COMMISSION STAFF WORKING DOCUMENT Bosnia and Herzegovina 2016 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 2016 Communication on EU Enlargement Policy
Date: 2016-11-09
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Bosnia and Herzegovina, accession criteria, accession negotiations, pre-accession strategy

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 9.11.2016  SWD(2016) 365 final   COMMISSION STAFF WORKING DOCUMENT Bosnia and Herzegovina  2016 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 2016 Communication on EU Enlargement Policy {COM(2016) 715 final}  
 
 
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 ...................................................................................................... 13 
2.4.  Human rights and the protection of minorities ................................................ 21 
2.5.  Regional issues and international obligations ................................................. 27 

3.   ECONOMIC CRITERIA .......................................................................................... 30 

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

the Union ......................................................................................................... 36 

4.  EUROPEAN STANDARDS..................................................................................... 39 

4.1. 

Internal market ................................................................................................ 39 
4.1.1.  Free movement of goods ................................................................... 39 
4.1.2.  Movement of persons, services and right of establishment ............... 41 
4.1.3.  Free movement of capital .................................................................. 42 
4.1.4.  Customs and taxation ........................................................................ 43 
4.1.5.  Competition ....................................................................................... 44 
4.1.6.  Public procurement ............................................................................ 46 
4.1.7. 
Intellectual property law .................................................................... 48 
4.1.8.  Employment and social policies, public health policy ...................... 49 
4.1.9.  Education and research ...................................................................... 51 
4.1.10.  WTO issues ....................................................................................... 52 
4.2.   Sectoral policies .............................................................................................. 52 
Industry and SMEs ............................................................................ 52 
4.2.1. 
4.2.2.  Agriculture and fisheries ................................................................... 53 
4.2.3.  Environment and climate change ...................................................... 55 
4.2.4.  Transport policy ................................................................................ 58 
4.2.5.  Energy ............................................................................................... 60 
4.2.6. 
Information society and media .......................................................... 62 
4.2.7.  Financial control ................................................................................ 63 
4.2.8.  Statistics............................................................................................. 66 
4.3.  Justice, freedom and security .......................................................................... 67 
4.3.1.  Visa, border management, asylum and migration ............................. 68 
4.3.2.  Anti-money laundering ...................................................................... 71 
4.3.3.  Drugs ................................................................................................. 71 
4.3.4.  Police ................................................................................................. 72 
4.3.5.  Fighting organised crime ................................................................... 72 
4.3.6.  Fight against terrorism....................................................................... 74 
Judicial cooperation in civil and criminal matters............................. 74 
4.3.7.  

2 

 
 
 
Annex I – Relations between the EU and Bosnia and Herzegovina ................................. 75 

Annex II – Statistical Annex ............................................................................................. 78 

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1. 

INTRODUCTION1 

1.1.   Context  

The  EU  initiated  in  December  2014  a  renewed  approach  to  Bosnia  and  Herzegovina  (BiH), 
which provides for the re-sequencing of the conditionalities in order for the country to progress 
towards the EU and address the socio-economic challenges it faced.  Following the adoption of 
a  written  commitment  to  reforms  by  the  Bosnia  and  Herzegovina  institutions  and  leadership, 
the renewed approach led to the entry into force of the Stabilisation and Association Agreement 
(SAA)  between  Bosnia  and  Herzegovina  and  the  EU  on  1  June  2015,  replacing  the  Interim 
Agreement  (IA)  which  had  been  in  force  since  2008.  In  July  2015,  the  country  adopted 
a Reform  Agenda  aimed  at  tackling  the  difficult  socio-economic  situation  and  advancing  the 
rule  of  law  and  public  administration  reforms.  Its  implementation  has  continued  with 
meaningful progress. In September 2016, the EU Council invited the European Commission to 
submit its opinion on the EU membership application of Bosnia and Herzegovina, submitted in 
February.  

Regular  political  and  economic  dialogue  takes  place  between  the  EU  and  Bosnia  and 
Herzegovina in the framework of the SAA/IA structures. Bosnia and Herzegovina initialled in 
July  2016  a  protocol  for  the  technical  adaptation  of  the  SAA/IA,  to  take  into  account  its 
bilateral traditional trade with Croatia. The signing of the protocol is pending. The suspension 
of  the  Autonomous  Trade  Measures  will  be  lifted  once  the  protocol  on  the  adaptation  of  the 
SAA  is  provisionally  applied.  Shortcomings  in  the  judiciary  continued  to  be  discussed  in  the 
Structured Dialogue on Justice. 

1.2.   Summary of the report 

As  regards  the  political  criteria,  the  electoral  legislation  was  improved,  with  a  number  of 
OSCE-ODIHR  recommendations  being  followed  and  local  elections  organised  broadly  in  an 
orderly manner, despite incidents in some municipalities which need to be investigated. Despite 
efforts to  resolve  the  Mostar issue, elections could  not take place there this year. The Bosnia 
and Herzegovina Parliamentary Assembly and the entities’ parliaments made progress towards 
adopting outstanding reform priorities, in particular those stemming from the Reform Agenda. 
Cooperation  between  state-level,  entity-level  and  Brčko  district  parliaments  has  improved. 
However their role and capacities in the EU integration process need to be further improved. 
Cooperation between the BiH Council of Ministers and the entities' governments was effective 
as  regards  the  Reform  Agenda,  the  implementation  of  which  needs  to  continue.  The 
coordination  mechanism  on  EU  matters  was  adopted  by  the  Council  of  Ministers  in  August. 
A strategic programme for the country’s legal approximation with the EU acquis has yet to be 
adopted.  

Bosnia  and  Herzegovina’s  constitution  remains  in  breach  of  the  European  Convention  on 
Human Rights, as per the ruling in the  Sejdić-Finci case. Constitutional Court decisions have 
yet to be fully enforced throughout the country.  

While  some  progress  has  been  made  in  establishing  institutional  mechanisms  for  cooperation 
between  governments  and  civil  society  organisations  (CSOs),  a  strategic  framework  for 
cooperation with civil society needs to be developed.  

1  This  report  covers  the  period  from  October  2015  to  September  2016.  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 

 
 
 
                                                            
 
Bosnia  and  Herzegovina  is  at  an  early  stage  with  the  reform  of  its  public  administration. 
Backsliding has been recorded with the changes to the Federation entity's legal framework for 
the  civil  service,  increasing  the  risk  of  politicisation.  A  harmonised  approach  to  policy 
development  and  coordination  between  different  parts  of  the  administration  is  still  largely 
lacking.  The  adoption  of  a  new  strategic  framework  for  public  administration,  as  well  as 
a strategy on public financial management are needed. 

Bosnia  and  Herzegovina’s  justice  system  has  some  level  of  preparation.  Some  progress  was 
made  on  accountability  and  integrity.  The  action  plan  needed  to  implement  the  2014-2018 
justice  sector  reform  strategy  has  yet  to  be  adopted.  Politically  motivated  threats  on  the 
judiciary  by  some  politicians  in  the  country  continued.  Judicial  independence  remains  to  be 
strengthened. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  fight  against  corruption.  Some 
progress was made with the adoption of action plans at various levels of governance but their 
fragmentation  makes  implementation  less  effective.  Corruption  remains  prevalent  in  many 
areas and continues to be a serious problem. The declared political commitment on this subject 
did not translate into concrete results. 

Regarding  the  fight  against  organised  crime,  Bosnia  and  Herzegovina  has  some  level  of 
preparation. Some progress was made notably to improve inter-agency cooperation. However, 
financial investigations need to be stepped up. Fighting organised crime remains fundamental 
to  countering  criminal  infiltration  of  the  political,  legal  and  economic  system  of  the  country. 
Bosnia  and  Herzegovina  still  needs to  meet  international  standards  on  anti-money  laundering 
and countering the financing of terrorism. Bosnian and Herzegovina has been seriously affected 
by the phenomenon of foreign terrorist fighters and radicalisation. Bosnia and Herzegovina has 
already taken important measures to deal with this problem which needs to be complemented 
by further steps to identify, prevent and disrupt the flow of foreign terrorist fighters travelling 
to conflict areas such as Iraq and Syria.  

More  work  is  required  addressing  human  rights  and  minorities’  issues.  Some  progress  was 
achieved  in  particular  with  the  adoption  of  amendments  to  the  anti-discrimination  law.  The 
strategic, legal, institutional and policy frameworks for the observance of human rights remain 
in overall need of substantial improvement. There is some level of preparation on freedom of 
expression.  However,  no  progress  was  made  in  this  area.  Cases  of  political  pressure  and 
intimidation  against  journalists  need  adequate  legal  follow  up.  The  financial  stability  of  the 
public  broadcasting  system  remains  to  be  addressed,  as  well  as  the  issue  of  the  lack  of 
transparency of media ownership.  

With  regard  to  regional  cooperation,  the  country  continued  to  participate  actively  in  regional 
initiatives.  Bosnia  and  Herzegovina  took  over  the  chairmanship  of  the  Central  European 
Initiative in January.   

As  regards  the  economic  criteria,  Bosnia  and  Herzegovina  is  still  at  an  early  stage  in 
developing a functioning market economy. Some progress has been made in modernising the 
labour  legislation,  improving  the  business  environment  and  addressing  weaknesses  in  the 
financial sector in the framework of the agreed Reform Agenda. However, the public sector is 
inefficient and private sector development is slow. Strong and continuing political support for 
the  swift  implementation  of  much-needed  structural  reforms,  in  line  with  the  agreed  Reform 
Agenda, will be key. 

Bosnia and Herzegovina is at an early stage in building the capacity to cope with competitive 
pressure and market forces within the Union. There was no progress in improving the country's 
competitiveness, but implementation of Reform Agenda measures is ongoing.  

5 

 
Regarding approximation with European standards, there is some level of preparation in the 
fields  of  public  procurement  and  internal  market.  The  country  achieved  some  level  of 
preparation in the transport area; the adoption of a Framework Transport Strategy at State-level 
in  July  is  a  step  forward  towards  the  country  benefitting  from  the  connectivity  agenda. 
Country-wide  strategies  in  the  areas  of  agriculture,  energy  and  environment  are  yet  to  be 
adopted.  Further  sustained  efforts  are  also  needed  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. The results of the population and housing 
census conducted in October 2013 were published on 30 June 2016, in line with international 
standards and recommendations.  

2. 

POLITICAL CRITERIA 

2.1.  Democracy 

Elections 

The  electoral  legislation  was  improved,  with  several  OSCE-ODIHR  recommendations  being 
followed.  Local  elections  were  organised  in  October  2016  and  were  broadly  conducted  in  an 
orderly  manner.  However,  some  incidents  were  recorded  and  will  need  to  be  adequately 
addressed.  Due  to  a  lack  of  political  agreement,  the  2010  Constitutional  Court  decision 
concerning the respect of the basic democratic right of the citizens of Mostar to vote in local 
elections has yet to be implemented. 

Municipal elections were organised in October 2016 and were broadly conducted in an orderly 
manner. However, a number of incidents took place in some municipalities and resulted in the 
closing  of  the  polling  stations  in  one  municipality  and  a  temporary  closing  in  several  others.  
Bosnia  and  Herzegovina  authorities  need  to  investigate  these  incidents  and  ensure  the 
appropriate judicial follow up. The election legislation was amended in May and June 2016 to 
incorporate  the  gaps  identified  by  OSCE/ODIHR  and  GRECO  on  campaign  financing,  the 
party  and  independent  candidate  deregistration  process,  the  increase  in  the  threshold  for 
distribution  of  mandates  on  candidate  lists,  and  increased  fines  for  violating  the  election 
process.  A  number  of  municipalities  struggled  to  collect  the  necessary  funding  to  hold  the 
elections.  Despite  renewed  efforts,  an  agreement  on  implementing  the  2010  Constitutional 
Court’s decision on elections in Mostar has yet to be reached, and after 6 years the citizens of 
Mostar still cannot exercise their democratic rights. The Constitutional Court decision needs to 
be implemented as a matter of priority.   

Parliament 

The  Bosnia  and  Herzegovina  Parliamentary  Assembly  and  the  entities’  parliaments  made 
progress towards adopting outstanding reform priorities, in particular those stemming from the 
Reform  Agenda.  While  cooperation  between  state-level,  entity-level  and  Brčko  District 
parliaments improved, their role and capacities in the EU integration process need to be further 
improved. 

The Parliamentary Assembly of Bosnia and Herzegovina further delivered on its legislative 
agenda, with a focus on legislation stemming from the Reform Agenda. The oversight role of 
the assembly improved as its committees repeatedly organised specific sessions to review the 
activities  of  the  executive.  During  the  reporting  period  the  assembly  also  adopted  several 
multiannual  strategic  documents  to  increase  legislative  efficiency,  transparency,  public 

6 

 
 
 
 
outreach, dialogue and cooperation. The Secretariat of the Parliamentary Assembly also started 
to share its capacities with entity and Brčko District parliaments.  

