  Programmes  (ERPs),  which  set  out  a  medium-term  macro-fiscal  policy  framework 
together  with  key  structural  reforms  aimed  at  supporting  the  framework  and  boosting 
competitiveness.  The  ERPs  were  the  basis  for  country-specific  recommendations  jointly 
adopted  by  the  EU  and  the  Western  Balkans  and  Turkey  in  the  Economic  and  Financial 
Dialogue meeting on 12 May 2015. 

3.1. 

The existence of a functioning market economy 

Bosnia and Herzegovina is at an early stage in developing a functioning market economy, 
although  some  progress  has  been  made.  In  particular,  steps  have  been  taken  to  strengthen 
policy  coordination  and  to  improve  the  business  environment,  particularly  on  the  ease  of 
market  entry  and  the  granting  of  construction  permits.  Despite  the  setback  from  the  spring 
floods, economic growth remained positive. 

However, stronger and sustainable economic growth will require the development of a more 
dynamic private sector. This requires strong political support and the timely implementation 
of much-needed structural reforms. 

In line with the ERP recommendations and the Reform Agenda and in order to support long-
term growth, in the coming year Bosnia and Herzegovina should pay particular attention to: 

→ increasing the quality of public finance, for example by providing for more fiscal space, in 

particular for capital investment; 

→ improving its budget management framework; 

→ taking  steps  to  advance  restructuring  and  privatisation  and  to  improve  the  business
    environment. 

Economic policy essentials 

The consensus on economic policy essentials has increased.  A broad agreement has been 
reached  on  economic  reforms,  but  the  government  now  needs  to  show  strong  reform 
commitment  by  starting  to  implement  the  planned  reforms.  The  consensus  between  the 
authorities  at  different  levels  of  government  on  the  economic  policy  essentials  has  broadly 
gained momentum with the adoption of the global framework for fiscal policies and balances 
2016-2018 by the Fiscal Council. 

In  February  2015,  Bosnia  and  Herzegovina  submitted  its  Economic  Reform  Programme 
covering  the  2015-2017  period.  The  programme  sets  out an overly  ambitious fiscal  strategy 
based  on  reductions  in  expenditure  but  lacks  initiatives  that  would  stimulate  growth.  In 
addition,  although  some  major  obstacles  for  growth  were  identified,  the  structural  reform 
strategy  is  vague  on  medium-term  measures  beyond  2015.  There  is  ample  room  for 
improvement in terms of policy coordination. Following the adoption of the Reform Agenda 
in  July,  Bosnia  and  Herzegovina  is  encouraged  to  take  further  steps  towards  its 
implementation,  including  with  the  help  of  the  ERP  recommendations  set  out  below,  which 
reflect Reform Agenda priorities  

The IMF Stand-By Arrangement (SBA), agreed in 2012, expired on 30 June 2015 but the last 
loan  tranche  disbursement  was  made  in  July  2014.  The  programme  went  off-track  due  to 
delays in implementation of previously agreed structural reforms. Negotiations for a new IMF 
programme have been ongoing. 

30 

 
 
 
 
Macroeconomic stability 

Economic  growth  remained  resilient  in  spite  of 
external shocks. However, the short-term outlook 
will  heavily  depend  on  the  implementation  of 
structural  reforms.  After  GDP  growth  of  2.4 %  in 
2013,  substantial  flood  damages 
in  mid-2014 
reduced  output  growth  to  around  1  %  in  2014.  In 
contrast to 2013, it was domestic demand rather than 
net  exports  that  drove  GDP  growth  in  2014. 
Investment  was  stimulated  by  disbursements  under 
the flood recovery programme (2.2 % of GDP by the 
end  of  2014)  and  could  remain  important  for 
economic growth in 2015. Investment in the private 
sector, however, continued to be stagnant. Private consumption growth remained subdued in 
2014,  reflecting  persistently  high  unemployment  and  declining  wages.  Industrial  production 
remained largely unchanged in 2014 but showed signs of increased activity from the second 
quarter 2015 onwards. However, a drought hit agricultural production in mid-2015 and could 
negatively impact on growth in 2015. Overall, data since early this year point to strengthening 
economic dynamics. Per capita GDP2 reached only 28 % of the EU average in 2014, largely 
unchanged since 2011. 

External  imbalances  have  declined  recently.  In 
2014,  strong  import  growth,  partly  resulting  from 
reconstruction  following  the  spring  floods,  pushed 
the current account deficit up from 5.7 % of GDP in 
2013  to  7.6 %  in  2014.  However,  strengthening 
exports  since  autumn  2014  and  the  fading  out  of 
reconstruction-related  imports  helped  to  bring  the 
current account deficit back to 6.2 % of GDP in the 
first quarter of 2015. The substantial trade deficits of 
around  25  %  of  GDP  are  primarily  financed  by 
inflows of transfers, such as remittances, which increased to slightly above 11 % of GDP, and 
by service exports. Net foreign direct investments (FDI) rose from 1.7 % of GDP in 2013 to 
around 3 % of GDP in 2014. Partly boosted by IMF financial assistance, net foreign exchange 
reserves reached a level of some 30 % of GDP in mid-2015, covering more than six months’ 
worth of imports. 

for 

the 

Improvements in the labour market remained subdued so far. The difficult labour market 
conditions  remained  broadly  unchanged.  Employment  in  the  public  sector  continued  to 
account 
largest  proportion  of 
employment  (32 %).  At  the  same  time, 
employment  and  activity  rates  remained  at 
low  levels  of  43 %  and  59 %  respectively. 
registered 
The 
rate 
average 
from 
unemployment 
44.5 % in 2013 to 43 % in mid-2015, while results from the annual labour force survey (using 
ILO  methodology)  indicate  that  unemployment  stood  at  27.6 %  in  2014  for  a  second 
consecutive year. The significant difference between the registered and  survey-based  labour 
figures points to a fairly large informal labour market. The structural nature of unemployment 

ERP recommendation 5: ‘Reduce labour market 
rigidities  by  addressing  disincentives  to  hiring, 
including taking further steps towards a reduction 
of 
tax  wedge  while  ensuring  budget 
the 
neutrality.’ 

slightly  decreased 

of 

2 Expressed in purchasing power standards. 

31 

 
                                                 
 
is reflected by the high proportion of long-term unemployment, accounting for around four-
fifths  of  jobseekers.  In  addition,  the  already  high  youth  unemployment  figure  increased  to 
63 % in 2014, as  compared with 59 % in 2013. Furthermore,  the enduring large  differences 
between  female  and  male  participation  rates  (46  %  and  72  %  in  2014)  suggest  that  labour 
market conditions remain especially adverse for women.  

Monetary  policy  remained  in  line  with  the  overall  economic  development.  Monetary 
policy continued to be conducted under a currency board arrangement with the euro as anchor 
currency and enjoys a high level of confidence and credibility. This approach has served the 
economy  well  so  far.  However,  it  also  implies  that  the  burden  of  adjustment  to  external 
shocks has to be accommodated by other policy areas, including fiscal policy. This requires a 
more responsible fiscal policy, necessitating the building-up of sufficient fiscal buffers and a 
stronger  emphasis  on  medium-term  stability.  The  overall  price  level  continued  to  decline, 
although  at  a  slower  pace.  In  the  first  eight  months  of  2015,  the  overall  index  of  consumer 
prices  was  0.6  %  lower  than  a  year  before.  In  July  2014,  the  decline  had  been  -1.3  %. 
However, the main reason for the drop in the overall index was a marked decline in a limited 
number of commodities while prices for housing, health and education rose by some 1-2 %. 
Planned  increases  of  energy  prices  in  Republika  Srpska  in  the  second  half  of  2015  and 
stronger domestic demand are expected to lead to a higher overall price level.  

The  budget  deficit  increased  in  2014  amid  the 
persistently  low  quality  of  public  finances.  The 
suspension  of  disbursements  of  the  last  tranches  under 
the IMF SBA and the emergency financing for the areas 
hit by flooding put heavy pressure on public finances in 
2014,  resulting  in  short-term  financing  solutions.  The 
fiscal deficit in 2014 is estimated to have surged to close 
to  3 %  of  GDP,  nearly  tripling  the  target  of  1.1 %  of 
GDP set in the 2015-2017 framework for fiscal balance 
and policies. Public expenditure remained broadly flat at 
46 %  of  GDP  in  2014  and  consisted  mostly  of  current 

expenditure.  Capital  expenditure  reached 
only  around  4 %  of  GDP  and  is  projected 
to  decline  to  below  3 %  in  the  coming 
years,  contrary  to  ERP  recommendation  2. 
Despite the adverse economic effects of the 
spring floods, revenues from indirect taxes 
showed positive growth in 2014. Measures 
to  improve  tax  compliance,  coupled  with 
increases  in  excise  duties  on  beer  and 
tobacco  contributed  to  stronger  revenues. 
As  a  result,  consolidated  revenues  are 
estimated 
remained  broadly 
unchanged at 43 % of GDP in 2014.  

to  have 

2: 

‘Improve 

recommendation 

ERP 
the 
composition  of  public  spending  to  increase  the 
fiscal  space  for  capital  investments  by  containing 
current  expenditures  through  curbing  the  public 
sector  wage  bill  and  more  efficiently  allocating 
staff in the civil service at all levels of government. 
Take  steps  to  better  target  social  expenditures 
through  extensive  audits  and  finalisation  of  the 
establishment 
of 
Beneficiaries 
Payments  without 
Contribution in the Federation’. 

the  Single  Registry 

of 
of  Cash 

32 

 
 
 
by 

adopting 

especially 

framework 

implemented  efficiently. 

Although  important  legal  steps  have  been  taken  to  improve  the  sustainability  of  fiscal 
policy, Bosnia and Herzegovina needs to do more to put these into practice, in line with 
ERP recommendation 1. The 2015 budgets of the Federation and the State government were 
adopted  with  considerable  delay.  Fiscal 
discipline  in  the  Federation  and  its  lower 
levels  of  government  improved  following 
the entry into force of the Law on Budgets 
in January 2014. However, so far the law is 
not 
In  mid-
September, the Republika Srpska adopted a 
law  on  fiscal  responsibility, 
including 
establishment  of  an  independent  Fiscal 
Council  and  a 
limiting 
government expenditures and deficits. 

ERP  recommendation  1:  ‘Improve  the  budget 
management 
and 
implementing  the  Law  on  Fiscal  Responsibility  in 
Republika  Srpska, 
the 
establishment of a Fiscal Council and the adoption 
of  a  fiscal  rule.  Take  steps  to  address  obstacles  to 
an efficient implementation of the Law on Budgets 
in  the  Federation,  in  particular  the  functioning  of 
the  Fiscal  Coordination  body.  Continue  with  the 
fiscal 
improvement  of  expenditure  controls, 
discipline,  budget  reporting  methods  and 
the 
efficiency  of  tax  authorities  of  lower  levels  of 
government.’ 

The  rapidly  increasing  public  debt  and 
related  refinancing  risks  are  sources  of 
macroeconomic  vulnerability.  General  government  debt  has  steadily  increased  in  recent 
years, reaching 45.1 % of GDP by the end of 2014. The repayment schedule for public debt is 
concentrated  in  the  next  few  years,  posing  additional  risk  to  fiscal  sustainability  given  the 
tight fiscal space and lack of access to international capital markets. Debt service payments in 
2014  soared  to  5  %  of  GDP  on  the  back  of  intensified  issuing  of  short-term  government 
securities to make up for the non-disbursement of tranches under the IMF SBA. 

including 

fiscal 

rule 

Interplay of market forces 

is 

less  severe 

Privatisation  remained  largely  an  unfinished  task.  The  direct  state  influence  on  the 
economy  has  remained  significant,  with  a  total  spending-to-GDP  ratio  of  close  to  45 %  of 
GDP.  The  problem 
in 
Republika  Srpska,  where  only  a  few  large 
publicly  owned  companies  remain.  The 
privatisation  process  in  the  Federation, 
to  suffer 
started 
setbacks 
of 
privatisation strategies in 2014 and 2015. Attempts to sell 14 companies in 2014 were largely 
unsuccessful. This left the assets still to be privatised at two-thirds of the initial stock of state-
owned capital for privatisation, underscoring the pressing need for an initial restructuring to 
kick-start the privatisation process, as underlined in ERP recommendation 3. 

ERP  recommendation  3:  ‘Take  steps  to  advance 
restructuring  and  privatisation  and  improve  the 
efficiency  and  corporate  governance  of  companies 
with state ownership, notably in the Federation, to 
relieve the substantial burden on public finances.’ 

in  1999,  continued 

adoption 

despite 

the 

Market entry and exit 

Some progress was made to ease market 
entry  and  to  facilitate  the  issuing  of 
construction  permits.  However,  progress 
has  been  uneven  and  uncoordinated  across 
the  entities.  In  2013  and  2014,  Republika 
Srpska  carried  out  an  ambitious  set  of 
reforms to reduce business registration time 
and 
Srpska 
authorities also started a single registry for 
companies. 

costs.  The  Republika 

ERP  recommendation  4:  ‘Take  steps  to  continue 
with  the  set-up  of  registry  of  para-fiscal  fees  to 
relieve  burden  on  businesses  without  endangering 
the  sustainability  of  public  finances.  Continue  to 
reduce costs of business entry and exit and simplify 
the  regulatory  framework  for  the  issuance  of 
construction permits, especially in the Federation.’  

33 

 
 
rate 

address 

conditions 

the  Federation, 

ERP  recommendation  7:  ‘Take  steps  toward  the 
establishment  of  a  single  economic  space  by 
addressing  the  lack  of  internal  coordination  across 
all government levels.’   

the  adoption  of 
In 
amendments  to  the  law  on  the  default 
interest 
for 
created 
companies 
arrears  more 
to 
In  addition,  both  Entities 
effectively. 
announced  the  set-up  of  a  registry  of  non-
tax  charges  for  end-2015,  in  accordance 
with  ERP  recommendation  4.  Limited 
access 
contract 
enforcement  and  the  high  tax  burden  on 
labour  have  been 
identified  as  major 
disruptive  factors  for  doing  business  in 
Bosnia  and  Herzegovina.  No  progress  was 
made  on  the  creation  of  a  single  economic  space  (ERP  recommendation  7),  nor  on  mutual 
recognition of business registration by the Entities (ERP recommendation 8). 

ERP  recommendation  8:  ‘Improve  the  business 
sector 
and 
environment 
development, 
the  mutual 
including 
through 
registration.  Develop 
recognition  of  business 
measures to provide targeted support for SMEs and 
to widen their access to finance. Tackle all forms of 
corruption,  fraud  and  money 
laundering  and 
informalities in the economy.’ 

financing, 

support 

private 

slow 

to 

The legal system 

Strengthening the rule of law, simplifying contract enforcement procedures and fighting 
corruption  remain  essential  if  Bosnia  and  Herzegovina’s  business  environment  is  to 
improve.  Although  a  few  steps  have  been  taken  to  improve  the  legal  rules  governing 
business,  the  situation  remains  complex  and  problematic.  The  country  has  a  lack  of 
institutional capacity and a poor track record, especially on settling commercial disputes. The 
enforcement of commercial contracts still takes a long time, involving 37 procedures, taking 
on average 595 days and costing 34 % of the claim value. 

Financial sector development 

The banking system is liquid and well-capitalised but burdened with a high level of non-
performing  loans  (NPLs).  The  financial  system  continues  to  be  dominated  by  the  banking 
sector, which accounted for 87 % of total financial assets. 

The number of banks declined to 26 after one bank filed bankruptcy proceedings in 2014; this 
increased  the  proportion  of  foreign-owned  assets  in  the  banking  sector  to  over  90 %.  There 
were only two majority state-owned banks, accounting for less than 3 % of the sector's assets. 
The rest is privately owned. 

6: 

recommendation 

The capital  adequacy ratio declined slightly to 16.3 %, remaining well above the regulatory 
minimum  of  12 %  at  the  end  of  2014.  Banking  sector  profitability  recovered  in  2014  after 
recording losses in 2013. Nevertheless, the 
the  banking 
indicators  for 
credit  risk 
system  raise  concerns  as  the  proportion  of 
NPLs  in  total  loans  remained  slightly 
above 14 % in the second quarter of 2015. 
Despite  some  recent  progress,  legislative 
changes  to  facilitate loan  restructuring  and 
NPL  resolutions  are  still  not  in  place.  In 
order  to  strengthen  the  sector's  resilience, 
Bosnia and Herzegovina needs to markedly 
step-up  its  efforts  to  encourage  the  clean-up  of  banks’  balance  sheets,  as  requested  in  ERP 
recommendation  6.  Furthermore,  the  Central  Bank's  analytical  capacities  need  to  be 
strengthened.  Credit  growth  remained  feeble  despite  greater  liquidity  in  the  banking  sector. 
The  size  of  the  non-banking  sector,  chiefly  investment  funds  and  insurance  companies, 

the 
ERP 
development of a financial restructuring framework 
including  to  address  the  high  burden  of  non-
performing loans on bank balance sheets from both 
a  stock  and  a  flow  perspective  and  thus  help 
remove  potential 
and  demand-side 
supply- 
obstacles  to  credit  extension.  In  this  context,  a 
strengthening  of  the  crisis  resolution  framework 
would also appear warranted.’  

‘Finalise 

34 

 
increased somewhat: its assets increased slightly to 13 % of GDP in 2014, still below half of 
the pre-crisis period. 

3.2. 

The  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the 

Union 

Bosnia  and  Herzegovina  is  at  an  early  stage  in  achieving  the  capacity  to  cope  with 
competitive  pressure  and  market  forces  within  the  Union,  although  some  progress  has 
been  made,  in  particular  on  the  liberalisation  of  energy  markets.  There  were  however  no 
positive  developments  in  the  quality  of  education  (a  key  driver  of  competitiveness).  State 
influence on the economy remains significant and puts a persistent burden on public finances. 