The  Stabilisation  and  Association  Parliamentary  Committee  (SAPC)  was  established  in 
November  2015  as  part  of  the  Stabilisation  and  Association  Agreement  (SAA)  bodies. 
However, it failed to adopt its Rules of Procedures due to insistence by some delegates from 
Bosnia  and  Herzegovina  for  the  inclusion  of  a  voting  mechanism  provision  which  would  not 
comply with European standards. 

The  Republika  Srpska  National  Assembly  continued  to  adopt  legislation  to  implement  the 
Reform  Agenda.  The  assembly’s  EU  Integration  Committee  was  active  and  fostered 
cooperation  with  other  parliamentary  institutions  in  Bosnia  and  Herzegovina  and  abroad. 
However, fast-track procedures were often used for law-making, which raises questions about 
the  quality  of  the  adopted  legislation.  In  October  2015,  the  assembly  adopted  conclusions 
which  included  the  possibility  for  representatives  to  be  sanctioned  through  Republika  Srpska 
entity  courts  for  their  political  activities  at  state  level,  a  provision  not  in  line  with  European 
standards.  

The  work  of  the  Federation  of  Bosnia  and  Herzegovina  (FBiH)  Parliament  resumed  after 
the  new  parliamentary majority  was  established  in  October  2015.  Coordination  with  cantonal 
assemblies improved, in particular on shared powers. While the parliament adopted a number 
of  Reform  Agenda-related  legislation,  the  overall  decision-making  process  was  slow  due  to 
disagreements in the coalition. The Federation House of Peoples remained short of three Serb 
delegates, including the Deputy Chair, which had a negative impact on the legislative process. 
The  functioning  of  the  parliament  also  continued  to  be  hampered  by  the  lack  of  space  in  its 
rented premises and insufficient capacity to deal with European integration-related issues. 

The work of the Brčko district assembly committees, including the Committee for European 
Integration, remained problematic due to frequent lack of quorum at meetings and the limited 
capacity of the district assembly’s services. The Committee for European Integration held only 
two meetings. 

in 

The  four  parliaments  adopted  a  joint  concept  of  cooperation  on  EU  matters.  This  led  to  an 
improvement 
the 
parliamentary  forum  on  European  integration,  which  held  quarterly  meetings  on  EU  issues. 
Members  of  sectoral  committees  of  the  four  parliaments  were  also  active  in  joint  activities 
about the Bosnia and Herzegovina EU integration process. 

inter-parliamentary  cooperation, 

the  work  of 

including 

through 

Governance 

Bosnia and Herzegovina institutions further addressed reform priorities. Cooperation between 
the Bosnia and Herzegovina Council of Ministers and the entities’ governments was effective 
as  regards  Reform  Agenda  implementation.  The  coordination  mechanism  on  EU  matters  was 
adopted  by  the  Council  of  Ministers  in  August.  A  strategic  country-wide  programme  for  the 
country’s  legal  approximation  with  the  EU  acquis  has  yet  to  be  adopted.  Bosnia  and 
Herzegovina’s constitution remains in breach of the European Convention on Human Rights, as 
per  the  ruling  in  the  Sejdić-Finci  case  and  subsequent  judgments.  Constitutional  Court 
decisions have yet to be fully enforced throughout the country. 

The  Dayton/Paris  Peace  Agreement  put  an  end  to  the  1992-1995  war.  The  country’s 
constitution,  which  is  Annex  4  to  the  Agreement,  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 Bosniaks, Croats or Serbs from 
standing  as  candidates  for  the  Presidency  and  the  House  of  Peoples  of  the  Parliamentary 
Assembly.  The  Sejdić-Finci,  Zornić  and  Pilav  decisions  of  the  European  Court  of  Human 

7 

 
Rights  recognised  this  as  a  breach  of  the  European  Convention  on  Human  Rights.  A  large 
number of Constitutional Court decisions are yet to be implemented at various levels across the 
country. 

The  Presidency  of  Bosnia  and  Herzegovina  played  its  role  in  the  EU  integration  process, 
including  in  the  submission  of  the  EU  membership  application  in  February.  The  Protocol  on 
adaptation of the SAA to take into account Croatia's accession to the EU was initialled in July. 

The  Council  of  Ministers  remained  proactively  committed  to  advancing  the  country’s  EU 
integration agenda. In October 2015, it adopted the action plan for implementing  the Reform 
Agenda  at  the  state  level,  which  led  to  reforms  being  adopted  in  areas  such  as  debt 
management,  anti-money  laundering,  customs  policy  and  fight  against  organised  crime.  In 
August, the Council of Ministers adopted the Decision on the coordination mechanism in EU 
matters.  

Countrywide  strategies  in  areas  such  as  agriculture  energy  and  environment  have  yet  to  be 
adopted.  These  strategies  will  help  the  country  to  fully  benefit  from  EU  pre-accession 
assistance.  The  role  and  capacity  of  the  Directorate  for  European  Integration  will  need  to  be 
further  improved.  Its  new  Director  was  appointed  in  November  2015,  but  due  to  political 
disagreements the Directorate could not fully assume its coordinating role in the framework of 
the  SAA.  Pending  an  agreement  on  the  coordination  mechanism  and  the  establishment  of 
relevant structures, only two SAA sub-committees could be held. A national programme for the 
country’s legal  approximation  with  the EU  acquis has  yet to be  adopted;  the programme is  a 
legal obligation under the SAA. 

The  Federation  of  Bosnia  and  Herzegovina  Government  continued  to  deliver  on  reform 
priorities as defined in the Reform Agenda. This included the adoption of legislation in areas 
such as labour market, fiscal responsibility and business environment. The appointments to the 
supervisory  boards  of  public  companies,  which  initially  had  led  to  the  break-up  of  the  post-
election ruling coalition, proceeded smoothly. The Federation Office for European Integration 
still  lacks  administrative  capacity  to  coordinate  EU  affairs  across  the  different  levels  of 
government  within  the  Federation  entity  and  with  the  rest  of  the  country.  The  Federation 
Government and the cantons cooperated on EU integration issues only sporadically. 

The Republika Srpska Government adopted a number of laws in the framework of the Reform 
Agenda, notably in the areas of labour market, fiscal responsibility, bankruptcy and combating 
the grey economy. However, the government also adopted conclusions including provisions on 
direct reporting to the European Commission, a practice which directly challenges the need for 
the country to  ensure  a single channel of communication with  the EU. At the same time, the 
entity  government  refrained  from  participation  in  developing  countrywide  strategies  until  the 
establishment of the coordination mechanism on EU matters, with a major negative impact on 
programming and implementing the EU’s financial assistance in key sectors. Republika Srpska 
Government organised in September 2016 a referendum, ignoring the Bosnia and Herzegovina 
Constitutional Court decision to suspend the referendum until it decides on its constitutionality 

The  Brčko District  Government  held  three  sessions  on  European  integration.  In  November, 
the  government  adopted  an  action  plan  on  the  implementation  of  measures  arising  from  the 
Reform  Agenda,  and  adopted  reforms  in  areas  such  as  public  internal  financial  control  and 
assets seizure.  

Entity legislation remained largely in line with the European Charter of local self-government. 
However, a lack of clarity remained in the division of powers between the entities, cantons and 
municipalities, with a relatively low level of financial autonomy at municipal level. 

8 

 
The  Ombudsman’s  Office  continued  to  lack  adequate  human  resources  and  faced  serious 
financial constraints, which were detrimental to its overall performance. This makes it harder 
for  the  office  to  carry  out  its  functions,  including  on  the  implementation  of  the  anti-
discrimination  legislation.  Systematic  cooperation  between  the  Ombudsman’s  Office  and  the 
civil  sector  remained  limited.  The  new  Ombudsmen  were  appointed  in  November  through  a 
transparent and fair parliamentary selection process that included civil society representatives 
and was compliant with European standards and the Paris Principles. 

Civil society 

There  was  some  progress  in  establishing  institutional  mechanisms  for  cooperation  between 
governments and civil society organisations (CSOs), as well as for public financing of CSOs. 
However, a strategic framework for cooperation with civil society needs to be developed and 
full use should be made of the e-consultation web platform. Transparent procedures are needed 
for allocating public funding to CSOs at all governance levels.  

An  empowered  civil  society  is  a  crucial  component  of  any  democratic  system  and  should  be 
recognised and treated as such by the institutions. An institutional mechanism for consultations, 
the  e-consultation  web  platform,  was  launched  in  April  and  involved  9  ministries  and  14 
agencies at state level. Twenty-three institutions at all levels of government designated specific 
bodies  or  contact  points  in  charge  of  dialogue  and  co-operation  with  CSOs.  Sector-specific 
consultations  with  CSOs  were  occasionally  organised  through  dedicated  working  groups. 
However,  for  the  legal  framework  to  be  implemented  efficiently  government  representatives 
and  CSOs  need  an  expanded  role  and  there  needs  to  be  greater  political  commitment  to  the 
process. A strategic framework for cooperation with civil society has yet to be established at all 
levels  of  government.  Some  progress  was  noted  at  local  level,  where  an  additional  seven 
municipalities  adopted  a  legal  framework  for  transparent  funding  of  CSOs  on  the  basis  of 
clearly defined criteria and monitoring and evaluation tools. However, the distribution of public 
funds to CSOs is not fully transparent and systematic.  

On civilian oversight of the security forces, the Joint Parliamentary Committee for Security 
and  Defence  played  an  active  role  in  ensuring  democratic  control  over  the  armed  forces  of 
Bosnia  and  Herzegovina.  The  Parliamentary  Military  Commissioner  continued  to  oversee the 
protection of human rights and freedoms in the armed forces and the Bosnia and Herzegovina 
Ministry  of  Defence.  The  armed  forces  continued  to  dispose  of  unstable  ammunition  while 
building  sustainable  capacity  to  manage  the  rest  of  the  stockpiles.  The  large  stockpiles  of 
weapons  and  ammunition  under  the  responsibility  of  the  armed  forces  and  the  widespread 
presence of weapons held illegally by the population remained 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  and  backsliding  has  been  recorded  with  the 
amendments to the legal framework for the civil service in the Federation entity, increasing the 
risk  of  politicisation.  The  insufficient  political  support  for  countrywide  reforms  and  the 
fragmentation  of  the  public  service  are  hampering  efforts  to  carry  out  institutional  and 
legislative  reforms.  A  harmonised  approach  to  policy  development  and  coordination  is  still 
largely lacking. In  the coming  year, Bosnia  and Herzegovina should in  particular address  the 
Commission’s recommendations from last year: 

  develop,  adopt  and  start  implementation  of  a  new  countrywide  strategic  framework  for 
public administration reform with strong political leadership and guidance; 

9 

 
 
 ensure implementation of an effective human resources management system, in particular in 
recruitment, and amend civil service legislation in an inclusive and evidence-based process to 
reduce the risk of politicisation of the civil service at all administrative levels; 

 adopt a countrywide reform programme for public financial management that is aligned with 
the new strategic framework on public administration reform. 

Policy development and coordination 

The  policy-making  system  in  Bosnia  and  Herzegovina  is  very  fragmented.  A  ‘whole-of-
government’ approach is provided for in the legislation but challenges remain over how to put 
it  into  practice.  There  was  some  progress  in  moving  towards  countrywide  strategy 
development, including an agreement between the state and the entities' governments to set up 
an  inter-institutional  structure  for  public  administration  reform  strategy  development.  At  the 
same  time,  coordination  between  the  state  and  the  entities’  institutions  still  needs  to  be 
substantially improved.  

At  state  level,  the  first  medium-term  work  programme  and  action  plan  of  the  Council  of 
Ministers for 2016-2018 was adopted in  January, in  line with the 2014  decision  on mid-term 
planning, monitoring and reporting procedure. The entity governments have similar legislation 
in place to ensure financial sustainability of government programmes. Nevertheless, the lack of 
countrywide medium-term planning remained a major weakness. A coordination mechanism on 
EU  matters was adopted and its effective implementation  is necessary for  improved  planning 
and  monitoring  of  the  European  integration  process.  In  July  the  BiH  Council  of  Ministers 
adopted a decision on the procedure of harmonisation of legislation with the EU acquis. Next 
steps should include the adoption of a national plan for the approximation to the acquis. 

Some  aspects  of  inclusive  and  evidence-based  policy  and  legislative  development  are  in 
place,  but  the  quality  of  policy  and  legislative  proposals  should  be  further  improved.  Public 
consultations  are  regulated  by  law  but  are  still  not  fully  implemented.  At  state  level,  an  e-
platform  for  public  consultation  on  legislative  proposals  was  launched  in  April,  but  the 
improvements are yet to be assessed. Regulatory impact assessments are enshrined in law but 
are  not  carried  out  systematically  due  to  insufficient  staff  capacity.  Financial  impact 
assessments are carried out for draft legislative proposals but not for strategic documents.  

The lack of countrywide medium-term policy planning is a serious obstacle to public scrutiny 
of government work. At state and entity levels some transparency is ensured through publicly 
available  reports  and  the  publication  of  government  agendas  and  summaries  of  decisions. 
However, publicly available reports do not allow comparing achievements with specific policy 
objectives. 

Public financial management 

Bosnia  and  Herzegovina  continued  to  address  public  finances  on  a  sub-system  basis  by 
adopting separate debt management or internal financial control strategies in the absence of an 
all-encompassing  public  financial  management  reform  programme  (PFM).  However, 
ministries  of  finance  at  all  levels  expressed  commitment  to  preparing  a  comprehensive  PFM 
strategy. In June, the Republika Srpska entity adopted the information note on development of a 
2016-2020  PFM  strategy  for  Republika  Srpska  and  tasked  its  Ministry  of  Finance  with 
participating in the development of the countrywide PFM strategy after the entity strategy has 
been adopted. In July, the BiH Council of Ministers adopted a decision on establishment of a 
working group with a view of producing a countrywide PFM reform strategy. 

A budget preparation and management information system is used in the different levels of the 
administration  for  budget  planning  and  for  the  medium-term  budget  framework  while  the 

10 

 
public investment management information system is still being brought up to its full capacity. 
Budget  preparation  and  adoption  timelines  improved  in  2016,  except  in  the  Brčko  District 
where the 2016 budget was adopted after the legal deadline.  

The  institutions  at  all  levels  have  considerable  weaknesses  in  internal  control  and  public 
procurement,  making  the  systems  vulnerable  to  inefficiency  and  waste.  Social  contributions 
and pension entitlements, which account for a significant portion of public funds, are managed 
by  extra-budgetary  funds  that  are  neither  integrated  into  the  budget  process  nor  into  budget 
documentation  such  as  the  medium-term  or  annual  budgetary  outlooks.  The  inclusion  of  the 
pension fund in Republika Srpska’s treasury system as of January 2016 to stabilise its liquidity 
has yet to produce the expected results.  

Bosnia and Herzegovina has not yet achieved sufficient budget transparency. Annual budgets 
are  published  and  annual  reports  on  budget  implementation  are  produced  by  the  Ministry  of 
Finance  and  Treasury  and  audited  by  the  Supreme  Audit  Institution.  Similar  provisions  also 
apply  in  the  entities  and  in  the  Brčko  District.  The  lack  of  harmonisation  on  the  charts  of 
accounts at state level and in the entities hampers access to consolidated data.  

In  the  context  of  budget  scrutiny,  follow-up  on  external  audit  findings  and  recommendations 
needs improvement. In-year reporting is insufficient, as is citizens’ participation in the budget 
process.  There  has  been  no  attempt  to  prepare  a  citizens’  budget  at  any  of  the  government 
levels.  

Public service and human resources management 

The  legal  framework  on  public  service  in  Bosnia  and  Herzegovina  is  very  fragmented,  with 
different laws applying to the civil service at different levels of government. In December 2015 
the  Federation  entity  amended  its  law  on  civil  servants,  removing  senior  and  middle 
management  positions  from  the  remit  of  the  civil  service.  This  was  a  significant  setback  on 
ensuring the political neutrality of the civil service, as it enables the Federation entity to make 
political  appointments  and  dismissals  at  senior  and  middle  management  level.  Similar 
provisions  were  also  adopted  by  the  Sarajevo  canton  in  August,  although  to  a  lesser  extent. 
Currently,  the  application  of  two  articles  on  recruitment  of  the  Federation  law  has  been 
temporarily  suspended  pending  a  Constitutional  Court  decision  on  the  merit  of  a  case 
challenging the law on procedural and substantive grounds.   

The  principle  of  merit-based  recruitment  and  promotion  for  civil  servants  is  generally 
enshrined in legislation, but its application is hampered by unclear legal provisions, formalistic 
application of procedures and low capacity of selection committees. The criteria for dismissals 
and disciplinary procedures, including the possibility to appeal, are also enshrined in the laws. 
In practice the number of dismissals is low.  

Human resources management (HRM) remained fragmented and inefficient due to absence 
of a central policy-making institution at state and entity levels. There are four main civil service 
agencies  which  perform  centralised  HRM  functions,  but  they  are  not  empowered  to  lead  and 
monitor implementation of the civil service policy and legal framework. HRM units have been 
established only in a small number of institutions. HRM information systems have been put in 
place  at  different  levels  of  administration,  but  are  not  used  as  tools  for  decision-making  and 
planning due to lack of complete information and legal obstacles over data protection. Further 
efforts are needed to establish a unified personnel database. 

The  remuneration  system  is  not  transparent  and  does  not  ensure  equal  pay  for  equal  work 
because different salary regulations are in force at different levels of administration. Additional 
fees for participation in committees are still paid in the Federation entity. A fair and objective 
job evaluation and classification system is still to be implemented. 

11 

 
The  right  to  professional  development  is  not  fully  ensured  or  monitored.  The  state  and  the 
entities  have  training  strategies  in  place,  but  without  external  donor  funding  resources  are 
insufficient to cover the needs. Performance appraisals are regulated and carried out regularly. 
However, a close link has yet to be established between performance appraisal and professional 
development and mobility. 

Integrity  in  public  service  is  relatively  well  addressed  at  state  level  through  anti-corruption 
and integrity plans, codes of conduct for civil servants, rules on incompatibility of office and 
the  work  of  the  Agency  for  Prevention  of  Corruption  and  Coordination  of  the  Fight  Against 
Corruption. However, the Agency has limited power to enforce these plans and the perception 
of corruption remains high. 

Accountability of the administration 

The overall organisation of the public administration in Bosnia and Herzegovina is affected by 
complex  constitutional  arrangements  that  are  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  over  40 
institutions that report  directly to  the Council of Ministers rather than to their line ministries. 
Within  institutions,  managerial  accountability  is  not  yet  rooted  in  the  administrative  culture 
(See Financial control). 

The institutional set-up and resources to protect the citizens’ right to good administration are 
insufficient.  The  Ombudsman’s  Office  is  relatively  active  in  issuing  recommendations, 
although  it  rarely  acts  on  its  own  initiative.  However,  the  rate  at  which  the  public 
administration implements such recommendations is low.  

The right to access public information is regulated by law 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  not  given  access  to  public  information,  administrative  inspection  is 
authorised to act upon the complaint and penalise the responsible person or institution. There is 
also a second-instance body to review appeals and issue final decisions at the level of the state 
institutions. However, there is no independent body to deal with appeals. 

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.  The 
right  to  seek  compensation  in  cases  of  wrongdoing  is  rarely  exercised  due  to  the  lack  of 
a legal framework on public liability. 

Service delivery to citizens and businesses 

Due to  the country’s highly  decentralised responsibilities for  service  delivery, there is  a  need 
for an increased focus on user-oriented administration. Public satisfaction with government 
services  is  not  regularly  measured.  The  e-signature  does  not  function  at  state  level  due  to 
incomplete  secondary  legislation  and  therefore  the  scope  of  available  e-services  is  limited  to 
providing  information.  An  operational  plan  to  establish  the  interoperability  framework  at  the 
level of Bosnia and Herzegovina institutions was adopted in December 2015. However, further 
development of e-services is held back by the lack of a countrywide approach and differences 
in how the state, the entities and the Brčko District apply the legal framework for e-signatures, 
develop e-government portals and implement an interoperability framework. The Constitutional 
Court of the Federation entity invalidated the monopoly of notaries in the conduct of legal-civic 
matters,  thus  potentially  extending  the  scope  of  eligible  service  providers  for  citizens  and 
business. 

12 

 
The  current  legal  framework  at  different  levels  enshrines  the  key  principles  of  good 
administrative  behaviour,  but  there  is  room  for  further  simplification  of  administrative 
procedures. Special administrative procedures still need to be reviewed and either abolished or 
brought in line with the law on administrative procedure. Exemptions should be minimised and 
allowed only when they are duly justified. 

Strategic framework for public administration reform 

Since  the  countrywide  strategy  for  public  administration  reform  (PAR)  expired  in  2014, 
Bosnia  and  Herzegovina  has  embarked  on  developing  a  new  strategy,  in  line  with  the 
objectives of the Reform Agenda. Governments displayed  political support to the reform by 
approving the Information Note on the Operational Plan paving the way for the actual drafting 
process.  Members to the inter-institutional working groups responsible for drafting the strategy 
have been nominated at all levels. The development of the strategy is at an early stage. 

Despite the expiry of the 2014 strategy and its action plan, the Public Administration Reform 
Coordinator’s Office continued to implement projects financed with the PAR Fund. The annual 
report for 2015 declared a 65 % rate of implementation but the current monitoring framework 
lacks  clear  performance  indicators  that  would  make  it  possible  to  determine  how  far  reform 
objectives have been achieved.  

The  public  administration  reform  sector  coordination  mechanism  under  the  previous  strategy 
continues to provide an effective structure for cooperation with entity and Brčko District levels. 
However, the PAR strategy implementation is not financially sustainable. Cost estimates for 
human resource needs and other costs of implementation are not reflected in the annual budgets 
and the medium-term expenditure frameworks at all levels. 

2.3.  Rule of law 

Functioning of the judiciary 

Bosnia and Herzegovina’s justice system has some level of preparation. Some progress was 
made in addressing some of last year's recommendations on accountability and integrity in the 
judiciary, namely through the adoption by the High Judicial and Prosecutorial Council of a set 
of  guidelines  on  conflict  of  interest,  drafting  of  integrity  plans  and  disciplinary  measures. 
However,  a  number  of  recommendations  were  not  fulfilled.  The  action  plan  needed  to 
implement the 2014-2018 justice sector reform strategy was not adopted. The slow reduction of 
the  utility-cases  backlog  in  the  courts  and  inadequate  procedures  for  execution  of  court 
decisions continued to harm judicial efficiency. Sanctions for breaching disciplinary and ethical 
rules were not yet much of a deterrent. Politically motivated threats on the judiciary continued. 
Judicial independence, including from political influence, remains to be strengthened. 

In the coming year Bosnia and Herzegovina should in particular: 

 adopt the action plan needed to implement the 2014-2018 justice sector reform strategy and 
establish a clear monitoring system; 

  implement    the  guidelines    adopted  by  the  High  Judicial  and  Prosecutorial  Council  on 
conflict  of  interest,  disciplinary  sanctions  and  integrity  in  the  judiciary;  introduce  more 
qualitative  criteria  for  appointment  and  appraisal  of  judges  and  prosecutors;  continue 
developing training programs, notably for the initial level and managerial positions,  including 
on ethical and disciplinary matters;  

 reform the execution procedure laws to reduce effectively the utility-cases backlog in courts 
and introduce court-annexed mediation in selected pilot courts.   

Strategic documents and budget 

13 

 
 
The  action  plan  accompanying  the  2014-2018  countrywide  justice  sector  reform  strategy, 
with new adjusted timelines for implementation, has not yet been adopted by the BiH Council 
of  Ministers.  A  ministerial  conference,  encompassing  justice  ministers  at  all  levels  and 
including  representatives  of  the  Brčko  District  Judicial  Commission  (BDJC)  and  the  High 
Judicial and Prosecutorial Council (HJPC) is responsible for supervising the implementation of 
the  justice  sector  reform  strategy.  The  conference  held  a  meeting  in  March,  but  has  not  yet 
adopted its rules of procedure, which are a prerequisite for the establishment of the technical 
structures monitoring the implementation of the various areas of the strategy. Implementation 
of some specific activities under the strategy did nevertheless start. The authorities need to take 
more  decisive  action  to  implement  the  strategy,  notably  by  adopting  its  action  plan  and  by 
providing adequate budgetary allocations for each activity envisaged therein. 

Management bodies/judicial/prosecutorial council 

The  High  Judicial  and  Prosecutorial  Council  is  the  key  institution  managing  the  judiciary 
throughout the country. The HJPC’s annual reports are widely published online and presented 
before legislative bodies at all levels. 

Shortcomings remain in the law on the HJPC, notably concerning appointment and disciplinary 
procedures, conflict of interests, declaration of assets as well as the right to appeal HJPC final 
decisions. These need to be addressed in the light of the opinion of the Venice Commission and 
the  recommendations  issued  by  the  European  Commission  as  part  of  the  EU-BiH  Structured 
Dialogue  on  Justice.  Other  improvements  regarding  transparency  of  the  HJPC  sessions, 
strengthening  voting  procedures  as  well  as  disqualification  and  relocation  of  judges  and 
prosecutors need to be addressed through changes in the relevant rules of procedures.  

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,  although  not  in  the  Bosnia  and 
Herzegovina constitution. There are no established procedures carrying penalties against undue 
influence  or  threats  to  judicial  independence.  Politically  motivated  threats  against  courts  and 
prosecutor’s offices continued, particularly at state level. Such practices need to be addressed 
forcefully.  

The  constitutional  and  legal  framework  needs  to  ensure  full  protection  against  unlawful 
pressure on the independence, impartiality and autonomy of judges and prosecutors. There is a 
need  to  broaden  the  grounds  for  appeal  against  final  HJPC  decisions  including  those  on 
appointments  of  judges  and  prosecutors  and  their  transfers  as  well  as  in  disciplinary 
proceedings.  