In  line  with  the  ERP  recommendations  and  in  order  to  support  long-term  growth,  in  the 
coming year Bosnia and Herzegovina should pay particular attention to: 

→ developing a more strategic approach to tackling deficiencies in its training and education
    system; improving teacher training and, in turn, the basic and transversal skills of students. 

→ simplifying its complex procedure for exports; 

→ developing a transport strategy and an energy strategy.  

Human and physical capital 

very 

fragmented. 

Significant efforts are needed to improve the efficiency of the education system, in line 
with  ERP  recommendation  9.  Education  policy  is  not  decided  on  at  national  level  but  at 
Entity  level  in  the  Republika  Srpska  and  at  cantonal  level  in  the  Federation.  Despite  recent 
efforts to increase coordination, the system 
remains 
Public 
expenditure  for  education  is  nearly  3.5 % 
of  GDP,  slightly  below 
the  regional 
average.  The  inefficient  use  of  education 
spending 
for 
improvement.  The  low  enrolment  rates  for 
tertiary education, despite an upward trend, 
are  far  below  the  regional  average.  The 
country 
upcoming 
use 
membership  in  the  Advisory  Group  on 
European  Qualifications  Framework  to  develop  and  finalise  its  National  Qualification 
Framework.  

ERP  recommendation  9:  ‘Develop  a  more 
strategic  approach  to  tackle  the  deficiencies  in  the 
training  and  education  system  by  effectively 
prioritising  measures  based  on  a  mapping  of  the 
skills gap taking into account the needs of industry, 
especially  SMEs.  Harmonise 
legislation  and 
standards  related  to  education  and  training  at  state 
and entity level, as well as at cantonal level, since 
the competence on education in the Federation is at 
cantonal level.’   

should 

leaves 

ample 

room 

its 

There is a pressing need to attract private investment, in particular FDI, and to increase 
public  spending  on  investments  that  stimulate  growth.  The  spring  floods  in  May  2014 
affected  large  parts  of  the  country,  causing  losses  and  damage  of  up  to  15 %  of  GDP. 
Reconstruction  advanced  at  a  slow  pace  and  only  20 %  of  the  reconstruction  funds  pledged 
for the Floods Recovery Programme had been disbursed by March 2015. The investment-to-
GDP ratio in 2014 remained relatively modest at 18 % of GDP. In addition, low public capital 
expenditure (below 4 % of GDP) is holding back improvements to physical infrastructure. On 
a positive note, net FDI inflows reversed their downward trend and increased to 3 % of GDP 
in 2014. The development of public-private partnerships and lending schemes to SMEs could 
further boost private investments. 

35 

 
 
competitive 

Some progress has been achieved on unbundling electricity networks. Starting from 2015, 
Bosnia  and  Herzegovina  formally  liberalised  its  electricity  market.  However,  legislative 
changes  to  the  regulatory  framework  are 
still to be passed. On the other hand, hardly 
any  progress  has  been  achieved  towards  a 
more 
telecommunications 
market.  The  three  incumbent  operators 
continue to act as de facto monopolies over 
fixed voice telephony in their geographical 
areas.  The  number  of  new  registrations  in 
the internet services and network operators 
market continued its upward trend in 2014. 
The  energy  and  transport  sectors  need 
country-wide 
transport 
strategies to help unlock their large potential in line with ERP recommendation 10. 

ERP  recommendation  10:  ‘Develop  a  transport 
policy  and  strategy  and  an  energy  strategy  at  each 
level  of  government  according  to  competencies, 
and  embed  them  with  the  regional  agenda  on 
connectivity,  including  through  the  establishment 
of a credible planning of prioritised reforms with a 
timeline  and  funding  mechanism  (single  project 
pipeline). The energy strategy should also consider 
substantial  investments  in  a  diversified  power 
generation  and  on  an  effective  distribution 
network.’ 

energy 

and 

Sectoral and enterprise structure 

The structure of the economy is dominated by services, while agriculture's share in the 
economy  is  the  lowest  in  the  region.  The  economy  continued  to  be  dominated  by  the 
services sector, which accounted for 67 % of gross value added in 2014. Industry accounted 
for the second largest share at 21 %, broadly unchanged over the last four years. Agriculture 
occupies  the  lowest  share  in  value  added  by  regional  comparison  (7.1 %),  while  the 
contribution of the construction sector remained around 4.5 %. 

Micro-enterprises play a significant role in the economy. According to end of September 
2014 figures from the Statistical Business Register, only 56.7 % of enterprises in Bosnia and 
Herzegovina  were  active.  The  majority  (75.1 %)  were  micro-enterprises  with  less  than  10 
employees,  operating  mainly  in  wholesale  and  retail  sales.  The  informal  sector,  which 
flourishes in the context of poor law enforcement and insufficient anti-corruption measures, is 
a major obstacle for industrial development and continues to impose significant costs on the 
overall economy. 

State influence on competitiveness 

State  subsidies  and  guarantees  remain  significant  and  put  a  heavy  burden  on  public 
finances.  Limited  progress  has  been  achieved  on  reducing  the  state’s  influence  on  the 
economy. A large proportion of subsidies were granted to agriculture, while state guarantees 
were granted primarily to public enterprises in the infrastructure sector  to keep  them  afloat. 
Budget  subsidies  to  industry  and  agriculture  decreased  somewhat  in  2014  to  slightly  below 
1 %  of  GDP.  Loan  guarantees  and  transfers  provided  by  the  Entities  to  bankrupt  public 
enterprises reached 7 % of GDP. 

Economic integration with the EU 

Trade  integration  with  the  EU  fell  slightly  as  a  result  of  declining  exports.  Trade 
openness increased somewhat in 2014 to 91 % of GDP but still remains relatively low. The 
EU  is  by  far  Bosnia  and  Herzegovina’s  largest  trading  partner,  accounting  for  72.1 %  of 
goods  exports  and  58.9 %  of  goods  imports.  The  main  export  categories  include  low-  to 
medium-tech manufactured goods, such as textiles and raw materials. The share of the EU-28 
in  total  exports  fell  in  2014  due  to  a  20 %  slump  in  exports  to  Croatia  and  a  stagnation  of 
exports  to  Germany,  Bosnia  and  Herzegovina’s  main  EU  trade  partner  accounting  for  one-
quarter  of  its  total  goods  exports.  Over  the  same  period,  imports  from  the  EU  increased  by 
4.8 %, mainly from Italy (+20 %) and Austria (+10 %). 

36 

 
The EU is also the major investor in Bosnia 
and  Herzegovina,  accounting  for  nearly 
63 %  of  total  FDI,  with  Austria  and 
Slovenia  accounting  for  the  largest  FDI 
stocks  in  2013.  Non-tariff  barriers  to  trade 
with  the  EU  remain  a  significant  problem 
and 
regulatory 
reforms.  Some  positive  regulatory  steps 
were  taken  toward  stimulating  exports  to 
the  EU,  in  line  with  ERP  recommendation  11.  In  June  2015,  the  EU  Food  and  Veterinary 
Office  approved  all  actions  proposed  by  Bosnia  and  Herzegovina  to  meet  standards  for  the 
production and processing of dairy products intended for export to the EU. 

ERP recommendation 11: ‘Simplify the complex 
procedures  for  exports,  ensure  coordinated  border 
controls  and  improve  the  border  infrastructure 
system.  Develop  a  comprehensive  and  strategic 
approach in the field of EU food safety and sanitary 
and phytosanitary standards to receive accreditation 
for exporting agricultural and food products to the 
EU.’  

require  structural  and 

4. 

EUROPEAN STANDARDS 

4.1. 

Internal market 

4.1.1. 

Free movement of goods 

The country is at an early stage of preparation in the area of free movement of goods. There 
has been some progress, notably in the areas of standardisation, accreditation, metrology and 
consumer protection. In the coming year, Bosnia and Herzegovina should in particular: 

→ improve coordination between the relevant institutions; 

→ repeal conflicting legislation within the country; 

→ adopt a country-wide strategy for quality infrastructure. 

A  country-wide  strategy  for  quality  infrastructure  is  still  not  in  place,  and  cross-cutting 
coordination  in  this  field  between  the  relevant  institutions  at  different  levels  of  government 
remains insufficient. 

On horizontal measures, in the area of standardisation the Institute for Standardisation of 
Bosnia  and  Herzegovina  (BAS)  adopted  85 %  of  the  European  standards  required  for 
membership  of  the  European  Committee  for  Standardisation  (CEN)  and  the  European 
Committee  for  Electrotechnical  Standardisation  (CENELEC).  The  institute  adopted  1 500 
European standards as national standards, bringing the total to 17 341 European standards. A 
new  technical  committee,  BAS/TC  59  (Social  Security  and  Protection),  was  established, 
bringing  the  total  to  52.  No  conflicting  ex-Yugoslav  mandatory  standards  have  been 
withdrawn yet.  

On  conformity assessment, Republika Srpska continued to  develop and implement  its own 
legislation.  The  Federation  and  the  Brčko  District  continued  to  implement  the  Law  on 
Technical  Requirements  for  Products  and  Conformity  Assessment  of  Bosnia  and 
Herzegovina.  The  country  needs  to  provide  for  even  application  of  conformity  assessment 
procedures throughout the whole territory. 

The  Institute  for  Accreditation  of  Bosnia  and  Herzegovina  has  accredited  77  conformity 
assessment  bodies,  comprising  54  testing  laboratories,  1  medical  laboratory,  9  calibration 
laboratories, 1 product certification body and 12 inspection bodies. The law on accreditation 
is  not  yet  fully  in  line  with  the  acquis  and  should  be  amended.  There  is  a  need  for  a  clear 
policy on the role of accreditation in authorising conformity assessment bodies at both State 
and Entities levels.  

37 

 
 
In September 2014, the Institute for Metrology of Bosnia and Herzegovina (IMBiH) adopted 
14  regulations,  including  eight  rulebooks  related  to  instruments  used  in  medicine,  and  the 
Federation  of  Bosnia  and  Herzegovina  adopted,  in  September  2014  and  January  2015,  ten 
regulations in the area of precious metals. The secondary standard dosimetry laboratory was 
opened  in  Banja  Luka  in  September  2014.  Representatives  from  the  IMBiH  regularly 
participated in the work of technical committees on metrology. The institute also participated 
in  two  inter-comparisons.  A  decision  on  the  appointment  of  the  Metrology  Council’s 
members by the Council of Ministers is still pending. The country’s strategy for developing 
the metrology system has yet to be adopted, as has the new law on metrology which would 
merge the existing legislative framework and lay the foundation for implementing the acquis. 
Cooperation and coordination between the institute and the metrology institutes of the Entities 
requires strengthening. 

The Market Surveillance Agency and the inspection bodies of the Entities and of the Brčko 
District  have  initiated,  implemented  and  coordinated  proactive  and  reactive  market 
surveillance activities. During the reporting period sixteen activities were implemented as part 
of the proactive surveillance and 14 cases were initiated on reactive surveillance. As a result 
of 370 inspection controls 18066 unsafe products were withdrawn from the market and 11475 
unsafe  products  were  destroyed.  The  agency  published  70  notifications  with  descriptions  of 
risk and instructions for consumers and followed-up in the Bosnia and Herzegovina market 47 
alerts on dangerous products published on the public website of the EU Rapid Alert System 
on  dangerous  non-food  products  (RAPEX)  detected  in  the  EU  market.  The  Council  of 
Ministers of Bosnia and Herzegovina adopted the Strategic Development Plan on the Market 
Surveillance Agency for the period 2014 – 2016 in July.  

The market surveillance system is still largely based on mandatory standards and pre-market 
checks. Cooperation  between the agency and inspections carried  out by the Entities and the 
Brčko District needs further improvement. 

Although  the  ‘New  and  Global  Approach’  product  legislation  is  regulated  at  State  level, 
Republika  Srpska  is  adopting  its  own  legislation  (separately  from  the  State,  Federation  and 
the  Brčko  District).  The  division  of  responsibilities  for  aligning  with  the  ‘Old  Approach’ 
acquis  has  yet  to  be  clarified.  Republika  Srpska  should  re-engage  in  the  work  of  technical 
committees.  

The report on the execution of the 2014 State-level annual consumer protection programme 
and  the  2015  State-level  annual  consumer  protection  programme  were  adopted  in  May  and 
July 2015 respectively. 

The Ombudsman’s Office for Consumer Protection is fully staffed. The Ombudsman resolved 
all 295 cases received and delivered 20 expert opinions. Furthermore, the Ombudsman issued 
recommendations  in  the  telecommunications  sector  and  continued  to  raise  awareness  and 
further educate consumers, including through publication and distribution of two brochures.  

4.1.2.  Movement of persons, services and right of establishment 

The country is at an early stage of preparations in the area of movement of persons, services 
and  right  of  establishment.  Some  progress  was  made  in  this  field.  A  legal  framework  for 
providing universal postal services across the country has yet to be established. 

In the coming year, Bosnia and Herzegovina should in particular: 

→ strengthen the Insurance Agency of Bosnia and Herzegovina, whose role in the legislative 
process needs to be respected by the Entities as set out in the law. 

38 

 
→  prepare  updated  transposition  tables  to  map  the  level  of  harmonisation  of  national 
legislation with the European banking legislation. 

→  make further efforts to align with the latest accounting and auditing acquis. 

The movement of persons and the mobility of the labour force within the country remain a 
concern: the absence of harmonisation in employment and labour legislation, of rights based 
on  employment  (i.e.  health,  pension,  social  and  unemployment  insurance)  and  other  related 
taxation  issues  effectively  prevent  mobility  inside  the  country.  An  Agreement  on  the 
Employment of Citizens between Bosnia and Herzegovina and the Republic of Slovenia has 
entered into force. (see also 4.1.8 — Employment and social policies, public health policy). 

There  were  no  developments  on  the  right  of  establishment  and  freedom  to  provide 
services. Preparations for aligning with the Services Directive have not yet started. 

A  total  of  13  postal  service  providers  have  been  licensed  by  the  Bosnia  and  Herzegovina 
Agency  for  Postal  Traffic.  Three  of  these  are  public  and  11  private.  There  is  still  no  State-
level  strategy  for  postal  services.  The  State-level  law  on  postal  services,  which  aims  to 
achieve  further  harmonisation  with  the  acquis  and  to  ensure  the  regulatory  framework  is 
consistent between the Entities, has yet to be adopted. The lack of harmonisation between the 
Entities  and  the  State  level  on  the  scope  of  universal  and  reserved  services  continues  to 
undermine legal certainty. Administrative capacity at State level remains weak. 

Implementing the decision on the costs of issuing licences and the fees for providing postal 
services  removed  discriminatory  treatment  of  postal  service  operators  as  it  sets  the  costs  of 
licences  for  both  public  and  private  operators  as  a  fixed  percentage  of  their  respective 
revenues. The Agency for Postal Traffic also began implementing the amended rulebook on 
licensing postal services. 

The  country  has  yet  to  align  its  national  legislation  on  the  mutual  recognition  of 
professional  qualifications  with  the  acquis.  The  Brčko  District  adopted  the  law  governing 
recognition  of  professional  qualifications  in  January  but  this  is  not  fully  aligned  with  the 
acquis.  Implementation  of  the  acquis  on  the  recognition  of  professional  qualifications  is 
undermined by the lack of harmonisation between the Entities and the State level. 

On  financial  services,  both  Entities  are  in  the  process  of  finalising  the  draft  law  on  banks. 
Banking agencies carry out stress tests on a regular basis, as a result of which in the baseline 
scenario 5 out of 26 banks were identified as potentially being undercapitalised by end-2015. 

The  Standing  Financial  Stability  Committee  adopted  a  ‘comprehensive  plan  for  reaction  to 
crisis  situations’.  The  strategy  for  implementing  Basel  II  was  revised  into  a  strategy  for 
introducing  Basel  III,  and  all  activities  envisaged  in  2014  were  successfully  implemented. 
Updated transposition tables to map the level of harmonisation of national legislation with the 
EU banking acquis are still lacking. 

The  Ombudsman  for  financial  services  became  operational  in  the  Federation,  and  the 
implementing legislation governing its work was adopted. 

Some progress was made towards creating a single economic area for insurance services. The 
Administrative Board of the Insurance Agency of Bosnia and Herzegovina is operational but 
the Entities still need to allow it to work properly. 

Legislation on third party motor vehicle insurance has yet to be harmonised at State level and 
between  the  Entities.  The  State  level  guidelines  on  prevention  of  money  laundering  and 
financing  of  terrorism  were  adopted  at  the  State  level  in  January,  based  on  which  the 
Federation adopted harmonised implementing guidelines in March. 

39 

 
The  three  insurance  supervision  agencies  signed  a  cooperation  agreement  with  Croatia  in 
March  to  ensure  that  insurance  institutions  and  other  relevant  stakeholders  receive  regular 
education.  

The  Federation  adopted  an  amendment  to  the  rulebook  on  handling  claims  for  non-life 
insurance  which  strengthens  the  authorities’  supervisory  role.  An  integrated  information 
system  for  supervising  compulsory  insurance  policies  and  claims  was  adopted.  To  improve 
the  way  the  Ombudsman  functions  and  promote  implementation  of  the  law  on  insurance 
companies,  Republika  Srpska  adopted  the  rulebook  on  handling  customers’  complaints  and 
guidelines on improved reporting and collection of statistics by insurance companies. 

The  mechanism  for  harmonising  laws  between  the  Entities  and  with  the  acquis  in  the 
insurance sector is operational under the Insurance Agency of Bosnia and Herzegovina. The 
latter´s role needs to be strengthened to ensure that this process is permanent. 