Accountability 

To  complement  existing  legislation  and  improve  the  overall  accountability  of  judicial  office 
holders,  in  July  -  in  the  context  of  the  implementation  of  the  Reform  Agenda  -  the  HJPC 
adopted guidelines related to the prevention of conflict of interest in the judiciary, the drafting 
of integrity plans in the judiciary and the improvement of disciplinary proceedings. Conversely, 
the  very  loose  regulations  on  declarations  of  assets  require  some  financial  statement  from 
judges  and  prosecutors,  but  no  publicity  or  verification  mechanism  exists.  This  has  yet  to  be 
adequately addressed through the improvement of the legislative framework.   

Efforts  need  to  be  stepped  up  to  ensure  efficiency  and  effectiveness  of  the  disciplinary 
procedure,  also  by  revising  the  existing  legal  framework.  The  scope  of  some  disciplinary 
offences  is  still  to  be  clarified  and  the  sanctioning  policy  needs  to  be  stricter  as  deterrent 
sanctions  in  disciplinary  rulings  against  judges  and  prosecutors  remained  rare.  Over  the 

14 

 
reporting  period,  the  Office  of  the  Disciplinary  Prosecutor  registered  899  complaints  against 
holders of judicial and prosecutorial functions and issued 912 decisions on merits, including the 
last  years'  remaining  cases.  It  initiated  31  disciplinary  proceedings  which  resulted  in  28 
sanctions being imposed,  mainly  written/public reprimands  or  salary reductions  and only  one 
dismissal. Decisions not to prosecute need to be based on a clear reasoning and there needs to 
be a possibility for effective legal remedy.  

The HJPC can still reverse the final decision of the Disciplinary Prosecutor, which has limited 
possibilities for appeal.  As disciplined judges and prosecutors may still get promoted, there is 
the need for taking disciplinary measures duly into account in the promotion system. 

Codes  of  ethics  for  judges  and  prosecutors  exist,  but  there  is  no  formal  enforcement 
mechanism with the power to initiate disciplinary cases. Corruption in the judiciary still needs 
to be more forcefully addressed.  

Professionalism and competence 

Procedures  regulating  the  entry  into  or  advancement  in  judicial  careers  based  on  merit  and 
promotion  are  in  place  and  focus  on  candidates’  professionalism  and  performance  assessed 
against some objective indicators. However, there are a number of shortcomings that need to be 
addressed  as  a  matter  of  priority,  mostly  through  revision  of  by-laws  to  ensure  that  the 
appointment  and  career  management  of  judges  and  prosecutors  become  more  transparent, 
efficient  and  professional.  This  requires,  in  particular,  publishing  the  questionnaire  for  the 
entry-level  exam,  rationalising  the  number  of  competitions,  conducting  more  quality-based 
performance appraisal, including for top-managerial posts at all levels and introducing integrity 
checks.  Moreover,  the  legislator  has  to  address  the  lack  of  effective  legal  remedy  against  the 
final decision on appointment and performance evaluation. Dismissal is regulated by objective 
criteria under the law on the HJPC. 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 have their own budget. 
They  have  not  yet  undertaken  a  regular,  comprehensive  and  analytical  training  needs 
assessment  on  the  basis  of  career  development,  job  competencies  and  regular  performance 
reports.  Multiannual  training  programmes  need  to  be  systematically  developed  and  an 
independent  monitoring  and  assessment  system  needs  to  be  introduced.  The  content, 
methodology and delivery of training need upgrading, particularly on building specific capacity 
to handle complex cases. 

Monitoring and measuring of the day-to-day activities of courts and prosecutors’ offices take 
place through the ‘case management system’, which evaluates the performance of judges based 
on the annual workload.  All courts and prosecutors’ offices regularly produce statistical reports 
for  the  HJPC  and  an  annual  activity  report,  which  is  submitted  to  their  respective  justice 
ministries and to the HJPC. 

Over the reporting period, 38 196 new case access codes were issued to professionals for the 
‘online access to court cases’ web service while the system recorded more than 420 000 user 
logins. While courts’ work is increasingly transparent, access is still limited to interested parties 
and requires payment of a fee. This includes access to electronic versions of selected decisions.  

To  achieve  greater  transparency,  the  conditions  for  recording  court  proceedings  need  to  be 
improved and selected court decisions need to be made available to a larger number of parties, 
while also fully complying with data protection legislation.  

15 

 
In  order  to  increase  the  consistency  of  jurisprudence  across  the  country,  in  the  absence  of 
a state-level  supreme  court,  the  three  joint  panels  of  the  highest-level  courts  in  Bosnia  and 
Herzegovina held seven meetings. This has helped to achieve better harmonisation of case-law 
in civil and administrative matters, but not yet for criminal law. 

On  alternative  dispute  resolution  methods,  the  use  of  in-court  and  out-of-court  mediation 
requires  qualitative  improvement.  Judicial  conciliation  continues  to  be  used  more  frequently 
than  mediation.  Only  two  cases  went  to  mediation,  compared  with  6  280  cases  adjudicated 
using  judicial  conciliation,  meaning  that  barely  1  %  of  cases  were  solved  through  alternative 
dispute resolution methods. A proposal was made for better court-annexed mediation, and the 
opening  of  pilot  courts  with  this  type  of  mediation  is  under  way.  The  aim  is  to  bring  the 
mediation  system  in  Bosnia  and  Herzegovina  into  line  with  European  standards  and  best 
practices.  

The budget allocated to courts and prosecutors’ offices throughout the country and the HJPC in 
2016 was EUR 119.35 million (slightly higher in absolute terms than in 2015), i.e. 0.81 % of 
the  country’s  GDP,  which  is,  however,  slightly  less  than  in  2015  when  the  allocation 
corresponded to 0.85 % of the GDP. 

Efficiency 

The  average  length  of  court  proceedings  during  the  first  six  months  of  2016  fell  for  first 
instance cases, with an average of 354 days taken to complete a case (404 in 2015 and 437 in 
2014). For second instance, the average length rose again slightly to 273 days (269 in 2015 and 
239 in 2014). In 2015, there were 420 883 incoming cases and 452 485 completed cases in all 
courts  across  the  country.  This  gives  a  clearance  rate  (i.e.  the  percentage  of  completed  cases 
compared to newly filed cases) of 108 %.  

The backlog for pending court cases by end of June 2016 was reduced by 5 % compared with 
2015 with a total of 356 019 pending cases. As a result of the implementation of their backlog 
reduction plans, courts completed 111 282 old cases out of the 187 118 cases that were planned 
in 2016, achieving 60 % of the plans’ targets already in the first six months of 2016.  

The  average  duration  of  pending  non-utility-related  civil  cases  before  first  instance  courts  in 
Bosnia and Herzegovina in the first half of 2016 was 511 days, a fall of 10 days compared to 
end  of  2015.  These  achievements  are  the  direct  result  of  the  HJPC’s  attempts  to  improve 
judicial  efficiency.  The  bulk  of  the  case  backlog  was  made  up  of  over  1.7  million  of  unpaid 
utility bills cases as of June 2016.  

The  HJPC  launched  a  system  to  improve  registration  of  unpaid  utility  bills  cases  in  22 
municipal/basic  courts  and  14  utility  companies.  The  system  allows  for  the  immediate 
processing of these cases during the last stage of enforcement. By 30 June 2016, there were 547 
146 cases registered into the system with 289 923 (52,97 %) still pending To make serious inroads 
into  this  specific  backlog,  the  system  will  need  to  be  supplemented  by  more  comprehensive 
legislative  and  institutional  measures,  in  particular  with  regard  to  amending  execution 
procedure laws in the entities and making the debt collection more efficient. 

Fight against corruption 

Bosnia and Herzegovina has some level of preparation in the fight against corruption. Some 
progress was made to address last year's recommendations with the adoption of action plans at 
various  levels  of  governance.  However,  the  legal  and  institutional  framework  remained 
inadequate and the fragmentation of the action plans makes their implementation less effective. 
The lack of enforcement of the legislation had a detrimental effect on citizens and institutions. 

16 

 
Corruption  remains  prevalent  in  many  areas  and  continues  to  be  a  serious  problem.  The 
declared political commitment on this subject did not translate into concrete results. 

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

  adopt  consistent  action  plans  and  ensuring  the  implementation  and  monitoring  of  anti-
corruption strategies, particularly at state- and Republika Srpska entity levels; 

  establish  prevention bodies,  where  not  yet set  up,  and  ensure  that they  cooperate  with  the 
Agency for Prevention of Corruption and Coordination of the Fight against Corruption; 

 amend legislation to ensure effective monitoring of conflicts of interest at state, Federation 
entity  and  Brčko  District  levels  and  improve  legislation  governing  asset  declarations  and 
protection of whistle-blowers; 

  ensure  the  implementation  of  tougher  penalties  for  corruption-related  crimes  in  order  to 
achieve a more deterrent effect. 

Track record 

In  2015,  there  were  a  total  of  140  investigations  at  state  level  into  financial  crimes  and 
corruption, out of which 77 (55 %) were finalised and 23 sent to the Bosnia and Herzegovina 
Prosecutor’s  Office.  There  were  no  final  convictions  in  high-profile  cases  in  the  reporting 
period.  From  1 September  2015  to  15  August  2016  there  were  a  total  of  296  confirmed 
indictments  countrywide,  while  the  number  of  convictions  was  173,  a  majority  of  which  were 
suspended sentences. Most of the convictions were for abuse of office or authority.  

Audit reports, tax administration reports and financial investigations continue not to be used in 
a  systematic  and  complementary  way  to  fight  corruption.  The  political  authorities  should 
ensure  that  law  enforcement  bodies  are  fully  empowered  to  act  effectively  and  impartially 
when investigating corruption allegations. According to HJPC data, in 116 cases a total of EUR 
1 015 365 was confiscated.   

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

The  Commission  for  Determination  of  Conflict  of  Interest  in  Republika  Srpska  adopted  36 
decisions,  while  in  14  cases  a  conflict  of  interest  was  found.  Implementation  of  conflict  of 
interest  rules  in  other  parts  of  the  country  remained  uneven.  Due  to  administrative 
impediments, the state level commission has not decided in any case since its formation. The 
conflict of interest has not been monitored in the Federation entity. In the Brčko District, the 
authorities  entrusted  the  task  of  deciding  on  conflict  of  interest  cases  to  the  Brčko  District 
Election  Commission.  However,  legal  impediments  prevent  that  body  from  performing  its 
tasks, making changes to the law necessary. There is no policy in place to prevent corruption in 
the  private  sector.  Corruption  risk  assessments  analyses  in  the  health  and  education  sectors 
were  made.  These  areas  remain  particularly  prone  to  corruption  and  conducting  risk 
assessments  in  a  more  systematic  manner  is  a  first  positive  step  that  should  lead  to  further 
measures to effectively address corruption. 

There  are  different  laws  governing  access  to  information,  but  common  flaws  in  their 
implementation  were  reported,  including  the  lack  of  automated  statistical  information.  223 
cases of information complaints were referred to the Ombudsman in 2015, as opposed to 218 in 
2014.  

17 

 
Following  the  entry  into  force  of  the  law  on  whistle-blowers  in  2014,  a  total  of  three 
individuals  were  granted  the  status  of  whistle-blowers,  while  eight  requests  were  rejected. 
However, the law covers only the state-level public sector. 

Institutional framework 

The state level Anti-Corruption Agency is almost fully staffed, has an appropriate budget and 
has  moved  to  new  premises.  At  entity  level,  Republika  Srpska  has  a  dedicated  body.  The 
members  of  the  prevention  body  within  the  Federation  entity  were  appointed  in  April. 
Dedicated  corruption  prevention  bodies  were  set  up  in  several  cantons,  notably  Sarajevo, 
Central  Bosnia,  Una-Sana,  Bosnian-Podrinje  Goražde,  and  Herzegovina-Neretva,  and  in  the 
Brčko District. 

On law enforcement, the capacity to investigate economic, financial and public procurement-
related crimes remained weak. Greater specialisation is needed within the police and judiciary 
in order to fight corruption. 

Legal framework 

The legal framework was changed to some extent. The Federation of Bosnia and Herzegovina 
Parliament  adopted  amendments  to  the  entity  law  on  conflict  of  interest,  which  handed  over 
implementation to a state-level commission. In the Brčko District, amendments are needed to 
the law on conflicts of interest to ensure that it is properly implemented.  

In March, amendments to the Federation entity criminal code were adopted, to regulate crimes 
related  to  influence  peddling.  In  May,  amendments  to  the  law  on  Political  Parties  Financing, 
addressing  some  of  GRECO  recommendations  were  adopted.  The  Federation  entity  law  on 
suppression  of  corruption  and  organised  crime  has  not  started  being  implemented.  A  new 
Republika Srpska entity law on suppression of corruption, organised crime and the most serious 
forms  of  commercial  crimes  was  adopted  in  April.  Cantons  have  limited  or  no  specific  anti-
corruption  legal  framework.  There  is  still  no  effective  criminal  justice  policy  including  on 
penalties, which do not act as a deterrent. 

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

Strategic framework 

During the first year of implementation of Bosnia and Herzegovina Anticorruption Strategy, out of 
98 activities 25 were implemented completely, 63 are in the process of implementation while the 
implementation of 10 activities have not yet started. Policy documents for the 2013-2017 period 
are in place in Republika Srpska. In September 2016 the government of the Federation entity 
adopted  a  2016-2019  Anti-Corruption  strategy  as  well  as  the  Action  Plan  for  its 
implementation. Policy documents were adopted in Sarajevo Canton in October, Canton 10 in 
March,  Bosnian-Podrinje  Canton  Goražde  in  May  and  Tuzla  Canton  in  September.  To 
overcome  the  fragmentation  of  powers  across  the  country’s  various  administrative  layers, the 
fight  against  and  the  prevention  of  corruption  require  dedicated  and  specialised  bodies  at  all 
levels  of  government  with  appropriate  coordination  channels  and  a  holistic  vision.  In  this 
context, the Anti-Corruption Agency issued a set of recommendations on prevention structures 
and  policy  documents  to  ensure  coherence  and  efficiency.  Strategic  documents  need  to  be 
improved  by  including  in  particular  a  solid  risk  assessment  and  clear  identification  of 
benchmarks. Robust monitoring mechanisms have yet to be established. 

18 

 
Corruption risk assessments in the health and education sectors were made. These areas remain 
particularly prone to corruption and conducting risk assessments in a more systematic manner 
is a first positive step that should lead to further measures to effectively address corruption. 

Fight against organised crime 

Bosnia and Herzegovina has some level of preparation on the fight against organised crime. 
Some progress was made to address last year's recommendations, by improving to some extent 
inter-agency  cooperation.  However,  financial  investigations  remained  underused.  Fighting 
organised  crime  remains  fundamental  to  countering  criminal  infiltration  of  the  political, legal 
and economic system of the country. 

In the coming year Bosnia and Herzegovina should in particular: 

  strengthen  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; 

 improve regulation on mutual access to databases and the exchange of information between 
law  enforcement  agencies  and  prosecutors’  offices,  stipulating  procedures  and  mutual  access 
rights in more detail; 

  further  develop  effective  asset  confiscation  and  recovery  systems  at  all  levels,  including 
capacity  for  conducting  financial  investigations,  fully  implementing  adopted  joint  minimum 
standards  for  assets  seizure  system  in  Bosnia  and  Herzegovina,  based  on  the  EU  minimum 
standards. 

Track record 

There have been 30 convictions against 116 persons for organised crime. In the same period, 43 
organised crime investigations against 238 suspects were ordered, while 84 persons were indicted 
in 19 cases for organised crime. Some large-scale operations took place, including in cooperation 
with  EU  Member  States.  In  2015  criminal  assets  worth  EUR  1  015  365  were  subject  to 
confiscation orders in a total of 116 cases.  

Bosnia  and  Herzegovina  remained  a  country  of  origin,  transit  and  destination  for  human 
trafficking  for  labour  exploitation,  sexual  exploitation,  begging  and  forced  marriages. The 
number  of  identified  victims  of  human  trafficking  increased  threefold,  of  which  80  %  were 
women and girls. The Federation entity did not make changes to the criminal code that would 
ban all forms of human trafficking. This limits the ability of the country as a whole to prosecute 
trafficking crimes.  

There is no overall policy for carrying out  financial investigations on a systematic basis and 
the precautionary freezing of assets during the early phase of investigations is rarely applied. 
Specialised  anti-terrorism,  human  trafficking,  drugs,  cybercrime  and  financial  investigations 
units  are  broadly  in  place  at  state  and  entity  level,  though  with  insufficient  capacity.  A 
Financial  Investigation  Unit  has  yet  to  be  established  at  Federation  entity  level.  The  joint 
counter-terrorism task  force is  not  functioning properly and its operational capacity has to  be 
further  strengthened.  Institutional  capacity  to  effectively  address  various  forms  of  organised 
crime needs substantial improvement. 

Arrangements  for  practical  cooperation  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 

19 

 
 
technical aspects of the system are being updated and improved. Better regulation continues to 
be needed on determining access rights to data and databases. 

There  is  no  operational  countrywide  DNA  database  and  DNA  profiling  capacity  remains 
limited.  Swift  exchange  of  forensic  data  with  other  countries  does  not  take  place.  The 
automated fingerprint information system (AFIS) is outdated and of limited use.  

Joint  minimum  standards  on  civil  possession  and  the  carrying  of  weapons  which  were 
adopted  in  July  2015  started  being  turned  into  respective  laws  across  the  country.  Full 
implementation will bring a harmonised legal framework within Bosnia and Herzegovina and 
improve alignment with relevant EU standards in this field. 

The Operational and Strategic Agreement with Europol was signed in August.  

Institutional and operational capacity 

There  is  the  need  throughout  Bosnia  and  Herzegovina  to  further  improve  capacities  for  financial 
investigations  and  assets  seizure  in  order  to  tackle  organised  crime  and  corruption.  In  the 
Federation entity the agency responsible for managing seized assets is not yet fully operational.  

Legal framework 

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  the  legislation  across  the  country.  The  Brčko  District  adopted  a  new  Assets 
Seizure law in July 2016. The Federation entity faces serious delays in applying the legislation 
on asset seizure. 

Strategic framework 

The 2014-2016 strategy on the  combat of  organised  crime  is in  place. However, there is a 
lack of efficient mechanism to overview the implementation of the high number of action plans 
by the various law enforcement agencies across the country and to secure a consistent approach 
in tackling organised crime. Inspired by the Europol methodology, a serious and organised crime 
threat assessment (SOCTA) 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  new  strategy  on  the  combat  of  organised  crime  for  the 
following period and the new SOCTA need to be drafted. 

Activities to implement the country’s 2013-2016 strategy for controlling small arms and light 
weapons (SALW) continued. A new SALW strategy for 2016-2020 was adopted in September 
2016.  

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. Computer emergency response team 
(CERT) capacities need to be introduced at the state level and for the Federation entity, while 
existing CERT capacities in the Republika Srpska entity need to be enhanced.  

The  additional  Protocol  to  the  Council  of  Europe  Convention  on  Cybercrime  concerning  the 
criminalisation of acts of a racist and xenophobic nature committed through computer systems, 
needs  to  be  implemented  was  ratified    by  Bosnia  and  Herzegovina  and  entered  into  force  in 
2006. It needs to be implemented effectively. 

The fight against terrorism 

In  June,  new  members  to  the  body  to  oversee  the  implementation  of  the  Bosnia  and 
Herzegovina  strategy  for  the  prevention  of  and  fight  against  terrorism  for  2015-2020 

20 

 
strategy  were  appointed  by  the  Council  of  Ministers.  However,  the  body  is  not  yet  fully 
operational. The action plan to implement the Strategy was adopted in October 2016. 

Bosnia  and  Herzegovina  has  been  seriously  affected  by  the  phenomenon  of  foreign  terrorist 
fighters  and  radicalisation.  The  phenomenon  needs  a  dedicated  response  strategy  by  the 
intelligence and law enforcement community and a coherent judicial policy towards offenders. 
Efforts  need  to  be  stepped  up  to  identify,  prevent  and  disrupt  the  flow  of  foreign  terrorist 
fighters travelling to conflict areas such as Iraq and Syria. 

Pockets of radicalisation have been identified across the country, in particular in the Wahhabi 
community. De-radicalisation and prevention of radicalisation programmes are to be developed 
and introduced. 

Provisions  in  the  state  criminal  code  criminalising  acts  of  joining  foreign  para-military  and 
para-police  forces  (‘foreign  fighters’)  started  to  be  used  in  criminal  proceedings  with  8  cases 
being investigated. In one case, three persons were convicted with prison sentences. In 2016, for the 
terrorism  criminal  offences  34  investigations  were  ordered  against  43  persons.  In  two  cases,  the 
Bosnia  and  Herzegovina  Court  imposed  a  total  of  nine  convictions  for  terrorism  related  criminal 
offences. 

The  capacities  of  the  counter-terrorism  task  force  have  yet  to  be  significantly  strengthened. 
The task force’s operational component is still awaiting rules on its financing and confirmation 
of  the  formal  status  of  its  members.  The  counter-terrorism  capacity  of  the  Bosnia  and 
Herzegovina’s  Prosecutor’s  Office  increased  with  the  appointment  of  eight  new  prosecutors 
dedicated to terrorism cases. 

Bosnia and Herzegovina still needs to meet international standards of the Financial Action Task 
Force (FATF) on anti-money laundering / countering the financing of terrorism (see also 4.1.3 
and 4.3.2). 

2.4. 

 Human rights and the protection of minorities 

the  reporting  period 

Some  progress  was  achieved  over 
last  year’s 
recommendations  on  effectively  addressing  human  rights  and  minorities’  issues,  in  particular 
with the adoption of relevant amendments to the anti-discrimination law. The strategic, legal, 
institutional  and  policy  frameworks  for  the  observance  of  human  rights  are  in  need  of 
substantial  improvement.  The  provision  on  the  death  penalty  in  the  constitution  of  the 
Republika Srpska entity still needs to be repealed. 

in  addressing 

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

  Adopt a countrywide strategy for human rights and non-discrimination. 

 

Introduce  a harmonised,  consistent, effective  and  free  legal aid  system  across  the country 
and ensure non-discriminatory access to justice. 

  Revise  the  Roma  action  plan  on  employment,  housing  and  healthcare  in  line  with  the 
operational  conclusions  from  the  Roma  seminars,  including  the  necessary  budget  to 
implement agreed actions. 

Bosnia  and  Herzegovina  has  ratified  all  major  European  and  international  human  rights 
instruments.  However,  it  has  not  yet  fully  implemented  the  128  accepted  recommendations 
from  the  2014  Universal  Periodic  Review.  This  includes  recommendations  on  constitutional 
changes to recognise the equality of all citizens, prevent discrimination against minorities and 
gender-based violence, ensure non-discrimination, inclusive education, criminal code reform on 
war crimes and harmonisation of law and policy at all levels of government. 

21 

 
 
Since September 2015, the European Court of Human Rights (ECtHR) has found at least one 
violation of the European Convention on Human Rights (ECHR) in three cases, relating to the 
right  to  liberty  and  security  and  to  prohibition  of  discrimination.  A  total  of  838  new 
applications  were  allocated  to  a  decision-making  body,  bringing  the  number  of  pending 
applications  to  1  027.  The  remaining  outstanding  cases  relate  mainly  to  repossession  of 
occupancy  rights,  missing  persons  and  discrimination  on  ethnic  grounds.  No  progress  was 
made in implementing the Court’s judgments on the Sejdić-Finci and Zornic cases.  

There  is  still  no  overarching  policy  document  on  promotion  and  enforcement  of  human 
rights.  The  Ombudsman  still  lacks  adequate  human  and  financial  resources  to  perform  its 
functions  as  national  human  rights  institution.  Training  on  the  ECHR  and  ECtHR  case-law 
continued for judges, prosecutors, legal associates and advisers of the Constitutional Court and 
the Court of Bosnia and Herzegovina.   

On  the  right  to  life,  the  provision  on  the  death  penalty  in  the  Republika  Srpska  entity 
constitution has still not been repealed. 

A national preventive mechanism for prevention of torture and ill treatment in line with the 
Optional  Protocol  to  the  Convention  against  Torture and  other  Cruel,  Inhuman  or  Degrading 
Treatment or Punishment has still not been established. Reports of ill treatment of suspects in 
some police stations and of prisoners in some prisons and detention facilities remain a matter of 
serious concern which needs to be addressed.  A state law on the rights of civilian victims of 
torture  during  the  war,  in  compliance  with  the  Convention  against  Torture,  has  yet  to  be 
adopted. 

Legislation  on  the  prison  system  is  not  sufficiently  harmonised  throughout  the  country.  The 
psychiatric  institution  in  Sokolac,  intended  to  provide  mandatory  psychiatric  treatment 
requested during criminal proceedings, is not operational as funds were never allocated for its 
functioning.  Execution  of  criminal  sentences  was  hampered  by  the  lack  of  coordination  and 
harmonisation  of  procedures  across  the  country.  The  backlog  in  the  execution  of  criminal 
penalties in the Federation entity was considerably reduced, with 196 cases awaiting execution 
as of April. Existing penitentiary legislation still needs to be aligned with European standards 
and  effectively  implemented.  Healthcare  services  in  prisons  remained  deficient  due  to 
insufficient resources and medical staff. 

Protection of personal data in Bosnia and Herzegovina is partially harmonised with European 
standards.  The  number  of  complaints  received  by  the  Agency  for  Personal  Data  Protection 
decreased  to  121  in  2015  from  140  in  2014.  The  Agency  provided  259  expert  opinions  and 
conducted 90 inspections. There is still no legal obligation to consult the Agency for Personal 
Data  Protection  on  draft  laws  that  include  provisions  on  personal  data.  The  staffing  of  the 
Agency needs to be strengthened. 