On  capital  markets,  the  Entities’  legislative  frameworks  are  neither  fully  aligned  with  the 
acquis  nor  fully  harmonised  with  each  other.  The  Federation  and  the  Brčko  District  have 
adopted a new law on takeovers of joint stock companies. Participants in the securities market 
with their head office in one Entity still need to obtain a licence to operate in the other. 

The Federation of Bosnia and Herzegovina adopted its new company law, further aligning it 
with the acquis but has not yet published it in the Official Gazette.  

Legislation on corporate  accounting and auditing is  almost  fully harmonised between the 
Entities.  Further  efforts  should  be  made  to  align  it  with  the  latest  accounting  and  auditing 
acquis.  Progress  was  achieved  regarding  the  quality  assurance  system.  In  December,  the 
Federation Chamber of Auditors adopted a rulebook to strengthen internal organisation. The 
Committee for Public (audit) Control should have adequate resources to carry out its work as 
the competent authority for public audit oversight.  

4.1.3.  Free movement of capital 

Bosnia  and  Herzegovina  remains  moderately  prepared  in  the  area  of  free  movement  of 
capital, but there was no progress in this area. Further alignment with the acquis is needed to 
provide for country-wide harmonisation and to create a single economic area, 

As  regards  movement  of  capital,  Bosnia  and  Herzegovina  continues  to  apply  relatively 
liberal rules on inward capital flows. The legal framework is not harmonised with the acquis. 
In  both  Entities,  the  legislation  limits  the  amount  that  non-residents  may  transfer  without 
bureaucratic burdens. 

On  foreign  investment,  there  is  a  persistent  lack  of  coordination  across  the  country  in 
designing and implementing legal reforms. Restrictions on foreign direct investment continue 
to apply in the media sector, where a 49 % limit on foreign-owned capital remains in place. 

Capital  markets  continue  to  suffer  from  challenging  economic  conditions  and  operate  at 
relatively  low  levels.  The  securities  market  remains  dominant  in  terms  of  capital  market 
growth since both Entities continue to secure both short-term and long-term financing through 
local capital markets. 

Bosnia  and  Herzegovina  has  a  payment  system  for  giro  clearing  and  real-time  gross 
settlement operations within the Central Bank. In 2014, the value of transactions in these two 
categories increased by 8.7 % compared with 2013. 

40 

 
 
 
4.1.4.  Customs and taxation 

Bosnia and Herzegovina is moderately prepared in the areas of customs and taxation. Some 
progress  was  made  in  these  fields,  particularly  on  adopting  the  new  customs  policy  law, 
improving protection of intellectual property rights and the overall operational capacity of the 
Indirect  Tax  Administration  (ITA).  In  the  coming  year,  Bosnia  and  Herzegovina  should  in 
particular: 

→ adopt implementing rules to enable the implementation of the new customs policy law; 

→  improve  cooperation  between  ITA  and  the  tax  administrations  of  the  Entities,  including 
through joint audits; 

→ modify the Law on Excise Duties to align its definition of small breweries with that of the 
acquis. 

The  new  customs  policy  law  was  adopted  in  July.  The  new  law  provides  for  additional 
simplified  customs  procedures  such  as  the  Authorised  Economic  Operator  status,  and  for 
introducing a new computerised transit system and will require the adoption of implementing 
rules.  In  December  the  customs  tariff  was  updated  in  line  with  the  2015  version  of  the  EU 
Combined  Nomenclature.  The  regional  Convention  on  Pan-Euro-Med  Preferential  Rules  of 
Origin entered into force in November. 

There  was  progress  in  terms  of  registration  and  follow-up  procedures  for  customs  cases 
against violations of intellectual property rights which increased from 73 in 2013 to over 200 
in 2014. 

Implementation of Asycuda World, the new customs declaration processing system that will 
support implementation of the new customs policy law, is continuing. 

Bosnia and Herzegovina has yet to finalise procedures to ratify its participation in the EU’s 
Customs 2020 and Fiscalis programmes. 

In the area of taxation, legislation has to be adopted further aligning value added tax (VAT) 
with  the  acquis.  IT  applications  for  electronic  submission  of  VAT  returns  and  for  VAT 
refunds  to  non-established  taxable  persons  are  not  yet  operational.  The  Law  on  the 
Amendments  to  the  Law  on  Excise  Duties  in  Bosnia  and  Herzegovina  which  introduces 
differentiated excise duties for beer became applicable in September. It is not in line with the 
acquis and discriminates against imported beer. 

ITA is conducting a pilot E-audit project with a small number of big taxpayers with a view to 
improving  tax  compliance.  In  exchange  for  real  time  access  to  tax  relevant  information  it 
provides them with specific contact points and increased taxpayer assistance. 

The Entities need to continue aligning legislation with the acquis and step up their efforts to 
improve mutual cooperation and to strengthen their administrative capacity on direct taxation. 

4.1.5.  Competition 

The  country  has  some  level  of  preparation  on  competition.  No  progress  was  made  in  this 
area. In the coming year, Bosnia and Herzegovina should in particular: 

→ fully implement the State aid legislation and set up the institutional framework needed to 
control all State aid effectively, in order to comply with the SAA; 

→  further  align  with  the  EU  acquis  on  competition  and  ensure  the  Competition  Council 
functions efficiently. 

41 

 
On  antitrust  and  mergers  policy,  the  Competition  Council  issued  14  opinions.  It  is  fully 
staffed under the existing rulebook and personnel received training to strengthen its capacity 
to  conduct  investigations.  However,  short  procedural  deadlines  often  lead  to  automatic 
adoption of decisions. This raises concerns, particularly when combined with ethnicity-based 
veto rights of Competition Council members. Complex procedures for the formal appointment 
of the chairperson have prevented the Competition Council from functioning properly. 

The  State  Aid  Council,  has  issued  21  decisions  so  far.  The  regulation  on  the  criteria  for 
verifying the compatibility of State aid has yet to be adopted by the Brčko District and at State 
level.  The  regulations  on  this  issue  and  on  procedures,  State  aid  applications  and  the 
notification form will need to be aligned with EU acquis. The alignment of existing State aid 
schemes in accordance with obligations arising from the SAA and EU State aid rules has not 
yet  started.  Bosnia  and  Herzegovina  still  needs  to  improve  the  consolidated  State  aid 
inventory reporting and address the issue of transparency. 

The  technical  competence  of  all  stakeholders in  the  State  aid  system  has  been  improved  by 
specialised  training.  Financing  the  operations  of  the  State  Aid  Council  and  its  secretariat 
remains an issue as Republika Srpska again did not contribute its full share. The secretariat is 
not yet fully operational. Further efforts are needed to ensure that all State aid measures are 
notified to and approved by the Council before being granted. The transparency of all State 
aid granted in Bosnia and Herzegovina has yet to be assured. 

4.1.6.  Public procurement 

Bosnia and Herzegovina has some level of preparation in this area. Procurement is an area 
particularly vulnerable to corruption and more efforts are needed to prevent corruption during 
the procurement cycle. Good progress was achieved in the past year, especially through the 
entry  into  force  of  the  new  law  on  public  procurement.  However,  the  country  is  still  at  an 
early stage of harmonising with the acquis on public-private partnerships and concessions. In 
the coming year, Bosnia and Herzegovina should in particular: 

→ adopt remaining secondary legislation; 

→ strengthen  the  monitoring  role  of  the  Public  Procurement  Agency  and  make  the 
procurement process more transparent; 

→ establish a specialised procurement function within contracting authorities. 

Institutional set-up and legal alignment 

In  terms  of  the  institutional  set  up  and  legal  framework,  the  new  public  procurement  law 
came into force in December. It is broadly in line with the EU legislation from 2004. The law 
ensures respect for the principles of the Treaty on the Functioning of the EU, such as value for 
money,  free  competition,  transparency  and  equal  treatment,  but  Bosnia  and  Herzegovina 
maintains a system of domestic preferences which will be gradually phased out. Most of the 
implementing  legislation  was  adopted  on  time,  except  for  some  secondary  legislation  and 
decisions. The country will need to align with EU legislation from 2014 in this area. 

Bosnia  and  Herzegovina  did  not  take  measures  to  provide  for  competitive  and  transparent 
procedures  or  the  independent  reviews  required  by  the  acquis  in  the  area  of  public-private 
partnerships  and  works  concessions.  The  regulation  of  the  concessions  system  is  still 
fragmented and its administrative set-up has no formal channels for cooperation. This creates 
legal uncertainty and high administrative costs, and fragments the envisaged single economic 
area. 

42 

 
The Public Procurement Agency of Bosnia and Herzegovina (PPA), the body mandated by 
law to initiate, implement and monitor public procurement reform in all sectors, has sufficient 
administrative  capacity  to fulfil its core  tasks. The PPA implements the public procurement 
systems  reform  strategy.  The  strategy  is  outdated,  however,  and  should  be  renewed  in  line 
with the provisions of the new public procurement law. 

Implementation and enforcement capacity 

The public procurement market was worth 8.14% of GDP in 2014. The average number of 
bidders  per  tender  ranged  from  one  to  four,  depending  on  the  type  of  procurement  (goods, 
works or services) and the procurement procedure.  Only 50 % of tenders had a prior notice 
published  and  44%  of  the  total  procurement  value  was  attributed  through  the  use  of  less 
transparent award procedures, albeit under the previous procurement rules. 

The administration needs to be strengthened including through trainings, in order to provide 
for the monitoring of procurement procedures. 

Regarding  implementation  and  enforcement  capacities  to  manage  public  procurement 
processes, the new public procurement law calls for more detailed planning, preparation and 
publication  of  public  procurement  activities.  Specialised  procurement  functions  still  need  to 
be established in each contracting authority and staffed with officials who have relevant skills 
and capabilities. 

The PPA also maintains the central procurement portal where tender and contract notices and 
other  important  information  and  guidance  are  published.  The  e-procurement  information 
system was developed and brought into use at the end of 2014 but e-procurement is still at a 
very early stage. 

The statistics collected from contracting authorities and published by the PPA provide a solid 
tool  for  monitoring  the  use  of  procurement  procedures,  including  the  less  competitive  ones. 
However,  the  PPA’s  monitoring  role  is  limited  and  should  be  strengthened  to  enable  it  to 
identify potential weaknesses and irregularities. 

Improvements  were  made  to  the  regulation  of  integrity  and  conflict  of  interest  in  public 
procurement procedures. 

Efficient remedies system 

The  right  to  legal  remedy  is  stipulated  in  the  Constitution  and  in  the  Law  on  Public 
Procurement.  The  legislation  on  review  procedures  is  broadly  in  line  with  the  relevant  EU 
Directive and general EU Treaty principles. The decisions of the Procurement Review Body 
(PRB)  can  be  challenged  in  the  Court  of  Bosnia  and  Herzegovina.  The  submission  of  an 
objection suspends the procurement procedure. 

In 2014, the PRB upheld complaints in half of the cases it reviewed (i.e. 355 of the 696 cases 
resolved in 2014. A further 436 cases were rejected, dismissed or suspended). Over the same 
period,  the  Court  of  Bosnia  and  Herzegovina  delivered  eight  judgments  in  cases  brought 
against PRB decisions, ruling against it in six cases.  

The  procurement  legislation  does  not  lay  down  the  institutional  arrangements  for  handling 
complaints  about  concessions  award  procedures.  While  the  composition  of  the  PRB's  board 
was renewed in March, its implementation capacity, especially to deal with the complexity 
and  high  number  of  procurement-related  appeals,  needs  to  be  strengthened.  Publication  of 
decisions by the PRB and by the Court of Bosnia and Herzegovina has resumed, which should 
allow for better transparency, but it does not cover decisions taken before 2015. 

43 

 
Bosnia  and  Herzegovina  should  strengthen  the  review  and  remedies  system,  including  at 
branch  offices,  to  provide  for  speedy,  effective  and  competent  handling  and  resolution  of 
complaints  and  penalties.  This  would  give  businesses  easier  access  to  the  system  at  lower 
cost, and would help regain public trust. 

4.1.7.  Intellectual property law 

Bosnia  and  Herzegovina  is  moderately  prepared  in  the  area  of  intellectual  property  law. 
Some progress was made in this area. Further efforts are required, in particular to improve 
enforcement and coordination. 

In the coming year, Bosnia and Herzegovina should in particular: 

→ adopt a strategy of intellectual property rights (IPR) enforcement; 

→ set-up an inter-ministerial body for the coordination of enforcement of intellectual property 
rights. 

The Institute for Intellectual Property continues to function well but needs to further increase 
its  staff  to  fulfil  the  tasks  related  to  granting  of  intellectual  property  rights  set  out  in  its 
development strategy for 2008-2015. The Memorandum of Understanding between the Office 
for Harmonization in the Internal Market of the EU (OHIM) and the Institute for Intellectual 
Property of Bosnia and Herzegovina was signed in December 2014. 

On  copyright  and  neighbouring  rights,  25  copyright  works  and  related  rights  entered  the 
institute’s records and certificates of deposit and registration were issued accordingly. 

Regarding  industrial  property  rights,  the  International  Convention  for  the  Protection  of 
New Varieties of Plants and the European Patent Convention have yet to be ratified. 

On enforcement, the Indirect Taxation Authority issued 257 decisions, of which 170 are in 
the  procedure  of  temporary  retention  and  seizure  of  goods.  The  State  Investigation  and 
Protection Agency seized counterfeit goods valued at about EUR 470 000. The enforcement 
of IPR remains to be improved. An inter-ministerial body for the coordination of enforcement 
of IPR is still to be set-up. The monitoring system should be improved so that information and 
statistics on civil proceedings before the Court on enforcement of IPR are accessible. 

Knowledge  of  IPR  significantly  increased  among  Bosnia  and  Herzegovina’s  enforcement 
institutions.  However,  the  institutions’  capacities  need  to  be  strengthened  and  their 
cooperation  needs  to  improve.  The  country  has  yet  to  adopt  the  intellectual  property 
enforcement  strategy  for  2015-2020.  A  reliable  system  for  collecting,  analysing  and 
exchanging data among the various institutions has yet to be set up. 

4.1.8.  Employment and social policies, public health policy 

Preparations remain at an early stage. There has been no progress in the area of employment 
and social policies. Unemployment is still largely structural and remained high overall, while 
unemployment  among  women  and  young  people  rose.  There  has  been  some  progress  on 
public health. In the coming year, Bosnia and Herzegovina should in particular: 

→  develop  autonomous  social  dialogue,  modernise  labour  and  health  and  safety  laws  and 
harmonise them between the Entities; 

→ urgently address high unemployment, notably youth unemployment, and provide effective 
support to job seekers;  

→ implement public health reforms and provide for cooperation between the Entities. 

44 

 
On  employment  policy,  labour  laws  throughout  the  country  need  to  be  modernised  and 
harmonised with each other.  Challenges in relation to the labour market remain considerable. 
Some programmes exist to support the employment of Roma and other target groups, notably 
in Republika Srpska.  There is an urgent need to strengthen the financial and administrative 
capacity to implement active labour market measures both at the level of Entity governments 
and public employment services. 

Labour  market  participation  marginally  increased  in  2014  to  59.2 %,  with  both  male  and 
female  participation  rates  growing  slightly.  The  employment  rate  also  rose  somewhat  to 
43.2 %  in  2014,  but  female  employment  dropped  marginally  from  32.2 %  to  31.9 %.  Job 
creation remained modest and the overall unemployment rate remained unchanged at 27.5 % 
in 2014. However, the male unemployment rate fell to 25.2 % and the slight increase in the 
female  participation  rate  was  hence  entirely  reflected  in  a  somewhat  higher  unemployment 
rate for women, which increased to 31.2 %. Unemployment among young people (15-24 years 
old)  further  increased  to  63 %  in  2014.  Overall,  more  than  80 %  of  unemployment  remains 
long-term (i.e. unemployed for one year or more). 

With regard to social policies, the outdated labour law remains in place in the Entities, and 
hiring and dismissal procedures are extremely complex and burdensome for employers. Social 
contributions  differ  between  cantons,  the  Entities  and  the  Brčko  District.  In  July  the 
Federation adopted a revised labour law which was met with protests by trade unions. Health 
and safety at work legislation at the level of Entities, cantons and the Brčko District is not 
harmonised with the acquis nor across Entities. Labour inspectorates remain understaffed and 
are unable to perform their tasks properly. 

On  social  dialogue,  no  steps  have  been  taken  to  establish  the  State  Economic  and  Social 
Council  due  to  the  continued  lack  of  State-level  legal  provisions  for  recognising  social 
partners.  However,  such  councils  exist  at  Entities  level,  as  well  as  in  some  cantons  in  the 
Federation.  Following  the  adoption  of  the  Federation's  new  Labour  Code,  social  partners 
should renegotiate collective agreements.  Social dialogue remains weak at all levels.   

Implementation  of  the  legislative  framework  on  social  protection  remains  low.  Due  to  the 
financial constraints at all levels of government, the social protection benefits prescribed by 
social protection laws are not implemented in practice, with some benefits not being paid or 
amounts reduced according to available funding. 

Participation  of  women  in  the  workforce  is  low  and  there  is  still  maternity-related 
discrimination  in  employment.  Employed  mothers  or  fathers  enjoy  full  salary  compensation 
for  12  months  for  parental  leave  in  Republika  Srpska.  In  the  Federation,  the  situation  is 
fragmented and can vary among cantons. The same goes for child allowances for low-income 
families. 

Social inclusion policies are still not harmonised across the Entities and neither are provisions 
for  individuals.  In  June  a  State-level  Action  Plan  for  Children  2015–2018  was  adopted 
focusing on social protection and healthcare for children, pregnant  women and childbearing 
women.  In  general,  vulnerable  groups  including  children,  Roma,  returnees,  internally 
displaced persons and disabled people are not adequately protected by the State, the Entities, 
the Brčko District or the cantons. 