The constitutional and legal guarantees on the  freedom of thought, conscience and religion 
continued  to  be  generally  upheld.  While  religious  tolerance  was  symbolically  promoted  on 
some  well-publicised  occasions,  cases  of  discrimination  on  religious  grounds  continued  to 
occur, as well as incidents targeting religious sites. 

Freedom of expression 

There  is  some  level  of  preparation  on  freedom  of  expression.  However,  no  progress  was 
achieved in this area and no progress was made in addressing last year‘s recommendations. The 
financial stability of the public broadcasting system was not addressed.  Political pressure and 
intimidation  towards  journalists,  including  physical  and  verbal  attacks,  continued  during  the 
reporting  period,  without  appropriate  judicial  follow-up.  There  was  no attempt  to  address  the 
issue of the lack of transparency of media ownership. 

22 

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

  ensure  sufficient  protection  of  journalists  and  an  appropriate  law  enforcement  response  to 
cases of threats to journalists; 

  finalise  the  reform  of  the  public  broadcasting  system,  including  securing  the  funding  of 
public  broadcasters,  harmonising  relevant  entity  broadcasting  legislation  with  the  state-level 
law, and securing political neutrality of the steering boards; 

 adopt appropriate legislation on media ownership transparency, including for online media. 

Intimidation of journalists 

Political and financial pressure on the media continued. Cases continued to be reported, mainly 
involving  intimidation  and  threats  to  journalists,  verbal  and  physical  attacks,  hacking  of 
websites, political, institutional and economic pressure and defamation. In March, members of 
an  extremist  group  registered  in  the  Republika  Srpska  entity  and  in  Serbia,  physically  and 
verbally attacked N1 and RTV TV crews. The  Republika Srpska authorities did not condemn 
the attack in public and the  Republika Srpska police issued only two minor offence orders to 
perpetrators.  

Legislative environment 

Legal  provisions  guaranteeing  freedom  of  expression  are  in  place.  However,  political  and 
ethnic  lines  continue  to  divide  the  public  sphere  and  drive  the  development  of  legislative 
proposals in the media sector. The Republika Srpska National Assembly adopted amendments 
to the Radio and Television of Republika Srpska (RTRS) law in May. The amendments further 
distance  the  entity’s  broadcasting  legislation  from  the  state-level  law  and  disrupt  the 
functioning  of  the  three  public  service  broadcasters  within  the  public  broadcasting  system  of 
Bosnia and Herzegovina. 

Implementation of legislation/institutions 

The  political,  institutional  and  financial  independence  of  the  Communications  Regulatory 
Agency  (CRA)  continued  to  be  an issue  of  concern.  The  Council  of  Ministers  of  Bosnia  and 
Herzegovina confirmed the appointment of the acting Director of the CRA as Director of the 
regulatory  authority  in  April.  The  CRA’s  political  neutrality,  independence  and  its  public 
perception as a neutral body have yet to be ensured. The Bosnia and Herzegovina Council of 
Ministers'  decision  on  the  use  of  the  surplus  revenues  of  the  CRA  may  further  harm  the 
Agency’s financial and operational independence.  

There were shortcomings in the implementation of the freedom of access to information act, in 
particular  on  remedies  when  access  is  denied.  The  institutions  do  not  run  the  test  of  public 
interest before limiting the right to access to information, interpreting the legal provisions in a 
way that protects private rather than public interests.  

The  Central  Election  Commission  refused  to  publish  the  asset  disclosure  statements  of  the 
officials running in elections, in line with the interpretation given by the Agency for Protection 
of Personal Data. This was contrary to the Bosnia and Herzegovina election law. The Reform 
Agenda  commitment  to  start  publishing  asset  disclosure  forms  of  officials  holding  judicial 
functions has yet to be implemented. 

Public service broadcaster 

All  types  of  broadcasting  are  licensed  by  the  CRA  in  accordance  with  the  law  on 
communications  of  Bosnia  and  Herzegovina.  However,  the  independence  of  the  three  public 

23 

 
service broadcasters within the country’s public broadcasting system has yet to be ensured. The 
public broadcasters in the two entities continued to be exposed to political influence.  

In March, the Federation Parliament launched the procedure to change the law on RTV, which 
would allow the appointment of steering board members of Radio-Television of the Federation 
entity in one year without holding the CRA vacancy procedure. The Federation entity failed to 
adopt appropriate amendments to harmonise the entity’s broadcasting legislation with the state-
level law and secure depoliticised, merit-based selection and appointment of the steering board. 
Due  to  the  lack  of  a  politically  independent  steering  board,  RTV  remained  open  to  political 
influence. 

The  appointment  of  the  RTRS  steering  board  could  not  yet  be  completed  due  to  political 
disagreement in the ruling coalition at the Republika Srpska National Assembly. The steering 
board  of  RTRS  remained  politically  affiliated  and  the  entity  broadcaster  remained  under  the 
firm political control of the ruling party and with a deterioration of the RTRS editorial policy.  

Due to political obstruction, the statute of the state-level public service broadcaster Radio and 
Television of Bosnia and Herzegovina (BHRT) was not amended and the statute of the public 
broadcasting  corporation  was  not  adopted  as  provided  for  under  the  law  on  the  public 
broadcasting system of Bosnia and Herzegovina. 

Economic factors 

Transparency  of  media  ownership  has  yet  to  be  fully  achieved  and  the  accessibility  to  full 
information  is  yet  to  be  secured  due  to  problematic  legal  provisions  hampering  systematic 
insight  into  ownership  structures.  This  is  especially  problematic  for  online  media,  which  are 
often not registered as media businesses. 

The rules on government financing of the media need to be improved. The country still lacks a 
law  on  media  ownership  transparency.  Public  broadcasters  that  are  not  part  of  the  public 
broadcasting  system  are  financed  from  municipal  and  cantonal  budgets  and  remain  under 
strong political influence. Legislation addressing State aid and competition includes provisions 
that seriously hinder broadcasters’ independence and ability to operate, which harms freedom 
of expression in the country.  

At entity level, Republika Srpska has a legal possibility to fund both public and private media. 
Lack  of  transparency  and  clear  criteria  in  the  distribution  of  subsidies  are  a  serious  concern. 
Media integrity is also harmed by the advertising practices of public companies and advertising 
agencies linked to political parties. 

Professional organisations, professional conditions 

The  Bosnia  and  Herzegovina  Journalists’  Association  is  the  most  active  civil  society 
organisation in the field of freedom of expression, the freedom of the media, the protection of 
journalists and media integrity. The complaints commission of the Press Council of Bosnia and 
Herzegovina continued to work and mediate between readers and the media, making sure that 
readers' complaints are addressed by editors. 

Freedom  of  assembly  and  association  are  enshrined  in  the  constitutions  and  legislation  at 
different  levels  of  authority  in  the  country.  These  rights  were  generally  upheld.  There  is  no 
common register of political parties but 103 political parties officially registered for the 2016 
local elections. 

On  property  rights,  the  Commission  for  Real  property  Claims  of  Displaced  persons  and 
Refugees has not yet resumed operation. There are 7 ongoing administrative disputes before the 
Court of Bosnia and Herzegovina in which this Commission is a respondent party. 

24 

 
Concerning  non-discrimination  policies,  some  initial  steps  were  undertaken  at  state-level  to 
develop comprehensive human rights and anti-discrimination strategies. In August amendments 
were  adopted  to  the  Bosnia  and  Herzegovina  law  on  prohibition  of  discrimination  to  include 
age, sexual orientation, gender identity and disability as grounds for discrimination. 

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 office in the House of Peoples and the Presidency of Bosnia and Herzegovina. No 
progress was achieved in eliminating the ‘two schools under one roof’ phenomenon, which is 
in breach of the relevant ruling of the Federation Supreme Court. The common core curriculum 
is not yet applied throughout the country. 

Amendments  to  the  Federation  criminal  code  concerning  hate  crimes  were  adopted  in  April. 
The amendments provide  a definition of a  hate crime, with a  comprehensive list  of protected 
grounds  including  race,  colour,  religious  beliefs,  nationality or  ethnicity,  language,  disability, 
sex, sexual orientation and gender identity. At least 146 alleged bias-motivated incidents were 
reported  to  the  police  in  Bosnia  and  Herzegovina  in  2015.  The  number  of  reported  incidents 
decreased in comparison with the previous year. The prevailing forms of bias were nationality, 
ethnicity,  religion  and  sexual  orientation.  A  mechanism  to  collect  data  on  hate  crimes  and 
discrimination cases has still not been established. In 2015 no verdicts on hate crime charges 
were  issued  by  courts;  there  needs  to  be  consistent  judicial  follow-up  and  a  systematic  and 
comprehensive  monitoring  of  hate  crimes.  Relevant  legislation  on  hate  speech  regarding  in 
particular the elements of incitement, intention, the public nature and the contents of the crime 
still  needs  to  be  harmonized.  A  Declaration  condemning  hate  speech  was  adopted  by  the 
National Assembly of the Republika Srpska entity in October 2016. 

Legal provisions providing equality between women and men are broadly in place but their 
implementation  continues  to  be  ineffective.  Gender  impact  assessments  of  policy  and 
legislative  processes  are  not  implemented,  although  they  are  provided  for  in  legislation. 
Women are still underrepresented in politics and public life. Permanent gender equality bodies 
have not yet been established under the aegis of cantonal governments. Annual operative plans 
to implement the gender action plan were adopted in the Republika Srpska entity in December. 

Lack  of  effective  implementation  of  legislation  on  the  prevention  of  and  protection  from 
gender-based violence, in particular domestic violence, remains a concern. Relevant legislation 
is  still  not  harmonised  with  the  Istanbul  Convention  on  preventing  and  combating  violence 
against  women  and  domestic  violence.  Statistical  data  is  still  not  robust  enough  to  provide 
enough insight on how the law is implemented. A harmonised system for monitoring and data 
collection on cases of violence against women is still lacking. Entities’ domestic violence laws 
are not yet harmonised. There are no departments specialised in gender-based violence cases in 
relevant institutions, including in the police and the public sector. Access to free legal aid and 
court representation is very limited. The number of protective measures issued remained low, 
and the general system of response and support to victims needs to be improved. Existing safe 
houses  remained  in  most  cases  strongly  underfunded,  in  breach  of  existing  legislation,  with 
some having closed down as a result. 

On the rights of the child, no specific budget was allocated to implement the 2015-2018 action 
plan  for  children  adopted  last  year.  Children  with  disabilities  represent  70  %  of  the  total 
number of children placed in institutional care, which is a matter of concern. Use of foster care 
and  alternative  solutions  need  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  remained  weak,  resulting  in  few  cases  being  brought 
before the courts. Only one case was investigated by the Ombudsman’s Office in 2015. Not all 

25 

 
children in Bosnia and Herzegovina are covered by compulsory health insurance and concerns 
continued over the regression of these rights and the exclusion of marginalised groups such as 
Roma children and other social categories. 

The  legal  framework  on  juvenile  justice  is  in  place  but  requires  further  harmonisation  across 
the  country.  Appropriate  by-laws  on  protection  and  treatment  of  children  and  juveniles  in 
criminal  proceedings  are  now  in  place,  but  lack  of  capacity  still  impedes  meaningful 
implementation. The country has no strategy against juvenile offending in place. The absence 
of separate units for juveniles during pre-trial detention and in police stations across the country 
is  a  breach  of  international  standards.  The  use  of  alternative  measures  to  juvenile  detention 
needs  to  be  stepped  up,  as  detention  should  only  be  a  last  resort.  Support  to  juveniles  upon 
release  from  an  institution  is  still  insufficient,  with  only  limited  reintegration  measures 
undertaken.  The  Orašje  educational-correctional  facility  has  been  operational  since  June. 
Proceedings  in  civil  and  administrative  cases  are  still  not  conducted  in  a  child-friendly 
consistent  and  harmonised  manner  across  the  country  and  measures  for  child  victims  and 
witnesses, while in place, are not applied in a reliable way. 

The  rights  of  persons  with  disabilities  are  still  not  effectively  protected.  The  status-based 
approach continued to result in significant financial inequalities among different categories and 
detracted from the financial sustainability of social protection, making this category of people 
very vulnerable. 

On  the  rights  of  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons,  the 
Federation entity adopted amendments to its criminal code in April which include hate crimes 
on several grounds including sexual orientation and gender identity. The Republika Srpska and 
Federation  entities  adopted  in  December  and  March  respectively  annual  operational  plans 
based on the gender action plan for 2016, including also LGBTI-related measures. There have 
still been no indictments over the 2014 attack on the Merlinka Festival. Another public attack 
on  LGBTI  persons  occurred  in  March  in  Sarajevo,  leading  to  one  person  being  injured.  The 
attacks  were  not  classified  as  hate  crimes  but  as  misdemeanours.  Same-sex  couples  are 
continuously discriminated against through the legal system, which fails to provide them with 
any  of  their  social  and  economic  rights.  The  transgender  community  remained  marginalised 
and no efforts were taken to simplify the procedure of legal sex change, which would enable 
legal gender recognition without having to complete medical transition. 

Issues of labour and trade union rights are covered in section 4.1.8. 