In the field of public health policy, in May Bosnia and Herzegovina ratified the Additional 
Protocol  to  the  Convention  for  the  Protection  of  Human  Rights  and  Dignity  of  the  Human 
Being with regard to the Application of Biology and Medicine, on the Prohibition of Cloning 
Human Beings.  Republika Srpska made some progress in implementing the e-health strategy. 
A  web  application  was  developed  for  family  medicine  teams  and  installed  in  48  health 

45 

 
centres.  Overall  cooperation  between  the  Entities’  ministries  in  implementing  health  sector 
reforms needs to be strengthened. 

Projects to limit tobacco and alcohol consumption, improve diet and increase physical activity 
are  being  implemented  with  World  Bank  support,  but  efforts  in  the  area  of  tobacco  control 
overall need to be reinforced 

In the field of communicable diseases, the multi-drug resistance and  infection control plan 
and  the  framework  plan  for  tuberculosis  prevention  and  control  in  healthcare  facilities  — 
which  form  part  of  the  national  tuberculosis  programme  —  were  updated.  State-level 
coordination of the harmonisation of legislation in the Entities and the Brčko District and of 
the international reporting of epidemic data should be strengthened. 

On  blood,  tissues,  cells  and  organs,  Republika  Srpska  adopted  the  Law  on  Transfusion 
Activities,  regulating  transfusion  activities,  the  quality  system  for  such  activities  and  the 
supply  of  blood  and  blood  components  to  residents  in  June.    The  Federation  adopted  a 
rulebook on the specific technical requirements for blood and blood components. 

The  Federation  also  established the  Centre  for  Transplantation  and  adopted  by-laws  on 
transplantation. Further efforts are needed to avoid duplication, establish a more efficient and 
less fragmented technical and administrative system for substances of human origin and bring 
it into line with the quality and safety requirements of the acquis.  

In Republika Srpska, early childhood development activities have continued. They are based 
on the adopted policy for improving early childhood development, the policy for improving 
the nutrition of children under five and the guidelines on nutrition for infants and pre-school 
and school children. 

Republika Srpska adopted the rare diseases strategy for 2014-2020 in December. 

A  country  overview  of  the  situation  on  drugs  and  drug  addiction  was  submitted  to 
the European Monitoring Centre for Drugs and Drug Addiction and published in November. 

On  pharmaceuticals,  the  Agency  for  Medicinal  Products  and  Medical  Devices  published 
rulebooks  on  the  manner  of  and  procedure  for  classifying  medicinal  products  and  on 
conditions for manufacturing a medicinal product. 

4.1.9.  Education and research 

Preparations on education and research and innovation policy are at an early stage. There was 
no  progress  in  these  sectors  but  Bosnia  and  Herzegovina  actively  participated  in  different 
cultural programmes as well as research networks and activities. 

In the coming year, the country should in particular: 

→ step up coordination and harmonisation of the legal framework on education; 

→ strengthen  the  capacity  of  State-level  education  agencies  to  develop  EU  standards, 
including for quality assurance in education; 

→ step up efforts to strengthen the research and innovation capacity. 

On education, the action plan for implementing the ‘baseline qualifications framework’ was 
adopted in October. Some elements of the qualification framework for higher education were 
developed  (qualification  and  occupational  standards  for  study  programmes  dealing  with 
agriculture,  food  processing  and  ICT,  as  well  as  teacher  education,  mechanical  engineering 
and  management).  There  are  46  higher  education  institutions  registered  in  Bosnia  and 
Herzegovina,  of  which  16  are  accredited  and  16  are  in  the  process  of  being  accredited.  
Bosnia and Herzegovina’s strategic development platform for adult education in the context 

46 

 
of lifelong learning for 2014-2020 was adopted in October 2014. Four cantons (Zenica-Doboj, 
Una-Sana,  Podrinje  and  Tuzla)  adopted  laws  on  adult  education.  Further  efforts  should  be 
deployed to establish national educational statistics. The education sector remains a high-risk 
area for corruption. 

Coordination  between  bodies  responsible  for  quality  assurance  is  weak  at  the  level  of  pre-
school, primary and secondary education due to the relevant agency's lack of capacity. Bosnia 
and  Herzegovina  still  does  not  participate  in  the  Programme  for  International  Student 
Assessment (PISA).  BiH participation is important as PISA results are an EU benchmark and 
an internationally accepted assessment of the basic skills of 15 year old children. The national 
pre-school enrolment rate for children aged 3-6 is still very low at 14% and far from the EU 
target of 95% by 2020.  Increasing this rate requires both infrastructure and teacher training.   

Some cantons have yet to adopt legislation on pre-school education and vocational education 
which would further develop legal frameworks across the country as well as fully harmonise 
them, including with the State-level framework law. An effective coordination mechanism has 
not  been  established  in  the  Federation  of  Bosnia  and  Herzegovina  and  the  two  existing 
coordination bodies are still acting in parallel.   

Bosnia and Herzegovina participates actively in the Western Balkans Platform on Education 
and Training. Bosnia and Herzegovina continues to participate in Erasmus+ and the Western 
Balkans  Youth  Window.  In  view  of  the  very  high  youth  unemployment  rate  in  Bosnia  and 
Herzegovina it is all the more important that the country uses Erasmus+ Youth in Action to 
foster  young  people's  non-formal  learning  at  international  level  so  as  to  enhance  their 
competences, skills and employability.  

As regards culture and media, in May a Creative Europe Desk was established, and Bosnia 
and  Herzegovina  participates  actively  in  both  sub-programmes  (Culture  and  MEDIA).  
Ratification of the UNESCO Convention for the Protection and Promotion of the Diversity of 
Cultural  Expressions  was  followed  by  the  adoption  and  implementation  of  the  Culture  for 
Development Indicator Suite in May 2015. 

On research and innovation policy, following Bosnia and Herzegovina's association to the 
EU's  'Horizon  2020'  programme,  a  Network  of  National  Contact  Points  (NCPs)  was 
established and representatives in the Horizon 2020 Programme Committees were nominated. 
Bosnia and Herzegovina also organised several workshops and information days on Horizon 
2020  but  based  on  initial  statistics,  successful  participation  is  limited.  Further  efforts  are 
needed to increase the country's participation in particular on research and innovation actions 
on  societal  challenges  and  on  participation  of  SMEs  as  well  as  on  scientific  excellence  in 
general.   

Bosnia  and  Herzegovina  continues  to  show  good  participation  in  COST,  the  framework 
supporting  trans-national  cooperation  among  researchers,  engineers  and  scholars  across 
Europe, but the country's participation in Eureka is less successful. Bosnia and Herzegovina 
cooperates  at  regional  level  as  co-signatory  of  the  Regional  Strategy  on  Research  for 
Innovation, with the Central European Initiative (CEI) and with UNESCO. 

At policy level, some progress was made on human capital building as more universities and 
institutes  signed  the  European  Charter  for  Researchers  and  a  Code  of  Conduct  for  the 
Recruitment of Researchers.  Bosnia and Herzegovina participates regularly in the European 
Research Area Committee (ERAC) and related advisory bodies and in regional networks and 
initiatives.  According  to  statistical  data  from  Bosnia  and  Herzegovina,  the  total  expenditure 
on research (both public and private investment) amounted to less than 69.6 EUR million or 
0.27% of its GDP in 2012.  

47 

 
4.1.10. WTO issues 

The country’s preparations are at an early stage. No progress was made in the negotiations 
for accession to the World Trade Organisation. 

Concerning  bilateral  market  access  for  goods  and  services,  Bosnia  and  Herzegovina  still 
needs  to  conclude  longstanding  negotiations  with  Brazil  and  Ukraine  and  recently  received 
requests  to  also  enter  into  negotiations  with  the  Russian  Federation  and  the  Republic  of 
Indonesia. Furthermore, Bosnia and Herzegovina has been asked by WTO members to enact 
and  deposit  three  pieces  of  legislation  on  trading  rights,  anti-dumping/countervailing  duties 
and  sanitary  and  phytosanitary  measures  (a  by-law  on  genetically  modified  organisms),  as 
well as to  finalise two commitment paragraphs on trading rights and agricultural policies in 
the draft Working Party Report.  

4.2. 

Sectoral policies 

4.2.1.  Industry and SMEs 

Bosnia and Herzegovina is at an early stage in the area of industry and SMEs. No progress 
was made in this field. In the coming year, Bosnia and Herzegovina should in particular: 

→ address the lack of a single economic area by harmonising or coordinating industrial and 
SME policies; 

→  address  outstanding  issues  harming  the  business  environment.  These  include  weak 
competitiveness,  high  barriers  to  business  entry  and  exit,  and  an  opaque  and  complex  legal 
and regulatory framework. 

On  industrial  policy  in  May  the  Federation,  adopted  a  report  on  implementation  of  the 
industrial policy action plan for 2014 and tasked the line ministry to prepare a new action plan 
for 2016-2019. 

Regarding  SME  policy,  a  national  coordinator  for  the  Small  Business  Act  Assessment  was 
appointed in January. This should now bring a more active coordination role that is required 
at  State  level.  A  single  Entity  registry  of  business  operators  in  Republika  Srpska  became 
operational  in  February.  Republika  Srpska  also  adopted  an  amendment  to  the  rulebook  on 
craft entrepreneurs in November to finalise the establishment of a crafts business registry. 

However,  the  lack  of  a  State-level  SME  strategy  and  SME  definition  hampers  policy 
harmonisation and assessment of how the Small Business Act is being implemented country-
wide. The double registration requirement in both Entities for business registration has yet to 
be  resolved,  possibly  through  mutual  recognition.  The  lack  of  a  unified,  country-wide 
economic area and shortcomings in the regulatory environment continue to hurt the business 
environment.  Barriers  include  high  costs  of  compliance  with  regulatory  burdens;  gaps  in 
implementing  laws  and  regulations  at  Entities  and  sub-Entities  level,  with  sometimes 
contradictory regulations; lack of targeted support for SMEs; and lack of coherent and high-
quality infrastructure covering the whole country. 

Bosnia  and  Herzegovina’s  participation 
the 
in 
competitiveness  of  enterprises  and  small  and  medium-sized  enterprises  is  still  under 
negotiation.  Participation  in  COSME  is  necessary  for  the  two  Entities’  consortia  to  become 
part of the Enterprise Europe Network (EEN) for 2015-2020. 

the  EU’s  COSME  programme  for 

48 

 
 
 
 
4.2.2.  Agriculture and fisheries 

Preparations  in  these  areas  are  at  an  early  stage.  Some  progress  was  made  in  the  field  of 
food  safety  and  veterinary  policy.  In  the  coming  year,  Bosnia  and  Herzegovina  should  in 
particular: 

→ align the official veterinary and phytosanitary control system with European standards; 

→ strengthen its administrative capacity, in particular in inspection services and laboratories; 

→ draw  up  a  State-level  strategic  plan  for  rural  development  and  establish  the  national 
structures  for  pre-accession  assistance  to  the  agricultural  sector  through  the  Instrument  for 
Pre-accession Assistance for Rural Development. 

In the area of agriculture  and  rural development  policy,  sectoral analyses on the  forestry 
and  aquaculture  sectors  were  completed  in  January.  The  Entities’  policy  framework  was 
improved  by  adoption  of  the  Federation's  Medium-term  Development  Strategy  of  the 
Agricultural  Sector  for  2015–2019  in  June  and  of  the  Strategic  plan  for  development  of 
agricultural and rural areas of Republika Srpska for 2016-2020 in May.. Progress is needed in 
establishing the necessary institutional structures that would allow the use of the Instrument 
for Pre-accession Assistance for Rural Development (IPARD.  Bosnia and Herzegovina has 
not yet drawn up a State-level strategic plan for rural development. A revised harmonisation 
programme  for  agriculture,  food  and  rural  development has yet to be adopted, as has State-
level  legislation  on  wine  and  organic  production.  The  administrative  capacities  and 
coordination structures within the agriculture and rural development sector including support 
measures, still need to be strengthened. 

Improvements  in  productivity  and  competitiveness  remain  hampered  by  the  lack  of  an 
efficient administration and effective rural credit schemes. Adoption of a national agricultural 
information  strategy  is  still  pending.  The  agricultural  census  has  not  taken  place  yet  as  the 
legal framework has not been agreed. Agricultural statistics and the agricultural information 
system  still  need  to  be  improved.  The  land  registration  systems  need  to  be  harmonised 
country-wide, and land management needs to be strengthened. 

On  food  safety,  following  recommendations  from  the  EU  Food  and  Veterinary  Office  the 
Bosnia and Herzegovina authorities drew up an action plan for controls on the production and 
processing  of  dairy  products  for  export  to  the  EU.  This  was  accepted  in  June  2015.  In  July 
2015 the country proposed to the European Commission a list of establishments that could be 
allowed  to  export  to  the  EU,  and  four  dairy  establishments  were  authorised  to  export  heat 
treated products to the EU in September 2015.  

However, the chain of command and the official food and feed control system can be further 
improved in order to become more efficient and the country is still not allowed to export most 
goods  of  animal  origin  to  the  EU  market.  It  has  yet  to  amend  veterinary,  food  safety, 
agriculture and rural development legislation to create an EU-compliant official food and feed 
control system. Institutional and administrative capacity — including inspections, particularly 
at designated border inspection posts — need to be further strengthened so that the relevant 
bodies can perform the tasks such a system demands. These include carrying out controls on 
genetically modified food and feed, in particular implementing the import control system and 
internal market controls in accordance with EU legislation. The Hygiene Package has yet to 
be fully implemented in a harmonised manner country-wide. 

Administrative capacities in the food safety sector were improved through additional training. 
Bosnia and Herzegovina continued to play its full part in the European Commission’s rapid 
alert  system  for  food  and  feed.  In  total,  8  notifications  were  received  through  the  system. 

49 

 
These  were  appropriately  followed  up  with  inspections  and  the  results  reported  back  to  the 
Commission.  None  of  the  cases  posed  a  risk  to  consumer  health  and  safety.  Nonetheless, 
further training is needed, in particular for inspection services and food businesses. A central 
database for the official control system is not yet fully operational.  A State-level strategy for 
laboratory testing of samples as required by the official controls on the food and feed chains 
has yet to be drawn up. 

In  July  the  authorities  of  Bosnia  and  Herzegovina  introduced  a  practice  of  stopping  trucks 
transporting bottled drinks from an EU Member State at the border in order to gather samples 
for  laboratory  testing.    This  caused  unjustified  delays  and  damage  to  EU  exporters.    After 
complaints from the EU, the practice ended in mid-August 

On  veterinary  issues,  Bosnia  and  Herzegovina  adopted  further  implementing  legislation  on 
controlling,  preventing  and  eradicating  communicable  animal  diseases.  It  continued 
implementing animal control measures, among other things for brucellosis and tuberculosis in 
cattle.  Vaccination  against  brucellosis  and  rabies  continues,  as  do  related  monitoring  and 
coordination  activities.  The  new  animal  disease  notification  and  outbreak  information 
management  system  which  became  operational  in  2014  needs  to  be  further  strengthened  in 
order to become fully functional. The strengthening of laboratories’ capacities continues. The 
country is also continuing to implement a residue monitoring plan. The legal framework on 
animal health still needs to be strengthened further. A country-wide strategic framework for 
managing  animal  by-products  needs  to  be  established  in  line  with  the  acquis.  The  animal 
identification and movement control systems have yet to be upgraded. 

Further  implementing  legislation  was  also  adopted  in  the  phytosanitary  sector.  In  July, 
Bosnia and Herzegovina was recognised to be free from potato ring rot and allowed to start 
exporting potatoes to the EU. Institutional capacities need to be further strengthened and the 
network  of  Plant  Health  Protection  Administration  regional  offices  has  yet  to  become  fully 
operational.    The  work  of  official  diagnostic  laboratories  and  controls  at  border  inspection 
points  are  generally  harmonised  with  the  acquis.  Surveillance  and  quarantine  of  harmful 
organisms  continues  to  be  undertaken  country-wide.  Registration  of  relevant  producers, 
importers,  exporters  and  distributors  in  a  single  phyto  registry  is  carried  out  on  an  ongoing 
basis. 

Implementing legislation on genetically modified organisms needs to be further harmonised 
to provide for uniform operating procedures across the country. 

On fisheries, the sectoral analysis on aquaculture in Bosnia and Herzegovina contributed to 
improving the country’s policies. Legislation in this sector needs to be harmonised across the 
country, and greater efforts are needed to facilitate exports of fish and fishery products to the 
EU. 

4.2.3.  Environment and climate change 

Preparations in these areas are at an early stage but there was some progress. In the coming 
year, Bosnia and Herzegovina should in particular: 

→  put  forward  and  start  implementing  the  country's  contribution  to  the  expected  2015  UN 
Climate Agreement; 

→ establish a harmonised legal framework for environmental protection and climate action, 
strengthen strategic planning and implementation of the acquis in these fields; 

→ strengthen administrative capacity and monitoring systems and improve inter-institutional 
coordination among all authorities. 

50 

 
Concerning horizontal legislation, several strategic documents fostering approximation with 
the  EU  environmental  acquis  have  yet  to  be  adopted.  They  include  the  environmental 
approximation  strategy  and  its  implementing  documents,  specific  implementation  plans  for 
selected environmental directives, and environment policy documents. Implementation plans 
on environmental impact assessment, the protocol on strategic environmental assessment and 
the Basel Convention on hazardous waste have yet to be adopted, as does an environmental 
monitoring  data  management  and  reporting  strategy.  Public  participation  has  yet  to  be 
improved  in  both  Entities.  New  Federation  of  Bosnia  and  Herzegovina  legislation  on 
environmental  protection  has  yet  to  be  adopted.  The  same  goes  for  the  Brčko  District’s 
strategy in this area. 

Implementation  of  the  acquis  on  air  quality  is  at  an  early  stage.  Air  quality  planning  and 
monitoring systems need upgrading. A country-wide air monitoring network has not yet been 
established.  Bosnia  and  Herzegovina  missed 
the  Energy  Community  deadline  for 
implementing  the  1999  Directive  on  sulphur  content  in  fuels.  The  State  and  Entities’ 
legislation is not in line with relevant acquis. 

A  country-wide  waste  management  strategy  and  strategic  planning  of  related  investments 
have  yet  to  be  prepared.  The  municipal  waste  management  plans  have  been  drawn  up  but 
have yet to be implemented. The Federation of Bosnia and Herzegovina is implementing the 
waste  management  strategy  and  waste  management  plan.  An  implementing  legislation  for 
waste from electrical and electronic equipment has been adopted. In Republika Srpska a new 
waste management strategy is in preparation and implementing legislation on waste storage, 
treatment  and  disposal  has  been  adopted.  Economic  instruments  to  promote  recycling  and 
prevention  of  waste  generation  remain  limited.  The  capacity  to  manage  industrial  and 
hazardous waste needs to be strengthened. 

Regarding water quality, the country still lacks a consistent and harmonised State-level policy 
on  water  management  that  would  include  implementing  legislation,  monitoring  and  river-
basin management plans. In Republika Srpska the strategy for integrated water management 
for  2015-2024  is  awaiting  adoption.  The  water  management  strategy  in  the  Federation  of 
Bosnia and Herzegovina for 2010-2022 is in the process of being implemented. In the Brčko 
District the water law transposing the Water Framework Directive is awaiting adoption. Acts 
are being drafted to enact the EU water directives but the country’s capacities to implement 
the water acquis remain insufficient. The drafting of the river-basin management plan for the 
Neretva-Trebisnjica rivers has been completed but has yet to be adopted. Preparation of a plan 
for the River Sava is under way. Investment in infrastructure has brought some improvements 
in  access  to  drinking  water  and  also  in  wastewater  discharges.  An  action  plan  for  flood 
protection and river management in Bosnia and Herzegovina for 2014-2017 has been adopted. 
A project to draw up flood risk and hazard maps is in preparation. 

On  nature protection, initial steps have been taken to develop the Natura 2000  network in 
Bosnia and Herzegovina. A list of potential Natura  2000  sites has yet to be adopted,  as has 
legislation  to  align  with  the  acquis  on  protection  of  wild  birds  and  habitats.  Investments  in 
hydropower  projects  need  to  ensure  that  EIA,  water  legislation  and  nature  protection 
obligations are respected, especially in national protected areas and areas of high natural value 
that could potentially become Natura 2000 sites. 

The  law  on  chemicals  in  the  Federation  has  yet  to  be  adopted.  A  national  plan  for 
implementing  the  Stockholm  Convention  on  Persistent  Organic  Pollutants  has  been  drafted 
but has yet to be adopted. 

Regarding  industrial  pollution  control  and  risk  management,  Bosnia  and  Herzegovina  is 
working on developing a national emissions reduction plan. 

51 

 
Significant further efforts are needed on noise. 

On civil protection, disaster risk reduction and management need to be addressed as a matter 
of  priority,  particularly  in  the  light  of  the  severe  2014  floods.  Bosnia  and  Herzegovina 
expressed its interest in becoming a member of the EU Civil Protection Mechanism in 2014 
and  concluded  a  protocol  on  cooperation  and  establishment  of  a  point  of  contact  with  the 
mechanism.  The  point  of  contact,  a  prerequisite  for  joining  the  mechanism,  should  ensure 
country-wide  outreach  and  coordination.  Further  coordination  and  cooperation  efforts  and 
further preparations for joining the mechanism are needed.  

The country is at a very early stage in aligning with the EU acquis on climate change.  Some 
limited measures and activities were taken on adaptation to climate change. Implementation 
of  the  strategy  for  adapting  to  climate  change  and  low  emissions  development  needs  to  be 
ensured.  Further  development  of  the  country's  climate  policy  and  strategy  is  required  and 
needs  to  be  consistent  with  the  EU  2030  framework.  Significant  efforts  are  also  needed  to 
integrate climate action into relevant sectoral policies and strategies. Bosnia and Herzegovina 
submitted  in  March  the  First  Biennial  Update  Report  on  greenhouse  gases  to  the  United 
Nations  Framework  Convention  on  Climate  Change  (UNFCCC).  Three  Nationally 
Appropriate Mitigation Actions projects were finalised. Bosnia and Herzegovina’s capacities 
for monitoring, reporting and verification in this area remain weak and should be considerably 
strengthened.  As  a  priority,  significant  efforts  are  needed  to  align  with  the  EU  Monitoring 
Mechanism Regulation and ensure that the country's capacity to implement the expected 2015 
Paris Climate Agreement is enhanced. The administrative capacity in the environment and 
climate sectors remains weak. No progress has been made on country-wide strategic planning 
or  on  a  mechanism  for  comprehensively  aligning  with  EU  legislation.  Capacity  building  is 
required  to  address  the  significant  needs  for  greater  capacity,  cooperation  and  coordination. 
Further  efforts  are  needed  to  raise  awareness  on  environmental  protection  and  need  for 
climate action at all levels of the country.  

4.2.4.  Transport policy 

Preparations in the transport area are at an early stage. Some progress was made in the past 
year. In the coming year, Bosnia and Herzegovina should in particular: 

→ adopt country-wide transport strategies for all sub-sectors; 

→ strengthen  the  regulatory  framework,  coordination  and  administrative  capacities,  to  help 
ensure that the country will be able to benefit fully from the connectivity agenda. 

The  State-level  framework  transport  policy  for  2015-2030  was  adopted  in  July.  The  key 
strategic documents for the transport sector and its sub-sectors, at all administrative levels in 
Bosnia  and  Herzegovina,  remain  to  be  drafted  and  adopted.  Legislation  on  rail,  road, 
maritime, inland waterway transport and intermodal transport has not yet been fully aligned 
with  the  acquis.  The  general  transport  infrastructure  in  Bosnia  and  Herzegovina  requires 
significant upgrades.  

On trans-European transport networks, Bosnia and Herzegovina continued to participate in 
the South-East Europe Transport Observatory (SEETO) and to implement the memorandum 
of  understanding  on  developing  the  South-East  Europe  Core  Regional  Transport  Network. 
The country played an active role in the Western Balkans 6 connectivity agenda by endorsing 
the agreement on the regional core transport network in Brussels in April, and the  agreement, 
in Riga in June on the core network corridors and on the list of projects to be implemented by 
2020. There has been progress in both the road and rail networks, however, at the same time, 
financing of remaining activities remains a challenge. 

52 

 
Road transport safety is a major concern. A road safety strategy and related action plan have 
yet to be adopted. 

Regarding  rail  transport  operations,  renovation  of  railway  tracks  continued.  The  two 
Entities’ vertically integrated railway companies are both in critical financial situations. Both 
have yet to fully separate operational functions from infrastructure management as the acquis 
requires. 

Concerning inland waterways, no activities are currently under way to restore the River Sava 
in  Bosnia  and  Herzegovina,  Croatia  or  Serbia.  This  is  due  to  the  cancellation  of  the  loan 
agreement with the World Bank and the subsequent cancellation of EU assistance. 

On  intermodal  transport,  the  railway  bottleneck  at  the  Ivan  Tunnel  and  Bradina  ramp  is 
preventing the transit of Ro-La trains (trucks on train) and 40 feet containers from the port of 
Ploče. Together with a dysfunctional navigation route on the River Sava, it is also preventing 
an increase in combined transport volumes. 

Regarding  air  transport,  the  Bosnia  and  Herzegovina  Air  Navigation  Services  Agency  has 
— in full coordination with EUROCONTROL — taken over control of the lower level of the 
country’s airspace from Serbian and Croatian air traffic control service providers. Bosnia and 
Herzegovina participates as an observer in the Joint Service Provision Area Initiative.  

On  maritime  transport,  Bosnia  and  Herzegovina  is  not  a  party  to  the  main  International 
Maritime Organisation conventions. 

4.2.5.  Energy 

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparations  in  the  area  of  energy.  Some 
progress  was  made  in  the  past  year.  The  country  continues  to  fall  behind  in  fulfilling  its 
international  commitments  stemming  from  the  Energy  Community.  In  the  coming  year, 
Bosnia and Herzegovina should in particular: 

→ adopt a country-wide energy strategy; 

→ strengthen  coordination  and  cooperation  at  all  relevant  levels  of  governance  to  improve 
strategic  planning,  facilitate  a  comprehensive  investment  policy  and  allow  for  efficient 
implementation; 

→ urgently  adopt  the  law  on  gas  in  order  to  comply  with  Energy  Community  Treaty 
obligations. 

Bosnia and Herzegovina continues to operate without a single country-wide energy strategy. 
The lack of country-wide strategic planning prevents it from adequately addressing issues of 
security  of  supply  in  particular  of  oil  and  gas.  The  two  Entities,  through  their  respective 
legislative  frameworks, 
to  establish  oil  stocks.  However,  a 
comprehensive and coordinated system at State level is not in place. There is no information 
on the level of the country’s oil stocks.. 

introduced  measures 

On the internal energy  market, Bosnia and Herzegovina formally liberalised its electricity 
market. In May, the State Electricity Regulatory Commission adopted new rules to improve 
the market principles in this area. The legislative and regulatory framework needs to comply 
fully  with  the  acquis  at  all  levels  as  it  does  not  allow  country-wide  wholesale  and  retail 
markets  to  develop.  The  independence  of  the  regulatory  commissions,  particularly  in  the 
Republika Srpska, needs to be strengthened and fully provided for. Bosnia and Herzegovina, 
did  not  meet  its  obligation  under  the  Energy  Community  (EnC)  to  align  its  legislative 
framework on electricity with the acquis, and specifically with the Third EU Energy package. 

53 

 
The  country  remains  in  serious  and  persistent  breach  of  its  commitments  under  the  EnC 
Treaty in the gas sector. The law on gas must be adopted as a matter of urgency in this area. 
Changes  to  Republika  Srpska’s  gas  law  are  needed  to  bring  it  into  line  with  the  acquis, 
whereas the gas law of the Federation of Bosnia and Herzegovina has yet to be adopted. 

The  legislative  framework  on  renewable  energy  still  does  not  comply  with  the  EnC 
requirements.  In  May,  the  EnC  submitted  a  reasoned  request  over  the  country’s  failure  to 
submit  the  national  renewable  energy  action  plan.  Submitting  the  plan  must  be  treated  as  a 
priority, together with ensuring that Bosnia and Herzegovina’s renewable energy targets are 
met by developing a State-level framework to supplement the framework at Entities level. On 
biofuels, the Entities’ respective authorities took no action to address sustainability criteria or 
set up appropriate certification. Any further development of hydropower should take place in 
conformity with EU environmental legislation 

Secondary  legislation  on  energy  efficiency  was  adopted  at  various  governance  levels, 
particularly  in  Republika  Srpska.  However,  there  was  no  progress  in  developing  the 
legislative  and  institutional  frameworks  required  at  the  State  level.  Bosnia  and  Herzegovina 
missed its EnC deadline to align with the 2006 Directive on Energy End-Use Efficiency and 
Energy Services. Due to limited coordination between authorities at State and Entities levels, 
the  country  did  not  develop  and  adopt  a  national  energy  efficiency  plan  or  a  consistent 
roadmap for enacting the acquis under the EnC Treaty. 

On nuclear safety and radiation protection, the State Regulatory Agency for Radiation and 
Nuclear Safety Law adopted a number of regulations to strengthen and improve its regulatory 
function,  including  a  rule  book  on  monitoring  radiation  in  the  environment.  The  agency 
continues to receive bilateral and international assistance to strengthen its technical capacities. 
In May, the BiH Parliament adopted an Action Plan on emergency cases aimed to protect the 
population from ionizing radiation in case nuclear accidents or incidents. 

4.2.6.  Information society and media 

Preparations  in  the  field  of  information  society  and  media  are  at  an  early  stage.  There  has 
been backsliding over the last year. In the coming year, Bosnia and Herzegovina should in 
particular: 

→ adopt a plan to ensure the financial stability and political independence of public service 
broadcasting; 

→ implement, as a matter of urgency, the digital switchover. 

In  the  field  of  electronic  communications  and  information  and  communications 
technologies,  the  electronic  communications  law  is  still  largely  based  on  the  1998  EU 
regulatory  framework.  A  general  authorisation  system,  replacing  individual  licences  for  the 
provision of electronic communications has yet to be introduced.  The institutional framework 
does not ensure political independence or adequate financial and operational independence of 
the regulator which undermines certainty for the sector and raises concerns over its efficiency. 
No further steps have been taken to introduce the European emergency number 112.  

The  Communication  and  Regulatory  Agency  (CRA)  continued  to  further  implement 
competitive  safeguards  as  well  as  to  implement  the  last  phase  of  rebalancing  of  the  fixed 
telephony  retail  tariffs.  However,  effective  implementation  of  the  market  regulation  -  and 
thereby  new  entrants'  access  to  the  market  -  remains  a  concern.  While  the  three  incumbent 
operators  are  subject  to  regulatory  obligations,  they  continue  to  operate  as  de  facto 
monopolies  in  fixed  voice  telephony  in  their  geographical  areas,  whereas  competition  is 

54 

 
emerging  in  the  fixed  broadband  market.    The  overall  fixed  broadband  penetration  rate 
increased modestly to 11.9 %.   

The  agreement  of  September  2014  signed  by  the  former  Yugoslav  Republic  of  Macedonia, 
Bosnia  and  Herzegovina,  Montenegro  and  Serbia  on  reducing  the  prices  of  mobile  roaming 
services came into force in July. 

On information society services, the e-commerce and e-signature laws at State level remain 
unimplemented  due  to  the  absence  of  a  supervisory  body  for  accreditation.  Administrative 
capacity in the Ministry of Transport and Communications remains insufficient. 

On  audiovisual  policy,  the  country  missed  the  17 June 2015  international  deadline  for  the 
digital switchover. Only the first phase of the digitalisation process has been completed, and 
only in the territory of the Federation of Bosnia and Herzegovina as Republika Srpska did not 
allow the equipment to be installed. 

The  process  is  jeopardised  by  the  non-existence  of  the  corporation  which  was  supposed  to 
coordinate  technical  aspects  of  digitalisation  under  the  relevant  law.  The  financial  stability 
and  sustainability  of  the  entire  public  broadcasting  system  is  still  seriously  affected,  as  the 
collection rate of the RTV tax (license fee) is continuously dropping. The current model for 
tax collection expired on 26 April and the authorities have not agreed yet on a new model. 

4.2.7.  Financial control 

Bosnia and Herzegovina is at an early stage of its preparations in the area of financial control. 
Some progress was recorded with the establishment of internal audit units and the adoption 
of  the  public  internal  financial  control  (PIFC)  strategy  by  the  Federation  and  by  Brčko 
District.  However,  the  absence  of  a  coordinated  approach  hampers  introduction  of  credible 
reforms.  Further  efforts  should  be  especially  devoted  to  completing  the  strategy  and  legal 
framework at Entities level. In the coming year Bosnia and Herzegovina should in particular: 

→ complete the legal framework on financial management and control at Entities level; 

→ update,  adopt  and  start  implementation  of  PIFC  strategies  at  State  level  and  in  the 
Republika Srpska; 

→ reconvene the regular meetings of the Central Harmonisation Unit Coordination Board and 
ensure systematic co-ordination among the SAIs. 

Public internal financial control 

The  individual  PIFC  strategies  and  action  plans  of  the  institutions  of  Bosnia  and 
Herzegovina  and  Republika  Srpska  need  to  be  renewed.  The  Federation  and  Brčko  District 
adopted  strategy  papers  on  PIFC  respectively  in  September  and  in  December.  A  formal 
mechanism to monitor and report on implementation of action plans is still lacking. 

The  central  harmonisation  units  (CHU)  have  been  established  at  State  and  Entities  levels 
but not yet in the Brčko District. CHU staffing is well below the authorised staffing levels, in 
particular  at  the  Entities  level  where  there  are  six  staff  altogether.  The  CHUs  act 
independently of each other and have not convened the CHU Coordination Board since 2011 
even though it is a legal requirement. They prepare and submit annual consolidated reports to 
their  respective  governments.  The  annual  report  of  the  Republika  Srpska  CHU  makes 
reference  to  developments  in  the  financial  management  and  control  framework  but  the 
equivalent documents for the State level and the Federation deal only with internal audit. The 
CHUs are active in organising training. They are mainly subsidised by external assistance. 

55 

 
The  concept  of  financial  management  and  control  is  still  at  a  very  early  stage  of 
development.  Legislation  on  this  needs  to  be  adopted  at  the  Entities  level.  Delegation  and 
accountability  arrangements,  the  distribution  of  management  information,  and  the  risk 
management  and  financial  management  of  public  enterprises  are  insufficiently  regulated.  A 
centralised budget inspection function has not yet been established at any governance level. 

The legal framework for internal audit is in place at all levels except in the Brčko District 
and  is  largely  consistent  with  international  standards.  The  criteria  for  establishing  internal 
audit units have been fixed at all levels, but they are not consistent with each other. Internal 
audit  capacity  remains  low.  An  internal  audit  charter  is  in  place  or  being  prepared  by  an 
increasing number of institutions. 