The fragmented, overall incomplete and un-harmonised legal and institutional framework does 
not  ensure  equitable  procedural  rights  and  maintains  discrimination  in  access  to  justice. 
Without clear minimum common standards for free legal aid applicable to the various levels of 
authorities, this right continues to be upheld in an uneven way, particularly to the detriment of 
the most vulnerable groups.  

Free legal aid agencies have not yet been established in two cantons. Legislation on free legal 
aid  is  yet  to  be  adopted  at  state  and  Federation  entity  levels  and  in  two  cantons.  A 
comprehensive  transitional  justice  strategy  and  unified  legal  basis  for  a  compensation 
mechanism  for  wartime  gross  human  rights  violations  across  the  country  have  yet  to  be 
adopted. 

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. The state-
level  and  Republika  Srpska  entity  councils  of  national  minorities  are  operational  and  the 
Federation entity Council of National Minorities in Bosnia and Herzegovina was reactivated in 
March.  However,  no  progress  was  achieved  to  implement  existing  laws  due  to  the  continued 

26 

 
lack  of  coordination  between  the  state  and  the  entities.  The  state-level  strategic  platform  on 
national minorities has not yet been adopted.  

National minorities continued to have a low presence and participation in political and public 
debates  and  in  the  media.  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  and  complex  appointment  procedures  also  undermine  the  legitimacy  and 
ability of the councils to operate properly. 

The  Roma  remained  the  country’s  most  vulnerable  and  disadvantaged  minority.  The  lack  of 
reliable  data  hampers  effective  policy-making  on  this  issue.  A  more  comprehensive  and 
integrated  approach  needs  to  be  adopted  for  the  social  inclusion  of  Roma.  The  number  of 
school drop-outs  and  unemployed  Roma  remained  very high and access to  the labour  market 
remained hampered. 

Work  started  on  revising  the  2013-2016  Roma  action  plans  on  housing,  employment  and 
healthcare.  In  2015,  the  Bosnia  and  Herzegovina  Ministry  of  Human  Rights  and  Refugees 
reduced  the  budget  for  implementing  the  Roma  action  plans  on  healthcare,  employment  and 
housing from EUR 1.5 million to EUR 1 million. This reduction did not reflect lower needs due 
to an improvement of the situation on the ground.  

No progress was observed on measures to preserve and promote Romani language, culture and 
history.  The  Romani  language  was  not  offered  as  an  elective  subject  in  any  school  in  the 
country, nor was any other alternative provided for learning the language. In March, the Joint 
Human Rights Committee of the Bosnia and Herzegovina Parliamentary Assembly adopted a 
conclusion proposing 8 April as Roma Day and 5 November as Romani language Day.  

Progress  continued  on  implementing  the  Roma  action  plan  on  housing.  However,  the  Roma 
community continued to experience major difficulties in accessing healthcare services and the 
labour  market.  The  civil  registration  process  has  yet  to  be  fully  completed  with  57  people 
remaining at risk of statelessness. 

On  refugees  and  internally  displaced  persons,  some  progress  was  made  on  the  Annex  VII 
Dayton  Peace  Agreement  strategy,  in  the  areas  of  repossession  of  property  and  occupancy 
rights, reconstruction of houses and infrastructure for returnees and IDPs. However, significant 
attention is still required on damage compensation for property that cannot be returned, access 
to  healthcare  and  to  employment,  health  and  social  protection,  safety  and  demining,  and 
education.  Some  7 500  people  are  still  accommodated  in  45  collective  centres  throughout 
Bosnia and Herzegovina and continue to live in difficult conditions. 

2.5.  Regional issues and international obligations 

Implementation  of  the  Dayton/Paris  Peace  Agreement  continued.  The  Republika  Srpska 
entity Government continued to hold joint sessions with the Serbian government as part of the 
Special and Parallel Relations agreement. 

The  country’s  cooperation  with  the  International  Criminal  Tribunal  for  the  former 
Yugoslavia (ICTY) is satisfactory. The Office of the Prosecutor of the ICTY noted that, save 
for one case, the State Prosecutor's Office has taken prosecutorial decisions in all war crimes 
cases  that  had  been  transferred  to  the  jurisdiction  of  Bosnia  and  Herzegovina  before 
confirmation of an indictment (the ‘Category II’ cases). 

On  the  domestic  prosecution  of  war  crimes,  the  backlog  of  war  crimes  cases  was  further 
tackled.  The  number  of  indictments  increased  with  92  filed  indictments  against  169  suspects 
between  September  2015  and  15  August  2016.  Over  the  same  period,  courts  in  Bosnia  and 

27 

 
 
Herzegovina  confirmed  80  indictments  against  150  suspects  and  concluded  62  cases  at  first 
instance against 91 suspects.  

There  was  a  continued  positive  trend  in  the  successful  prosecution  of  war  crimes  cases 
involving  sexual  violence.  Final  convictions  amounted  to  25  cases.  A  large  number  of 
potential  cases  remain  and  more  efforts  are  required,  particularly  to  ensure  institutional 
understanding  to  improve  victims’  confidence  in  the  judicial  system  and  avoid  re-
traumatisation of victims and witnesses.  

The societal and economic stigmatisation of conflict-related sexual violence victims with low 
socioeconomic status and limited access to justice remains a matter of concern in the absence 
of  a  state-level  programme  to  improve  their  status.  Such  a  programme,  which  should  also 
include a comprehensive legal and policy framework, is yet to be adopted. Women who were 
victims of the war do not have the same status in the two entities. 

There  was  an  increase  in  the  use  of  predominantly  in-court  victim  and  witness  support. 
However,  its  long-term  sustainability  remains  at  risk  due  to  insufficient  domestic  financing. 
Judges  and  prosecutors  are  increasingly  aware  of  the  benefits  of  proper  support  structures. 
Psychological  support  to  victims  and  witnesses  before,  during  and  after  war  crimes  trials 
increased, predominantly due to international financing, but remained insufficient to cover the 
magnitude of people involved, particularly in entity courts. 

The implementation of the national war crimes strategy objectives continued, including through 
the  transfer  of  less  complex  cases  by  the  state-level  judiciary  to  other  judicial  levels  and  the 
state-level  judiciary  taking  over  the  most  complex  cases  from  other  jurisdictions.  The  initial 
deadline of 7 years to have the most complex cases solved by December 2015 was not met and 
a  new  revised  deadline  has  yet  to  be  agreed,  alongside  a  reinforcement  of  the  role  of  the 
Supervisory  Body  to  ensure  the  successful  implementation  of  the  strategy.  As  of  end-
December,  335  of  the  most  complex  cases  were  completed,  leaving  358  pending.  Some  450 
less  complex  cases  were  completed,  426  of  which  through  transfer  to  other  judicial  levels, 
while 357 remained to be completed. 

Bosnia and Herzegovina still maintains a bilateral immunity agreement with the United States, 
granting US citizens exemptions from the jurisdiction of the International Criminal Court. In 
doing  so,  it  does  not  comply  with  the  EU  common  positions  on  the  integrity  of  the  Rome 
Statute  or  with  the  related  EU  guiding  principles  on  bilateral  immunity  agreements.  The 
country needs to align with the EU position. 

Bosnia and Herzegovina, Serbia, Croatia and Montenegro continued to closely cooperate under 
the Sarajevo Declaration Process, which aims to find sustainable solutions for 74 000 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. Some progress was made on implementing the 
regional housing programme in Bosnia and Herzegovina, with a number of housing solutions 
provided. 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 remained a matter of 
concern  in  the  Western  Balkans.  The  Central  Records  on  Missing  Persons  of  Bosnia  and 
Herzegovina indicate that 6 808 people are still missing as a result of the conflict. Ascertaining 
the fate of missing persons remains vital for reconciliation and stability in the region. While the 
Missing  Persons  Institute  of  Bosnia  and  Herzegovina  is  financially  sustainable,  its  ability  to 
fulfil its mandate is impeded by political pressures. A support fund for the families of missing 
persons,  which  is  provided  for  by  the  law  on  missing  persons,  has  still  not  been  established. 

28 

 
The lack of local forensic capacity, especially in the Federation entity, continued to hamper the 
process  of  identifying  remains.  In  April,  Bosnia  and  Herzegovina  ratified  the  Protocol  on 
cooperation with Serbia in the search for the 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, CEFTA and the ‘Western Balkans Six’ initiative. In November, 
Bosnia  and  Herzegovina  successfully  concluded  its  first  6-month  Chairmanship  of  the 
Committee  of  Ministers  of  the  Council  of  Europe.  In  January,  Bosnia  and  Herzegovina  took 
over the Chairmanship of the Central European Initiative. 

The impetus given through the ‘Berlin process’ and the Western Balkan Six initiative, notably 
on  the  EU’s  connectivity  agenda,  continued  to  foster  increased  regional  cooperation.  In 
December, a prioritised list of investment projects in the transport sector was endorsed by the 
Bosnia and Herzegovina National Investment Committee. 

On  regional  judicial  cooperation,  the  Protocol  signed  between  the  Prosecutor’s  Office  of 
Bosnia and Herzegovina and the Office of the War Crimes Prosecutor of Serbia on cooperation 
in prosecution of perpetrators of war crimes, crimes against humanity and genocide continued 
to provide results, with two additional indictments for war crimes filed and further confirmed 
during the reporting period in Bosnia and Herzegovina, one indictment confirmed and a guilty 
plea  agreement  reached  in  Serbia  and  one  case  transferred  to  Serbia  from  Bosnia  and 
Herzegovina.  The  two  protocols  signed  with  the  Croatian  and  Montenegrin  Prosecutor’s 
Offices are yet to produce concrete results. 

Relations  with  Albania  remained  friendly  and  without  open  issues.  The  Albanian  President 
paid an official visit to Bosnia and Herzegovina in February. 

There  are  no  official  relations  with  Kosovo,  as  Bosnia  and  Herzegovina  does  not  recognise 
Kosovo as an independent state. Bosnia and Herzegovina maintains a strict visa regime vis-à-
vis  Kosovo.  The  Ministry  of  Foreign  Affairs  continued  issuing  individual  short-term  visas  to 
citizens  of  Kosovo  only  if  they  have  an  invitation  from  a  foreign  diplomatic  mission  or 
international organisation accredited in Bosnia and Herzegovina, or for humanitarian reasons. 
An amendment to normalise the visa procedure for all citizens of Kosovo was still pending. 

An agreement on the collocation of diplomatic and consular offices with the former Yugoslav 
Republic of Macedonia was ratified in March 2016. 

In April, the Agreement on the state border between Bosnia and Herzegovina and Montenegro 
entered into force. A Protocol on cross-border supervision was signed in December. 

Overall, relations with Serbia remained good. In November, the Council of Ministers of Bosnia 
and Herzegovina and the Serbian government held their first joint session, which was followed 
by the signing of several bilateral agreements and memoranda, including on missing persons, 
the  environment  and  telecommunications,  construction  of  the  inter-state  bridge  across  Drina 
river,  on  international  road  transport  of  passengers  and  cargo,  in  the  field  of  radiation  and 
nuclear safety. The agreements were subsequently ratified by the country’s Presidency. Bosnia 
and Herzegovina Presidency members and the Minister of Foreign Affairs visited Belgrade in 
December.  The  Serbian  Prime  Minister  took  part  in  an  investment  forum  in  Srebrenica  in 
November. 

Relations with Turkey remained good. A number of bilateral agreements were ratified, such as 
the  Agreement  on  international  carriage  of  passengers  and  goods  by  road,  the  Agreement  on 
cooperation in the area of veterinary medicine and the Agreement on cooperation in the area of 

29 

 
science  and  technology.  Bilateral  contacts  have  been  frequent,  with  the  Presidency  and  a 
delegation  of  the  Council  of  Ministers  of  Bosnia  and  Herzegovina  paying  official  visits  to 
Turkey in December and April, respectively. The Turkish Prime Minister attended the opening 
of the rebuilt Ferhadija Mosque in Banja Luka in May.  

Relations with Croatia remained good, with frequent bilateral visits. In March the Presidency 
of  Bosnia  and  Herzegovina  paid  an  official  visit  to  Croatia.  In  October,  Bosnia  and 
Herzegovina  ratified  the  Agreement  on  rights  and  obligations  for  use  of  water  from  public 
water supply systems that cut across the state border. An Agreement on European Partnership 
between the two countries was signed in May 2016. However, 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 (%) 

2014 

29 

1.1 

2015 

29 

3.0 

Unemployment rate (female; male) (%) 

31.2/25.3 

30.9/25.9 

Economic  activity  rate 
proportion  of  the  population  aged  20–64  that 
economically active (%) 

for  persons  aged  20–64: 
is 

Current account balance (% of GDP) 

Foreign direct investment (FDI) (% of GDP) 

Source: Eurostat 

59.2 

-7.5 

2.6 

59.2 

-5.6 

1.4 

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  be  seen  in  the  context  of  the  central 
importance  of  economic  governance  in  the  enlargement  process.  Each  enlargement  country 
prepares  an  Economic  Reform  Programme  (ERP)  annually,  which  sets  out  a  medium-term 
macro-fiscal  policy  framework  and  a  structural  reform  agenda  aimed  at  ensuring 
competitiveness  and  inclusive  growth.  The  ERPs  are  the  basis  for  country-specific  policy 
guidance jointly adopted by the EU and the Western Balkans and Turkey at ministerial level in 
May each year. 