External audit 

Regarding the constitutional and legal framework, the functional, operational and financial 
independence  of  each  of  the  four  supreme  audit  institutions  (SAIs)  —  for  Bosnia  and 
Herzegovina  institutions,  the  Federation,  Republika  Srpska  and  the  Brčko  District  —  is 
provided  for  by  respective  laws  on  external  audit  at  the  State  and  Entities  level  and  in  the 
Brčko  District.  These  are  in  line  with  the  standards  of  the  International  Organisation  of 
Supreme  Audit  Institutions  (INTOSAI).  However,  none  of  the  SAIs  are  anchored  in  the 
Constitutions  or  in  the  Brčko  District’s  Statute.  The  State-level  SAI  is  a  full  member  of 
INTOSAI  and  EUROSAI.  The  independence  of  the  heads  of  the  SAIs  and  the  deputies  is 
sufficiently  legally  protected  and  their  mandates  provide  for  a  full  range  of  financial, 
regularity and performance audits of all public financial operations. 

Concerning institutional capacity, the SAIs of the Bosnia and Herzegovina institutions and 
Republika Srpska have sufficient staff while the SAIs of the Brčko District and especially of 
the Federation lack capacity to cover the wide scope of external audit. The SAIs of the State 
and the Entities have adopted strategic development plans for 2014-2020. 

To improve the quality of audit work, the Coordination Board of Supreme Audit Institutions 
in  Bosnia  and  Herzegovina  published  amendments  to  the  decision  on  transposition  and 
application of the framework of International Standards of Supreme Audit Institutions in the 
country. However, cooperation among the SAIs in the Coordination Board is not systematic 
and needs to be improved. The four SAIs have adopted procedures that cover financial audit, 
performance audit and quality control, and they ensure that audit work undertaken conforms 
to these standards and procedures. The head of each SAI monitors the execution of the annual 
audit plan and submits annual activity reports to the respective parliament. Increased use of 
information  technology  and  sampling  methodologies  has  improved  the  efficiency  of  audit 
processes. 

In Republika Srpska a department for quality control and compliance with international audit 
standards is operational. At the end of 2014 the Audit Office of the Institutions of Bosnia and 
Herzegovina  established  a  new  sector  for  development,  methodology  and  quality 
management. 

Concerning  the  impact  of  audit  work,  the  annual  reports  are  submitted  to  the  legislatures 
regularly, are published online and receive wide media and public attention. The time allowed 
for the parliamentary committees to assess and discuss the reports is shorter than optimal but 
they  are  usually  discussed  in  the  presence  of  the  SAIs.  The  implementation  of  audit 
recommendations is formally monitored by the SAIs at the time of the next audit. The SAI of 
Republika Srpska has set up an online database of recommendations available to the general 
public.  The  SAIs  and  CHUs  should  strengthen  their  cooperation  to  improve  the  internal 
control environment. 

56 

 
Protection of the EU’s financial interests 

Legislation is not aligned with the acquis, and no national anti-fraud coordination service 
(AFCOS) has been set up. Fraud prevention and repression are addressed under the national 
anti-corruption  strategy.  Initial  steps  have  been  taken  to  ensure  cooperation  with  the 
European Commission investigators during their on-the-spot missions. 

Protection of euro against counterfeiting 

The  country  is  addressing  counterfeiting-related  issues  under  its  strategy  for  fighting 
organised crime. Legislation is not aligned with the acquis as it does not define counterfeiting 
or identify the competent authorities and procedures to deal with counterfeit money. Medals 
and  tokens  similar  to  euro  coins  are  not  yet  regulated.  The  country  is  a  party  to  the  1929 
International  Convention  for  the  Suppression  of  Counterfeiting  Currency  since  2009. 
Technical analysis of counterfeit  money,  including  euro banknotes and coins, is performed 
by the Central Bank of Bosnia and Herzegovina, which has a dedicated department with three 
staff.  Some  of  the  cantonal  ministries  of  interior  also  have  experts  and  equipment  for 
undertaking  technical  analysis  of  counterfeit  banknotes  only.  No  cooperation  agreements 
have been concluded yet with the Commission and the European Central Bank.  

4.2.8.  Statistics 

Preparations  in  the  area  of  statistics  are  at  an  early  stage  for  many  sectors,  whereas  for  a 
limited number of sectors some level of preparation is visible. Some progress was achieved 
in the past year, notably in harmonising the statistical methodology with EU standards. 

Significant  efforts  are  needed  across  the  board,  especially  to  provide  for  the  alignment  of 
statistics with the EU acquis. In addressing the shortcomings outlined below, in the coming 
year Bosnia and Herzegovina should in particular: 

→  further  align  statistics  with  the  European  System  of  Accounts  (ESA)  2010,  in  particular 
regarding national accounts; 

→  further  improve  cooperation,  coordination  and  decision-making  processes  to  develop  the 
national statistical system in key statistical areas; 

→ urgently complete the processing of the census data and publish its results, in line with the 
International Monitoring Operation recommendations. 

As  regards  statistical  infrastructure,  the  law  on  Statistics  of  Bosnia  and  Herzegovina 
remains to be fully aligned with the principles of the European statistics Code of Practice. The 
position as Director of the Agency for Statistics of Bosnia and Herzegovina (BHAS) is still 
vacant.  However,  a  recruitment  procedure  has  been  initiated.  Cooperation  in  the  national 
statistical system between BHAS and other producers and providers of statistics needs to be 
enhanced as well as cooperation between BHAS and the entity offices, particularly in view of 
applying European methodology in a harmonized way. Exchange of data between the Indirect 
Taxation Authority and the Agency for Statistics of Bosnia and Herzegovina (BHAS) requires 
further improvement BHAS is partially using Eurostat’s electronic Dataflow Administration 
and Management Information System to send data to Eurostat. 

Significant  efforts  are  necessary  to  align  macro-economic  statistics  with  the  European 
System of Accounts (ESA) 2010. The same goes for annual and quarterly National Accounts. 
Preparation  of  sector  accounts  has  still  not  been  completed,  so  annual  and  quarterly  sector 
accounts  are  not  available.  Supply  and  use  tables  are  not  compiled  regularly,  nor  are  input-
output tables produced. Fiscal notifications in line with ESA 2010 and financial accounts are 
not  produced.  Government  finance  statistics  (GFS)  are  mainly  produced  in  line  with  the 

57 

 
relevant IMF manual from 2001; introduction of the 2014 manual is under way. Government 
finance statistics are also not produced in accordance with ESA methodology and the Central 
Bank has introduced bridge tables to convert them to ESA. Accrual accounting is applied for 
expenditures only. Bosnia and Herzegovina needs to compile a harmonised index of consumer 
prices (HICP). 

Structural  business  statistics  and  short-term  statistics  are  produced  but  with  limited  scope. 
Four  annexes  of  the  Regulation  on  structural  business  statistics  are  being  implemented  and 
data  for  several  of  the  remaining  annexes  is  under  development.  Some  short-term  business 
statistics was produced but further improvement remains necessary for industry, construction 
and  services  statistics.  On 
tourism  statistics,  Bosnia  and  Herzegovina  produces 
accommodation statistics but this statistical area needs to be improved further. Production of 
transport  statistics  is  at  an  early  stage.  R&D  statistics,  innovation  statistics  and  statistics  on 
information and communication technology (ICT) should be produced on a regular basis.   

As  regards  social  statistics,  a  severe  limitation  is  the  lack  of  up  to  date  population  figures.  
Publication of the census results are delayed as the statistical offices did not fully agree on the 
methodology.  The  State  level  Minister  of  Civil  Affairs  was  appointed  by  the  Council  of 
Minister  as  the  Census  co-ordinator  in  August.The  provision  of  data  under  the  European 
system of integrated social protection statistics is in the development phase. The labour force 
survey  (LFS)  is  conducted  annually.  The  Structure  of  Earnings  survey  and  statistics  on  job 
vacancies  are  not  implemented.  Labour  cost  statistics  are  being  compiled  and  provided  to 
Eurostat. Bosnia and Herzegovina started producing National Health Accounts and submitted 
data to Eurostat in May 2015. Production of statistics on external migration and asylum is in 
development and a memorandum of understanding (MoU) needs to be signed between BHAS 
and  the  Ministry  of  Security  of  Bosnia  and  Herzegovina.  Basic  statistics  on  education  are 
produced  on  a  regular  basis.  However,  significant  efforts  are  needed  to  develop  education 
statistics further, especially for financial indicators. For crime statistics, BHAS submits data 
to Eurostat but further improvements are required. 

In the area of agricultural statistics, relevant legislation on an agricultural census has yet to 
be adopted. The data from the census is the basic precondition for developing the country’s 
agricultural  statistics.  Since  no  agricultural  census  has  been  undertaken  for  more  than  50 
years, Bosnia and Herzegovina produces only a very limited number of statistical indicators 
on agriculture and provides some experimental estimates. 

As regards energy statistics, structural statistics are available for all energy sources produced 
except  renewable  energy.  Some  short-term  statistics  are  available,  including  for  electricity, 
gas and coal. Energy balances are produced for all energy sources except renewable energy. 
In  the  area  of  environment  statistics,  waste  and  water  statistics  are  compiled  on  an  annual 
basis.  Air  emission  accounts  and  statistics  on  environmental  taxes  by  economic  activity  are 
not  produced,  and  neither  are  statistics  on  environmental  protection  expenditures.  Material 
flow balances are not produced. 

4.3. 

Justice, freedom and security 

Bosnia and Herzegovina has some level of preparation for implementing the acquis in this 
area.  Some  progress  was  made.  The  migration  and  asylum  systems  are  being  strengthened 
and  are  adequate  for  current  inflows.  Infrastructure,  surveillance  and  equipment  at  border 
crossing  points  have  improved.  Implementation  of  the  Law  on  Prevention  of  Money 
Laundering and Terrorism Financing started and amendments to the criminal code regulating 
money  laundering  were  adopted,  even  though  some  further  legislative  changes  are  still 
necessary  to  meet  international  standards.  The  capabilities  of  individual  law  enforcement 

58 

 
agencies  to  identify  and  disrupt  drug  trafficking  operations  have  improved.  In  the  coming 
year, Bosnia and Herzegovina should in particular: 

→ step up efforts to prevent radicalisation and to address the phenomenon of foreign terrorist 
fighters; 

→ address remaining deficiencies in the legal framework concerning anti-money laundering, 
as well as adopt and implement a new strategy and action plan to combat money laundering; 

→ ensure policies to reduce drug demand are implemented effectively and drugs seized are 
destroyed. Strengthen institutions’ capacity to coordinate and implement the policies. 

4.3.1.  Visa, border management, asylum and migration 

Regarding visa policy, in 2014, 58 visas were issued at the border, a reduction of 37.6 % (93 
issued in 2013). In the first  half  of  2015,  32  visas  were  issued  at the border,  an increase of 
33% compared to the same period of 2014. Implementation of the visa-free regime with the 
EU continued smoothly overall. Although most travellers to the Schengen area are bona fide, 
a number of Bosnia and Herzegovina nationals have persistently abused the visa-free regime 
by  lodging  manifestly  unfounded  asylum  applications.  As  in  previous  reporting  periods, 
seasonal peaks of asylum-seekers were registered by some EU Member States and Schengen 
associated countries. The number of asylum applicants from Bosnia and Herzegovina grew by 
54 %  between  2013  and  2014.  The  extremely  low  recognition  rate  confirms  the  unfounded 
nature of these claims. Short and long-term measures to counter this phenomenon are needed: 
authorities  in  Bosnia  and  Herzegovina  must  take  immediate  action  under  the  post-visa 
liberalisation  monitoring  mechanism  to  address  asylum  abuses.  They  should  do  so  by 
continuing  public  information  campaigns,  intensifying  investigations  into  facilitators  and 
implementing  policies  to  improve  the  social  and  economic  inclusion  of  the  most  vulnerable 
population groups that are most likely to migrate, including Roma. Efforts in these areas need 
to continue systematically and be properly resourced. In September 2014, Germany included 
Bosnia and Herzegovina in its list of safe countries of origin. 

Legislation related to integrated border management, including the law on border control, is 
aligned  with  the  relevant  EU  acquis.  A  new  strategy  and  action  plan  on  integrated  border 
management has not yet been adopted. The upgraded integrated system for controlling State 
border crossings should be more effective in detecting invalid documents. A mechanism for 
issuing  local  border  traffic  permits  is  in  place  and  operational.  The  Joint  Centre  for  Police 
Cooperation between Bosnia and Herzegovina, Montenegro and Serbia, located in Trebinje, 
continued to function with liaison officers from Bosnia and Herzegovina and Montenegro. It 
aims  to  strengthen  regional  capacities  to  counter  cross-border  crimes  and  illegal  migration. 
Following the signing of a memorandum of understanding with Serbia in March, action has 
started to close the unauthorised border crossing points on the border with Serbia. The higher 
number of joint border patrols with neighbouring countries led to more people being charged 
with smuggling. Joint risk analysis is undertaken with Frontex, mainly in the Western Balkans 
Risk  Analysis  Network.  Bosnia  and  Herzegovina  authorities  regularly  provide  agreed 
statistical and qualitative information. 

The migration and asylum strategy and action plan for 2012-2015 are being implemented. A 
coordination  body  for  monitoring  implementation  of  the  strategy  is  functioning  well.  The 
asylum sector in the Ministry of Security is almost fully staffed. The permanent asylum centre 
in  Trnovo  functions  adequately.  Detention  procedures  have  to  be  brought  into  line  with  the 
acquis.  A  new  asylum  law  that  aims  to  align  more  closely  with  the  acquis  has  yet  to  be 
adopted. The number of asylum applications fell in 2014: 45 applications involving 45 people 
were  submitted,  compared  with  73  involving  100  people  in  2013.  Afghans  comprised  the 

59 

 
biggest group of asylum-seekers in 2014. In 2014, the Ministry of Security rejected 7 asylum 
applications. In the first half of 2015, 19 new asylum applications involving 20 people were 
submitted. 

Regarding  migration,  a  centre  for  temporary  detention  of  irregular  immigrants  is  in 
operation,  employing  53  staff  and  with  capacity  for  120  immigrants.  In  2014,  218  foreign 
nationals were accommodated in the centre, down from 236 in 2013. In the first half of 2015, 
a total of 93 people were accommodated in the centre, a decrease in comparison to the same 
period of 2014 when there were 121 people.  A total of 238 foreign nationals were returned to 
their country of origin in 2014. For the same purpose, in the first half of 2015 a total of 101 
foreign citizens were returned to their countries of origin, a decrease of 27% compared with 
the  same  period  of  2014.  In  2014,  169  irregular  migrants  were  registered  for  the  assisted 
voluntary  return  programme  for  special  purposes,  compared  to  83  in  the  first  half  of  2015. 
The  number  of  irregular  migrants  intercepted  at  the  border  fell  to  189  in  2014  from  228  in 
2013. In the first half of 2015, 75 people were intercepted, a reduction of around 13 from the 
same period in 2014. 

The seventh country migration profile was adopted in May. A new law on migration, which 
would  further  align  with  the  EU  acquis,  among  other  things  on  the  maximum  period  of 
detention  at  the  immigration  centre,  has  yet  to  be  adopted.  In  September  2014  Bosnia  and 
Herzegovina  extended a decision  granting Syrian nationals  one year  of temporary  residence 
on humanitarian grounds.  

Readmission  agreements  between  Bosnia  and  Herzegovina,  the  EU  and  other  countries 
continued to be implemented satisfactorily. Most of the 140 readmission cases in 2014 were 
carried out under the agreement with Croatia (194 in 2013). Bosnia and Herzegovina accepted 
readmission of 573 of its citizens in 2014 (against 397 in 2013). In the first half of 2015, 498 
citizens were readmitted, an increase of 90% compared to the same period of 2014 when there 
were 262 citizens readmitted. Implementing the strategy for reintegrating returnees remains a 
challenge. Obstacles to lasting return and local integration include difficulties with economic 
reintegration,  access  to  healthcare,  social  protection,  pensions  and  the  employment  of 
minority returnees (see 2.2 — Human rights and the protection of minorities). 

4.3.2.  Money laundering 

Moneyval issued a revised Public Statement in April stressing outstanding deficiencies in the 
legal framework and calling for action. Implementing legislation for the Law on Prevention of 
Money  Laundering  and  Terrorism  Financing  was  adopted  in  May.  Amendments  to  the 
Criminal  Code  of  Bosnia  and  Herzegovina  changing  the  definition  of  the  crime  of  money 
laundering and financing of terrorism activities were adopted in March and May, respectively. 
The  supervisory  bodies  established  by  the  law  have  yet  to  fully  exercise  their  functions.  In 
June 2015, Bosnia and Herzegovina made a high-level political commitment to work with the 
FATF  and  MONEYVAL  to  address  remaining  strategic  deficiencies  in  the  area  of 
criminalisation  of  money  laundering  and  terrorist  financing,  freezing  terrorist  assets  under 
UNSCR  1373,  effective  supervision,  non-profit  sector,  cross-border  currency  controls  and 
confiscation of assets.  

The  Council  of  Ministers  adopted  the  Action  Plan  for  removal  of  deficiencies  in  the  anti-
money  laundering  system,  as  required  by  FATF.  The  number  of  confirmed  indictments  and 
verdicts remains low. 

The  memoranda  of  understanding  with  12  foreign  financial  intelligence  units  allowed  for 
continued electronic exchanges of information with all other members of the Egmont Group. 
Training  sessions  were  organised  for  people  subject  to  reporting  obligations  under  the  new 

60 

 
law. The Financial Intelligence Directorate is adequately staffed but its technical capabilities 
to conduct complex analyses are limited. There was a reduction in the number of reports of 
money laundering filed at prosecutors’ offices across Bosnia and Herzegovina. One report of 
financing of terrorism activities was filed. In total, 78 people were reported in 2014, compared 
with 108 in 2013. 

4.3.3.  Drugs 

Bosnia and Herzegovina continues to be used for transit and storage of drugs. Production of 
drugs remains small and mostly limited to marijuana cultivation. Domestic demand for drugs 
increased slightly, especially for synthetic drugs. 

There  is  currently  no  national  strategy  and  action  plan  for  the  suppression  of  drugs.  The 
Republika  Srpska  Government  adopted  its  Strategy  for  Supervision  and  Suppression  of 
Narcotic  Drugs.  The  BiH  Commission  for  Suppression  of  Abuse  of  Narcotic  Drugs  is  not 
functioning  due  to  a  lack  of  political  will.  Legislation  to  prevent  and  suppress  the  abuse  of 
narcotic  drugs,  which  would  establish  a  focal  point  for  drug  issues  at  national  level,  is 
awaiting adoption. 

The  number  of  reported  crimes  related  to  drug  abuse  decreased.  Criminal  reports  on 
trafficking and possession of drugs in 2014 fell to 1344 from 1480 in 2013. The number of 
confirmed indictments declined to 985 in 2014 from 1039 in 2013 and convictions fell to 968 
from  1050.  In  May,  the  Commission  for  Drugs  Destruction  destroyed  550 kg  of  various 
drugs. However, a large quantity of drugs seized by order of various courts across the country 
is still awaiting destruction. Operational activities continue to be coordinated case-by-case. 

Cooperation with the European Monitoring Centre for Drugs and Drugs Addiction continued. 
BiH  became  a  member  of  the  Co-operation  Group  to  Combat  Drug  Abuse  and  Illicit 
Trafficking  in  Drugs  -  Pompidou  Group  of  the  Council  of  Europe  as  of  January  2015.  In 
November  2014  Bosnia  and  Herzegovina  produced  a  national  report  on  the  national  drug 
situation  which  describes  drugs  policy,  prevention,  drug  related  treatment,  social  correlates 
and social integration as well as data on drug related crimes and drug market. 

4.3.4.  Police 

Police  agencies  across  the  country  continued  to  build  up  their  capacities.  The  system  for 
electronic data exchange of police and prosecution registries is operational and some technical 
aspects of the system are being updated and improved. However, some legislative provisions 
prevent  the  development  of  an  effective  institutional  framework  at  State  level.  The  general 
lack of coordination and cooperation between law enforcement agencies hampers the ability 
of  the  police  to  deliver  a  full  range  of  services.  Legislation  which  would  improve  the  legal 
framework on policing has yet to be adopted. While the legislation provides for independent 
and  transparent  oversight  of  the  police,  including  public  complaints  mechanisms,  its 
implementation in practice is often flawed. More efforts are therefore needed to limit undue 
influence,  particularly  in  the  appointment  of  senior  police  officials,  ambiguous  rules  and  a 
general  lack  of  cooperation  and  coordination  between  police  agencies  and  bodies.  A 
regulation  setting  out  access  rights  to  data  and  databases  needs  to  be  adopted.  Staffing  in 
various law enforcement bodies and agencies needs to be strengthened.  

61 

 
 
 
 
4.3.5.  Fighting organised crime and terrorism 

Track record  

There  have  been  22  first  instance  convictions  for  organised  crime.  Some  large  scale 
operations  took  place,  including  in  cooperation  with  EU  Member  States.  In  2015  criminal 
assets worth 550 000 euros were subject to confiscation orders in a total of 36 cases. 

In 2014, the number of victims of trafficking of human beings identified increased, with 49 
victims acknowledged, up from an average of 30 in previous years. In the first six months of 
2015, ten victims of trafficking were identified. The trafficking detected was for the purpose 
of labour exploitation, sexual exploitation, begging and forced marriages. 

In  the  fight  against  terrorism  Bosnia  and  Herzegovina  has  been  seriously  affected  by  the 
phenomenon  of  foreign  terrorist  fighters  and  radicalisation.  Pockets  of  radicalisation  have 
been  identified  across  the  country,  in  particular  in  the  Wahhabi  community.  In  April,  the 
police station in Zvornik was attacked by a lone gunman who killed one police officer killed 
and  wounded  two  others.  The  attacker  was  killed  in  the  exchange  of  fire.  Two  suspects 
allegedly linked to the attack were apprehended and subsequently released from custody, with 
restrictive  measures.  The  reason  for  the  attack  is  being  investigated  by  the  Bosnia  and 
Herzegovina  State  Prosecutor’s  Office.  Provisions  in  the  State  criminal  code  on  sanctions 
against ‘foreign fighters’ have started to be used in criminal proceedings. Cases of hate speech 
need to be addressed more forcefully. 

Institutional and operational capacity  

In the area of fight against organised crime, the Federation faces serious delays in applying 
the legislation on seizures since the agency responsible for managing seized assets is not yet 
operational.  

Concerning  trafficking  in  human  beings,  regional  monitoring  teams  continue  to  meet 
regularly  and  improve  their  capacity  through  training.  International  cooperation  by  law 
enforcement agencies in Bosnia and Herzegovina, primarily State Investigation and Protection 
Agency,  through  joint  investigation  teams,  joint  activities  and  use  of  the  international  legal 
assistance  mechanism  is  satisfactory  but  requires  further  improvement.  Training  of  law 
enforcement  agencies,  especially  border  police,  on  human  trafficking  issues  has  continued. 
Police  academies’  official  2014  curricula  now  include  subjects  related  to  human  trafficking 
based  on  the  EU  acquis  and  best  EU  practices.  The  prosecution  of  perpetrators  and  the 
identification  and  proactive  protection  of  victims  need  to  be  further  improved.  Cooperation 
between  the  four  regional  monitoring  teams  and  the  Task  Force  for  combating  human 
trafficking needs to be strengthened further to ensure investigations are properly coordinated 
and  assistance  provided  to  victims.  Neither  the  Department  for  Combating  Trafficking  in 
Human Beings within the national coordinator’s office nor the database on victims are fully 
operational. 

The  capacities  of  the  Counter  Terrorism  Task  Force  have  yet  to  be  significantly 
strengthened.  The  Task  Force’s  operational  component  is  still  awaiting  regulation  of  its 
financing  and  confirmation  of  the  formal  status  of  its  members.  The  counter-terrorism 
capacity  of  the  Bosnia  and  Herzegovina’s  Prosecutor’s  Office  remains  insufficient.  The 
phenomenon of foreign terrorist fighters needs a dedicated approach by the intelligence and 
law enforcement community and a consistent judicial policy towards offenders. Efforts need 
to be enhanced to identify, prevent and disrupt the flow of foreign terrorist fighters traveling 
to conflict areas such as Iraq and Syria. 

62 

 
 
Legal framework  

As regards the fight against organised crime, minimum standards for asset seizures have yet 
to  be  consistently  incorporated  into  legislation  across  the  country.  The  legislation  on  the 
confiscation of criminal assets is partially aligned with the acquis. Alignment is still required 
at the State level, in Republika Srpska and the Brčko District.  

As regards trafficking in human beings, there is still no legislation in this area at Federation 
level. At the same time, national legislation, especially on penalties, has yet to be aligned with 
the acquis.  

Strategic framework  

A  strategy  on  combating  organised  crime  for  2014-2016  is  in  place.  However,  its 
implementation  is  fragmented  due  to  the  high  number  of  action  plans  by  the  various  law 
enforcement  agencies  across  the  country.  Activities  to  implement  the  country’s  2013-2016 
strategy for controlling small arms and light weapons continued. Joint minimum standards on 
the possession and carrying of weapons by civilians were adopted in June and acknowledged 
by the Council of Ministers in July, to harmonise laws within the country and with EU and 
international  standards.  Fighting  organised  crime  and  corruption  remains  fundamental  to 
countering criminal infiltration of the political, legal and economic systems. 

An agreement on operational and strategic co-operation with Europol is pending. 

Bosnia  and  Herzegovina  continues  to  be  a  country  of  origin,  transit  and  destination  for 
trafficking in human beings. Implementation of the strategy and action plan for 2013-2015 
is continuing. A comprehensive, multidisciplinary and victim-oriented approach to trafficking 
still  needs  to  be  developed  and  identification  of  victims  needs  to  be  improved.  The  country 
lacks  a  comprehensive  system  to  identify  the  overall  trends  and  challenges  in  addressing 
human trafficking. 

Bosnia  and  Herzegovina  still  lacks  a  comprehensive  overall  strategic  approach  to  address 
cybercrime and cybersecurity. 

In  July  the  Bosnia  and  Herzegovina  Council  of  Ministers  adopted  a  2015-2020  strategy  to 
prevent and combat terrorism. It follows the model of the EU counter-terrorism strategy and 
is  structured  around  four  major  principles:  prevention,  protection,  pursuit  and  protect. 
However, an action plan based on the strategy has yet to be adopted at State level or at other 
levels of governance in the country.  

(See also under 2.3: ‘fight against organised crime’.) 

4.3.6.  Judicial cooperation in civil and criminal matters  

There was no further development regarding the conclusion of a cooperation agreement with 
Eurojust. Relevant jurisdictions need to agree on who should be the partner of Eurojust for the 
negotiation and execution of the future cooperation agreement.  

63 

 
 
 
 
 
 
 
Annex I – Relations between the EU and Bosnia and Herzegovina 

Stabilisation and Association Process 

Bosnia  and  Herzegovina  participates  to  the  Stabilisation  and  Association  Process  and  is  a 
potential  candidate  for  EU  membership.  Meaningful  progress  in  the  implementation  of  the 
Reform  Agenda  adopted  in  July  2015  by  the  country  authorities  is  necessary  for  the  EU  to 
consider an EU membership application from Bosnia and Herzegovina.  

The  country’s  Constitution  was  drawn  up  as  part  of  the  internationally  agreed  1995 
Dayton/Paris  Peace  Agreement  (DPA).  It  established  a  complex  political  structure  that 
provides  for  governments  at  State,  Entity  and  District  levels.  The  State  level  comprises  a 
tripartite  rotating  Presidency,  a  Council  of  Ministers  (executive  branch)  and  a  bicameral 
Parliamentary  Assembly  consisting  of  a  House  of  Representatives  (lower  chamber)  and  a 
House of Peoples (upper chamber). The judicial branch established by the DPA consists of a 
State-level  Constitutional  Court.  The  High  Judicial  and  Prosecutorial  Council,  as  well  as  a 
State Court and Prosecutor’s Office, were established later.  

An international presence under UN auspices— the Office of the High Representative (OHR) 
—  has  been  in  place  in  Bosnia  and  Herzegovina  since  1995.  The  Peace  Implementation 
Council  Steering  Board  has  set  objectives  and  conditions  to  be  met  for  the  closure  of  the 
OHR. In particular, a resolution of the issue of state property and other levels of government 
and  of  defence  property  is  still  outstanding.  This  is  linked  to  the  implementation  of  the 
Constitutional Court’s decision regulating property distribution.  

Stabilisation and Association Agreement  

The  Stabilisation  and  Association  Agreement  between  Bosnia  and  Herzegovina  and  the  EU 
entered into force on 1 June 2015, thus replacing the Interim Agreement (IA) which had been 
in force since July 2008. Some progress was recorded regarding the level of approximation of 
the  EU  acquis,  mainly  in  the  areas  of  public  procurement,  intellectual,  industrial  and 
commercial  property  rights  (IPR),  internal  market,  customs  and  taxation  as  well  as  Roma 
inclusion.  Bosnia  and  Herzegovina  has  continued  refused  to  accept  the  established 
methodology for the technical adaptation of the SAA/IA and has therefore not yet adapted the 
trade  concessions  granted  under  its  SAA/IA  with  the  EU  to  take  into  account  its  bilateral 
traditional  trade  with  Croatia.  Bosnia  and  Herzegovina  needs  to  reach  an  agreement  on 
technical adaptation as a matter of urgency. Prolongation of the Autonomous Trade Measures 
beyond  2015  is  conditional  for  Bosnia  and  Herzegovina  accepting  the  adaptation  of  the 
IA/SAA with the EU to take into account its bilateral traditional trade with Croatia. 

The  EU  provides  guidance  to  the  country’s  authorities  on  reform  priorities  on  the  country's 
EU  membership  path.  Regular  political  and  economic  dialogue  took  place  between  the  EU 
and Bosnia and Herzegovina in the framework of the SAA/IA structures. Under the 7th cycle 
of  sub-committee  meetings,  with  the  exception  of  one  sub-committee  which  had  to  be 
postponed, all the other five meetings as well as the Structural Dialogue on Justice took place 
as planned. 

The  EU-BiH  Inter  Parliamentary  Meeting  took  place  in  May  in  Strasbourg.  The  European 
Parliament  adopted  a  Resolution  on  the  Commission  Progress  report  on  Bosnia  and 
Herzegovina in April.  

64 

 
 
 
A  Reform  Agenda  was  adopted  by  the  country  authorities  in  July  aimed  at  tackling  the 
difficult socio-economic situation, advancing the judicial and public administration reforms, 
as well as further advancing the country on its EU membership path. Its implementation has 
started. Meaningful progress in the implementation of the Reform Agenda is necessary for the 
EU to consider an EU membership application from Bosnia and Herzegovina.  

The  Structured  Dialogue  on  Justice  has  been  refocused  in  July  following  an  agreement 
reached  with  state  and  entities'  authorities  in  order  to  specifically  address  the  outstanding 
institutional  issues  related  to  the  functioning  the  judiciary.  In  September  at  a  ministerial 
meeting  in  the  framework  of  the  Structured  Dialogue  relevant  representatives  of  executive 
authorities  reiterated  their  commitment  to  develop  jointly  key  features  of  the  reform  of  the 
judiciary,  

As  regards  the  Common  Foreign  and  Security  Policy  (CFSP),  Bosnia  and  Herzegovina 
aligned itself, when invited, with 18 out of 29 relevant EU declarations and Council decisions 
(62%  alignment).  Bosnia  and  Herzegovina  did  not  align  itself  with  Council  decisions 
introducing  EU  restrictive  measures  in  the  context  of  Russia’s  illegal  annexation  of  Crimea 
and  events  in  eastern  Ukraine.  A  Framework  Agreement  on  the  participation  of  Bosnia  and 
Herzegovina in EU crisis management operations was signed in September. 

EU  has  continued  to  deploy  considerable  resources  in  Bosnia  and  Herzegovina  under  the 
Common  Foreign  and  Security  Policy  and  the  Common  Security  and  Defence  Policy.  The 
enhanced  presence  of  the  combined  Office  of  the  EU  Special  Representative  and  the  EU 
Delegation  in  Bosnia  and  Herzegovina  has  continued  to  be  instrumental  in  communicating 
EU priorities to citizens and in implementing the objectives of the EU agenda in key areas.  

The  EUFOR  Althea  military  operation  deployed  with  over  600  troops  in-theatre  and 
additional  over-the-horizon  reserves.  EUFOR  troops  focused  on  capacity  building  and 
training  of  the  armed  forces  of  Bosnia  and  Herzegovina  in  line  with  the  strategic  intent 
expressed  by  the  BiH  defence  leadership  to  develop  operational  capabilities  of  dual  use  in 
support  of  civil  authorities  for  removing  physical  remnants  of  war  or  disaster  relief  and 
deployment  in  peace  support  operations  overseas.  At  the  same  time,  EUFOR  retained 
deterrence capacity to support a safe and secure environment. The UN Security Council has 
extended EUFOR’s mandate until November 2015. 

Visa  liberalisation  for  citizens  of  Bosnia  and  Herzegovina  travelling  to  the  Schengen  area 
has been in force since December 2010. As part of the monitoring mechanism in place since 
visa  liberalisation,  the  Commission  has  been  regularly  assessing  the  progress  made  by  the 
country in implementing reforms introduced under the visa roadmap, including with regard to 
corruption.  A  Senior  Official  meeting  in  the  framework  of  the  Post-Visa  Liberalisation 
Monitoring  Mechanism  was  held  in  Sarajevo  in  November  2014.  The  monitoring  activities 
also include an alert mechanism to prevent abuses, coordinated by Frontex. The Commission 
has  regularly  submitted  its  post-visa  liberalisation  monitoring  reports  to  the  European 
Parliament  and  Council.  The  latest  report  was  issued  in  April  2015.  A  readmission 
agreement between the European Union and Bosnia and Herzegovina has been in force since 
2008. 

The  EU  Delegation  to  Bosnia  and  Herzegovina  is  responsible  for  implementing  financial 
assistance  as  well  as  ensuring  coordination  of  assistance  with  the  Member  States.  The 
country’s authorities have yet to establish the structure necessary for indirect management of 
EU  funds.  Implementation  of  the  2008-13  national  IPA  programmes  continued.  A  new 
framework programme under IPA II, covering for 2014-2017 period and providing for some 
€160 million as well as over €40 million for further flood recovery measures was adopted in 
December  2014  and  ratified  by  Bosnia  and  Herzegovina  in  August.  In  the  absence  of 

65 

 
countrywide strategies in many sectors, the IPA II Country Strategy Paper is restricted to the 
period 2014-17, as compared to the full period for IPA II 2014-20 and the following sectors: 
democracy  and  governance;  rule  of  law  and  fundamental  rights;  competitiveness  and 
innovation,  local  development  strategies;  education,  employment  and  social  policies.  The 
establishment of a coordination mechanism on EU matters and countrywide sector strategies 
remain key requirements for Bosnia and Herzegovina to benefit fully from IPA funding.  

Bosnia  and  Herzegovina  participates  in  the  following  EU  programmes:  Horizon  2020, 
Creative  Europe  (which  brings  together  the  former  Culture  and  MEDIA  programmes), 
Fiscalis  2020  and  Customs  2020.  The  country  is  in  the  last  phase  of  joining  the  Europe  for 
Citizens programme. Bosnia and Herzegovina also expressed interest in becoming a member 
of  COSME  programme  and  activities  are  ongoing  regarding  the  conclusion  of  the 
international agreement with the view of joining the programme as of 2015. 

66 

 
Annex II – Statistical Annex 

STATISTICAL DATA (as of 7.09.2015) 
Bosnia and Herzegovina 

Basic data 

Population (thousand) 
Total area of the country (km²) 

National accounts 
Gross domestic product (GDP) (million national 
currency) 
Gross domestic product (GDP) (million euro) 
GDP (euro per capita) 
GDP (in Purchasing Power Standards (PPS) per 
capita) 
GDP (in Purchasing Power Standards (PPS) per 
capita), relative to the EU average (EU-28 = 
100) 
Real GDP growth rate: change on previous year 
of GDP volume (%) 
Gross value added by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
Final consumption expenditure, as a share of 
GDP (%) 
Gross fixed capital formation, as a share of GDP 
(%) 
Changes in inventories, as a share of GDP (%) 
Exports of goods and services, relative to GDP 
(%) 
Imports of goods and services, relative to GDP 
(%) 

Business 
Industrial production volume index (2010 = 100) 
Number of active enterprises (number) 
Birth rate: number of enterprise births in the 
reference period (t) divided by the number of 
enterprises active in t (%) 
Death rate: number of enterprise deaths in the 
reference period (t) divided by the number of 
enterprises active in t (%) 
People employed in SMEs as a share of all 
persons employed (within the non-financial 
business economy) (%) 
Value added by SMEs (in the non-financial 
business economy) (EUR million) 
Total value added (in the non-financial business 
economy) (EUR million) 

Inflation rate 
Consumer price index (CPI), change relative to 
the previous year (%) 

Note 
1) 

Note 

2002 
3 828e 
51 209 

2002 
13 982 

7 149 
1 868 
: 

2010 
3 843e 
51 209 

2010 
24 879 

12 720 
3 310 
7 000e 

2011 
3 840e 
51 209 

2011 
25 772 

13 177 
3 432 
7 300e 

2012 
3 836e 
51 209 

2012 
25 734 

13 158 
3 430 
7 500 

2013 
3 832e 
51 209 

2013 
26 743 

13 674 
3 569 
7 700 

2014 
3 827e 
51 209 

2014 
27 259 

13 937 
3 641 
7 800 

2) 

: 

27 

28 

28 

29 

28 

5.0 

0.8 

1.0 

-1.2 

2.5 

1.1 

: 
: 
: 
: 
: 

: 

: 
: 

: 

3) 

3) 

3) 
3) 

3) 

Note 
4) 

2002 
: 
: 
: 

: 

: 

: 

: 

5) 

5) 

5) 

8.2 
21.5 
5.2 
65.1 
105.6 

16.6 

-1.0 
28.0 

49.1 

2010 
100.0 
: 
: 

: 

: 

: 

: 

8.1 
21.5 
4.9 
65.6 
105.1 

17.9 

0.2 
29.9 

53.2 

2011 
102.4 
: 
: 

: 

: 

: 

: 

7.7 
21.1 
4.9 
66.8 
104.9 

17.5 

0.5 
29.1 

52.0 

2012 
98.4 
: 
: 

8.0 
21.6 
4.5 
65.9 
102.8 

16.8 

0.2 
30.0 

49.8 

2013 
103.4 
: 
: 

: 

: 

66.4 

66.0 

3 715 

3 513 

6 023 

5 847 

7.1 
21.3 
4.7 
66.9 
: 

: 

: 
: 

: 

2014 
103.6 
: 
: 

: 

: 

: 

: 

Note 
6) 

2002 
0.4 

2010 
2.1b 

2011 
3.7 

2012 
2.0 

2013 
-0.2s 

2014 
: 

67 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance of payments 
Balance of payments: current account total 
(million euro) 
Balance of payments current account: trade 
balance (million euro) 
Balance of payments current account: net 
services (million euro) 
Balance of payments current account: net 
income (million euro) 
Balance of payments current account: net 
current transfers (million euro) 
of which government transfers (million euro) 
**3 year backward moving average of the current 
account balance relative to GDP (%) 
Net inward foreign direct investment (FDI) 
(million euro) 
Foreign direct investment (FDI) abroad (million 
euro) 
of which FDI of the reporting economy in the EU-
28 countries (million euro) 
Foreign direct investment (FDI) in the reporting 
economy (million euro) 
of which FDI of the EU-28 countries in the 
reporting economy (million euro) 
**Net international investment position, relative 
to GDP (%) 
Year on year rate of change in gross inflow of 
remittances (in national currency) from migrant 
workers (%) 

Public finance 
***General government deficit / surplus, relative 
to GDP (%) 
***General government gross debt relative to 
GDP (%) 
Total government revenues, as a percentage of 
GDP (%) 
Total government expenditure, as a percentage 
of GDP (%) 

Financial indicators 
Gross foreign debt of the whole economy, 
relative to GDP (%) 
Gross foreign debt of the whole economy, 
relative to total exports (%) 
Money supply: M1 (banknotes, coins, overnight 
deposits, million euro) 
Money supply: M2 (M1 plus deposits with 
maturity up to two years, million euro) 
Money supply: M3 (M2 plus marketable 
instruments, million euro) 
Total credit by monetary financial institutions to 
residents (consolidated) (million euro) 
Interest rates: day-to-day money rate, per 
annum (%) 
Lending interest rate (one year), per annum (%) 
Deposit interest rate (one year), per annum (%) 
Euro exchange rates: average of period (1 euro 
= … national currency) 
Trade-weighted effective exchange rate index 
(2005 = 100) 
Value of reserve assets (including gold) (million 
euro) 

Note 
7) 

2002 
-1 253 

2010 
-783 

2011 
-1 270 

2012 
-1 168 

2013 
-773 

2014 
-1 057 

7) 

7) 

7) 

7) 

7) 
7) 

7) 

7) 

-3 524 

-3 797 

-4 131 

-4 091 

-3 741 

-4 142 

232 

540 

998 

211 

944 

108 

921 

122 

923 

169 

932 

160 

1 500 

1 805 

1 810 

1 881 

1 876 

1 993 

347 
-12.5 

76 
-8.9 

45 
-7.4 

55 
-8.2 

62 
-8.1 

81 
-7.4 

282.0 

272.2 

344.6 

260.3 

224.7 

422.4 

0.0 

58.8 

-4.1 

: 

: 

: 

1.1 

: 

16.3 

-3.4 

: 

: 

7) 

282.0 

331.0 

340.4 

261.4 

241.0 

418.9 

7) 

: 

: 

: 

147.7 

196.5 

157.3 

146.7 

-57.7 

-59.5 

-61.6 

-56.9 

: 

: 

: 

: 

Note 

2002 
: 

: 

: 

: 

2010 
-2.5 

: 

43.7 

46.1 

Note 

2002 
: 

2010 
: 

2011 
-1.3 

: 

44.1 

45.3 

2011 
: 

2012 
-2.0 

: 

44.5 

46.6 

2012 
: 

2013 
-2.2 

: 

43.4 

45.6 

2013 
: 

: 

: 

: 

2014 
: 

: 

: 

: 

2014 
: 

: 

: 

: 

: 

: 

: 

8) 

8) 

1 538 

3 017b 

3 163 

3 141 

3 423 

3 738 

2 593 

6 968 

7 372 

7 624 

8 229 

8 830 

: 

: 

: 

: 

: 

: 

8) 

2 189 

7 436 

7 828 

8 151 

8 388 

8 635 

: 

: 

: 

: 

: 

: 

10) 
11) 

12.64 
1.45 
1.956 

7.89 
0.19 
1.956 

7.43 
0.12 
1.956 

6.87 
0.08 
1.956 

6.99 
0.13 
1.956 

6.64 
0.10 
1.956 

12) 

: 

100.0 

100.4 

99.6 

97.8 

98.1 

13) 

1 270 

3 302b 

3 284 

3 328 

3 614 

4 001 

68 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note 

2002 
: 

2010 
6 962 

2011 
7 938 

2012 
7 799 

2013 
7 756 

2014 
8 283 

14) 

: 

: 

: 

: 

: 

3 628 

4 204 

4 018 

4 285 

4 440 

-3 334 

-3 734 

-3 781 

-3 472 

-3 843 

100 

69.5 

61.0 

99p 

70.3 

59.7 

97p 

72.7 

61.4 

98p 

73.5 

60.0 

Note 

2002 
1.4 

2010 
-0.4 

2011 
-0.8 

2012 
-0.9 

2013 
-1.3 

100p 

72.1 

58.9 

2014 
-1.5p 

9.4 

6.4 

5.8 

5.4 

5.9 

4.8p 

71.3e 
76.7e 

2002 
: 

72.4e 
77.7e 

2010 
58.4 

73.7e 
78.8e 

2011 
58.3 

73.7e 
78.8e 

2012 
58.7 

73.7e 
78.8e 

2013 
58.7 

73.7e 
78.8e 

2014 
59.2 

42.8 

42.5 

42.5 

42.8 

43.2 

54.6 

31.2 

26.8 

: 
: 
: 
: 
31.3 

63.5 

25.6 
29.9 
57.5 

22.3 

53.7 

31.4 

27.0 

: 
: 
: 
: 
32.5 

62.1 

27.6 

26.1 
30.0 
57.9 

22.3 

54.2 

31.1 

27.2 

20.6 
21.5 
8.9 
48.9 
30.0 

65.3 

28.2 

26.5 
30.8 
63.1 

23.1 

53.3 

32.2 

27.7 

18.9 
22.2 
7.7 
51.0 
32.7 

62.5 

27.6 

26.7 
29.1 
59.1 

22.9 

54.6 

31.9 

28.5 

17.1 
22.1 
7.9 
52.7 
31.9 

63.1 

27.6 

25.3 
31.2 
62.7 

23.4 

28.2 

29.1 

26.8 

28.0 

31.6 

13.2 

13.5 

15.5 

15.7 

17.2 

17) 

41.1 

27.3b 

Labour market 

Note 

External trade in goods 
Value of imports: all goods, all partners (million 
euro) 
Value of exports: all goods, all partners (million 
euro) 
Trade balance: all goods, all partners (million 
euro) 
Terms of trade (export price index / import price 
index * 100) (number) 
Share of exports to EU-28 countries in value of 
total exports (%) 
Share of imports from EU-28 countries in value 
of total imports (%) 

Demography 

Crude rate of natural change of population 
(natural growth rate): number of births minus 
deaths (per thousand inhabitants) 
Infant mortality rate deaths of children under one 
year of age (per thousand live births) 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

Economic activity rate for persons aged 20–64: 
proportion of the population aged 20–64 that is 
economically active (%) 
*Employment rate for persons aged 20–64: 
proportion of the population aged 20–64 that are 
in employment (%) 
Male employment rate for persons aged 20–64 
(%) 
Female employment rate for persons aged 20–
64 (%) 
Employment rate for persons aged 55–64: 
proportion of the population aged 55–64 that are 
in employment (%) 
Employment by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
People employed in the public sector as a share 
of total employment, persons aged 20–64 (%) 
People employed in the private sector as a 
share of total employment, persons aged 20–64 
(%) 
Unemployment rate: proportion of the labour 
force that is unemployed (%) 
Male unemployment rate (%) 
Female unemployment rate (%) 
Youth unemployment rate: proportion of the 
labour force aged 15–24 that is unemployed (%) 
Long-term unemployment rate: proportion of the 
labour force that has been unemployed for 12 
months or more (%) 
Unemployment rate for persons (aged 25–64) 
having completed at most lower secondary 
education (ISCED 0–2) (%) 
Unemployment rate for persons (aged 25–64) 
having completed tertiary education (ISCED 5 & 
6) (%) 

: 

: 

: 

: 

: 
: 
: 
: 
: 

: 

15) 
15) 
15) 
15) 
16) 

16) 

: 
: 
: 

: 

: 

: 

69 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Social cohesion 

Average nominal monthly wages and salaries 
(national currency) 
Index of real wages and salaries (index of 
nominal wages and salaries divided by the 
inflation index) (2000 = 100) 
GINI coefficient — see definitions 
Poverty gap 
*Early leavers from education and training: 
proportion of the population aged 18–24 with at 
most lower secondary education who are not in 
further education or training (%) 

Standard of living 

Number of passenger cars relative to population 
size (number per thousand population) 
Number of mobile phone subscriptions relative 
to population size (number per thousand 
population) 

Infrastructure 

Density of railway network (lines in operation per 
thousand km²) 
Length of motorways (kilometres) 

Innovation and research 
Public expenditure on education relative to GDP 
(%) 
*Gross domestic expenditure on R&D relative to 
GDP (%) 
Percentage of households who have internet 
access at home (%) 

Environment 
Energy intensity of the economy (kg of oil 
equivalent per 1 000 euro GDP at 2005 constant 
prices) 
Electricity generated from renewable sources 
relative to gross electricity consumption (%) 
Road share of inland freight transport (based on 
tonne-km) (%) 

Energy 
Primary production of all energy products 
(thousand TOE) 
Primary production of crude oil (thousand TOE) 
Primary production of hard coal and lignite 
(thousand TOE) 
Primary production of natural gas (thousand 
TOE) 
Net imports of all energy products (thousand 
TOE) 
Gross inland energy consumption (thousand 
TOE) 
Electricity generation (thousand GWh) 

Note 
18) 

2002 
446 

2010 
798 

2011 
816 

2012 
826 

2013 
827 

2014 
830 

: 

: 
: 
: 

: 

: 

: 

: 

: 

: 
: 
31.8 

: 
: 
29.9 

: 
: 
30.3 

: 
: 
25.9 

: 
: 
25.2 

Note 

2002 
: 

2010 
188.6e 

2011 
191.4e 

2012 
195.9e 

2013 
202.6e 

2014 
211.3e 

175.5e 

784.3e 

825.8e 

873.2e 

910.4e 

920.7 

Note 

2002 
19.7 

2010 
20.1 

2011 
20.0 

2012 
20.1 

2013 
20.0 

2014 
: 

: 

35 

35 

48 

50 

: 

Note 

2002 
: 

2010 
: 

2011 
: 

2012 
: 

2013 
: 

2014 
: 

: 

: 

: 

: 

: 

0.27 

0.33 

29.8 

: 

: 

: 

: 

Note 

2002 
: 

2010 
: 

2011 
: 

2012 
: 

2013 
: 

2014 
: 

: 

: 

: 

: 

: 

: 

: 

62.0 

64.0 

65.9 

68.1 

70.3 

2010 
: 

: 
3 476 

: 

: 

: 

2011 
: 

: 
4 086 

: 

: 

: 

2012 
: 

: 
3 933b 

: 

: 

: 

2013 
: 

: 
3 515 

: 

: 

: 

17.1 

15.3 

14.1 

17.5 

2014 
: 

: 
: 

: 

: 

: 

: 

Note 

2002 
: 

: 
: 

: 

: 

: 

: 

70 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note 

2002 
: 

2010 
: 

2011 
: 

2012 
: 

2013 
: 

2014 
: 

1 697 
: 

1 649 
462 

1 675 
455 

1 680 
446 

1 670 
447 

1 652 
444 

581 

577 

539 

530 

533 

1 110 

1 086 

1 070 

1 089 

1 099 

19) 

20) 

: 

: 

: 

693 

688 

1 309 

1 104 

1 119 

0 

0 

0 

21) 

247 

286 

287 

674 

906 

0 

265 

688 

686 

1 224 

1 081 

0 

0 

319 

238 

Agriculture 

Agricultural production volume index of goods 
and services (at producer prices) (previous year 
= 100) 
Utilised agricultural area (thousand hectares) 
Livestock numbers: live bovine animals 
(thousand heads, end of period) 
Livestock numbers: live swine (thousand heads, 
end of period) 
Livestock numbers: live sheep and live goats 
(thousand heads, end of period) 
Production and utilisation of milk on the farm 
(total whole milk) (thousand tonnes) 
Harvested crop production: cereals (including 
rice) (thousand tonnes) 
Harvested crop production: sugar beet 
(thousand tonnes) 
Harvested crop production: vegetables 
(thousand tonnes) 

: = not available 
b = break in series 
e = estimated value 
p = provisional 
s = Eurostat estimate 

* = Europe 2020 indicator 
** = Macroeconomic Imbalance Procedure (MIP) indicator 
*** = The government deficit and debt data of enlargement countries are published on an "as is" basis and without any 
assurance as regards their quality and adherence to ESA rules. 

  Footnotes: 

1)  Mid-year population. 
2)  Source: Eurostat. 
3)  GDP calculated by the expenditure approach is higher than GDP calculated by the production approach. 
4)  Gross index. 
5)  Excluding natural persons (entrepreneurs). 
6)  2002: retail price index. 
7)  2010–14: based on IMF balance of payments manual, sixth edition. 
8)  2010–14: based on IMF monetary and financial statistics manual, 2000. 
9) 

Data for MFIs. 2013: based on the Central Bank of Bosnia and Herzegovina's estimates for GDP (production approach) for 
2013. 

10)  Short-term lending rates in national currency to non-financial corporations (weighted average). 
11)  Demand deposit rates in national currency of households (weighted average). 
12)  Real effective exchange rate. 
13)  2002: excluding gold. 
14)  Based on Paasche export and import unit value indices in BAM (2010 = 100). 
15)  The analysis of employment by sector does not sum to 100% because Section U is not included. 
16) 

The analysis of employment between public and private sector does not sum to 100% as some types of ownership are 
excluded. 

17) 

2002: not calculated using the ILO methodology; taken from the Bureau for Employment; excluding data from Brčko District. 

18)  Net salary. 2002: excluding data from Brčko District. 
19) 

The utilised agricultural area consists of arable land, kitchen garden, permanent crops and permanent grassland as cadastral 
data (not as UAA). 

20) 

2010–11: related to the Government Decision (all levels in Bosnia and Herzegovina) about repurchase of all quantities of pig 
meat on the market by large industrial processors. 

21)  2002: including dried pulses. 

71