3.1.   The existence of a functioning market economy 

Bosnia and Herzegovina is still at an early stage in developing a functioning market economy. 
Some  progress  has  been  made,  such  as  steps  to  modernise  labour  legislation,  improve  the 
business  environment  and  address  weaknesses  in  the  financial  sector.  However,  achieving 
stronger  and  sustainable  economic  growth  will  require  a  more  efficient  public  sector  and  a 
more dynamic private sector development. Strong and continued political support for the swift 

30 

 
 
 
 
 
implementation  of  much-needed  structural  reforms,  in  line  with  the  agreed  Reform  Agenda, 
will be key. 

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: 

→ improving the quality of public finance by enhancing the growth-friendliness of investment, 
improving the targeting of social spending, and strengthening debt management; 

→ strengthening  the  financial  sector,  by  addressing  non-performing  loans  and  enhancing 
banking sector supervision and developing a new resolution framework;  

→ improving  the  provision  and  quality  of  timely  and  exhaustive  statistics,  increasingly 
applying European and international standards.  

Economic governance   

Bosnia  and  Herzegovina  has  strengthened  its  commitment  to  market-oriented  reforms. 
Implementation  of  the  Reform  Agenda  and  other  reforms  in  view  of  complying  with  the 
economic accession criteria has made progress. In addition, the authorities agreed with the IMF 
on a 3-year reform programme in support to the Reform Agenda, and which is in force since 
September. However, chronic and time consuming disputes between the various governmental 
stakeholders  resulted  in  substantial  delays  and  have  strongly  impeded  the  effectiveness  of 
economic policy. In the 2016 Economic Reform Programme (ERP), the authorities presented, 
among others, an ambitious, back-loaded fiscal consolidation path, substantially lowering both 
revenue and expenditure. However, a particular concern is the disproportionate use of delaying 
investment in order to achieve spending reductions. Important ERP policy guidance measures 
agreed at the Economic and Financial Dialogue on 12 May 2015 have not been implemented. 

Macroeconomic stability 

P
D
G

f
o
%

60
55
50
45
40
35
30
25
20
15
10
5
0

Figure 1 Bosnia and Herzegovina GDP growth 

7,0
6,0
5,0
4,0
3,0
2,0
1,0
0,0
-1,0
-2,0
-3,0
-4,0

Economic  growth  remained 
resilient, but growth is still too 
low  to  lead  to  a  noticeable 
improvement  in  the  citizens' 
living  conditions.  In  2012,  the 
economy  contracted  by  0.9  % 
and,  as  a  result  of  heavy  flood 
damages,  output  growth  slowed 
down  to  0.3 %  in  2014.  This 
brought  average  annual  GDP 
growth over this period to 1.4 % 
only.  However,  in  2015,  output 
growth bounced back to 3 %. In 
the  first  half  of  2016,  output 
growth  was  1.7  %.Important  drivers  of  growth  were  domestic  demand,  in  particular  private 
consumption, as well as external demand. The resilience of private consumption is probably a 
result  of  stable  inflows  of  workers  remittances,  and  improving  real  disposable  income, 
benefitting  from  low  inflation  and  increasing  employment.  Domestic  and  foreign  investment 
appears to have remained subdued, reflecting a poor business environment but also concerns on 
longer-term growth perspectives. Industrial production strengthened in the second half of 2015 
and  first  half  of  2016,  partly  reflecting  stronger demand  from  abroad.  Overall,  data  since  the 

GDP per capita in purchasing power standards, EU28=100 (RHS)
GDP growth (LHS)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

31 

 
 
 
 
 
beginning  of  the  year  point  to  moderate  but  solid  economic  growth.  Still,  per  capita  GDP2 
remained at about 29 % of the EU average in 2015, only slightly up from 28 % in 2011.  

External imbalances have continued to decline, but remain substantial. In 2015, stronger 
export demand and lower prices for the import of energy and raw materials have resulted in a 
slight improvement in the country's trade and current account balances. The trade deficit shrank 
from 29.6 % in 2014 to 26.4 % in 2015, while the current account deficit dropped from 7.5 % 
of GDP in 2014 to 5.6 % in 2015. The substantial trade deficits are still primarily financed by 
inflows of transfers, such as remittances, and by service exports. Net foreign direct investment 
(FDI)  declined  from  2.6 %  of  GDP  in  2014  to  around  1.4 %  of  GDP  in  2015,  which  is  low 
when  compared  to  peer  countries.  Net  foreign  exchange  reserves  continued  to  increase, 
reaching a robust level of about 30 % of GDP in mid-2016, covering some six months' worth of 
imports.  

ERP  policy  guidance:  Develop  a  comprehensive 
strategy  to  foster  the  resolution  of  non-performing 
loans  by  banks,  including  all  relevant  stakeholders 
with  a  view  to  reducing  risks  to  financial  stability 
and  the  real  economy.  Follow-up  on  plans  to 
upgrade  the  legal  infrastructure  of  the  financial 
system  and  conduct  an  asset  quality  review  of 
smaller  banking  entities.  Establish  a  bank  lending 
and inflation expectations survey in order to better 
gauge underlying credit and price dynamics.  

Figure 2 Bosnia and Herzegovina fiscal developments 

P
D
G

f
o
%

46
45
44
43
42
41
40
39
38
37
36

3,0

2,5

2,0

1,5

1,0

0,5

0,0

P
D
G

f
o
%

2010 2011 2012 2013 2014 2015

Public debt (LHS)

Budget deficit (RHS)

ERP  policy  guidance:  Improve  the  quality  of 
public finances: Enhance the growth-friendliness of 
public spending, among others by increasing public 
investment,  and  contain  spending  for  public 
employment.  Improve 
targeting  of  social 
spending  and  establish  a  comprehensive  inventory 
of  public  sector  payment  arrears.  Furthermore, 
strengthen 
debt 
management  capacities,  in  particular  improving 

country-wide 

public 

the 

the 

2 Expressed in purchasing power standards. 

32 

 
                                                            
 
 
 
 
 
 
 
to 

cooperation and the flow of information from local 
level.  Set-up  an 
data  providers 
the  state 
enforceable 
instil 
to 
discipline at all levels of government. 

Monetary  policy  has  remained  in 
the  country's  policy 
line  with 
challenges.  The 
currency  board 
arrangement  with  the  euro  as  anchor 
and 
currency  was  maintained 
continues  to  enjoy  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.  

rules-based 

framework 

The overall price level continued to decline, although at a slower pace. In the first eight months 
of 2016, the overall level of consumer prices was 1.3 % lower than a year before. The drop in 
the price level was mainly driven by a limited number of commodity groups, such as transport, 
while  prices for housing, health  and education rose by some 1-2 %.  Important  factors  for the 
low domestic inflation were lower prices for imported commodities, such as energy and basic 
commodities and the stable exchange rate towards the Euro.  

The general government accounts were close to balance in 2015, although the quality of 
fiscal  governance  remained  low.  Preliminary  data  point  to  a  slight  surplus  in  the  overall 
public sector accounts of some 0.7 % of GDP in 2015, compared to a deficit of 2.0 % the year 
before. This substantial fiscal adjustment of 2.7 percentage points of GDP appears to have been 
primarily  the  result  of  delayed  investment  spending  and  a  maintaining  spending  on  public 
sector  wages  at  pre-year  level.  As  a  result,  public  spending  dropped  from  45.8  %  of  GDP  in 
2014  to  43.2  %  in  2015.  2  percentage  points  of  this  drop  in  spending  came  for  lower 
investment,  declining  as  a  percentage  of  GDP  from  4.1  %  in  2014  to  2.0  %  in  2015.  An 
important  factor  for  the  sharp  decline  in  spending  has  been  the  difficulty  in  accessing 
international capital markets. Total revenues of the public sector declined slightly, from 43.8 % 
of GDP in 2014 to at 43.2 % in 2015. However, both, the spending and the revenue ratios are 
still rather high when compared to peer countries. Despite ongoing preparations to improve the 
targeting  of  social  spending  and  to  reduce  payment  arrears,  the  quality  of  public  spending  is 
still very low. 

The increase in public debt slowed down in the first half of 2016. General government debt 
has steadily increased in recent years, reaching 41.9 % of GDP by the end of 2015. However, 
during  the  first  half  of  2016,  the  increase  in  debt  decelerated,  partly  reflecting  difficulties  in 
accessing foreign capital markets.  Debt service payments in 2015 increased to 0.8 % 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 Stand-by Arrangement. 

The  macroeconomic  policy  mix  is  largely  appropriate.  The  approach  of  maintaining  an 
euro-based  currency  board  arrangement  and  low  fiscal  deficits  has  supported  confidence  and 
avoided  the  build-up  of  major  macroeconomic  imbalances.    However,  the  implementation  of 
fiscal policy has  not  devoted sufficient  attention to  improving the quality of public spending, 
for example through a better targeting of social transfers and stronger public investment, which 
would increase the country's growth potential in the medium-term. 

Functioning of product markets 

Business environment  

ERP  policy  guidance:  Introduce  e-payment 
services  on  taxation  and  fully  implement  the 
law  on  electronic  signature  in  order  to 

33 

 
increase  transparency  and  reduce  space  for 
tax  evasion,  corruption  and 
regulatory 
complexity.  

The  legal  framework  concerning  market 
entry  and  exit  has  improved,  although 
actual  barriers  to  entering  and  leaving 
product  markets  are 
still  high.  The 
Federation entity adopted a new company law and both entities have started to improve their 
bankruptcy  legislation,  in  particular  with  a  view  to  simplify  and  accelerate  procedures. 
However, there is still much to be done to align with international standards. Registration costs 
have  been  marginally  reduced.  However,  overall,  the  number  and  duration  of  required 
procedures for entering or leaving the product market are still high and constitute a competitive 
disadvantage for the country.  

The rule of law and the functioning of the judiciary are still crucial issues. Property rights 
are not yet fully established, as in some areas the coverage of real estate registration is still low. 
Regulatory  and  supervisory  institutions  often  lack  necessary  resources  and  independence.  In 
particular,  financial  sector  supervision  suffers  from  fragmentation  and  a  lack  of  competences 
and  resources.  The  country's  international 
ranking  in  terms  of  business  environment  is 
very low.  

ERP policy guidance: Improve the provision 
of  timely  and  exhaustive  statistics,  applying 
European  and 
in 
particular  in  the  area  of  population  statistics, 
national  accounts  and  government  finance 
statistics. 
the 
provision  of  data  from  data  providers  to 
producers of official statistics.  

The informal economy is estimated at 30-
50  %  of  GDP  and  plays  a  central  role, 
providing  (unregistered)  jobs  and  income 
but  also  distorting  competition  and 
eroding  the  base  for  taxation  and  social 
security contributions. As a result, rates for 
taxes and social security contributions are higher than would be necessary otherwise. This leads 
to a significant tax wedge on labour, which in turn impedes the creation of formal employment 
and has a negative impact on the country's international competitiveness.  

international  standards, 

Furthermore, 

strengthen 

Strengthening the rule of law, simplifying contract enforcement procedures and fighting 
corruption remain essential. Although a few steps have been taken to improve the legal rules 
governing  business,  the  situation  remains  problematic.  The  country's  administrative  and 
judiciary capacities are limited, especially on settling commercial disputes, which often are still 
not  discussed  in  commercial,  but  civil  courts.  The  enforcement  of  commercial  contracts 
remains cumbersome: When measuring the number of procedures, the necessary time and the 
involved costs, no significant improvement appears to have taken place during the last 10 years, 
requiring  37  different  procedures,  taking  on  average  595  days  and  costing  34 %  of  the  claim 
value.  

State influence on the product market 

Direct state influence on the economy has remained significant, with public sector spending 
accounting  for  more  than  40 %  of  GDP,  generating  about  22 %  of  the  country's  value  added 
and  employing  about  26 %  of  the  country's  labour  force.  In  the  Federation  entity,  the  role  of 
state appears to be significantly higher than in Republika Srpska, reflecting the more complex 
administrative structures but also the fact that privatisation of state-owned companies is still at 
an early stage.  

State  subsidies  and  guarantees  are  still  significant  and  constitute  a  heavy  burden  on 
public finances. According to available data, public sector subsidies to industry and agriculture 
account for some 1.3 % of GDP. Together with loan guarantees provided by the Entities to non-
viable  public  enterprises  this  represents  a  significant  cost  and  in  particular  a  substantial 
contingent liability, impeding the predictability of public spending.  

34 

 
Privatisation and restructuring 

The privatisation process in the Federation entity started in 1999 but continued to suffer from 
delays  despite  the  adoption  of  privatisation  strategies  in  2014  and  2015.  Attempts  to  sell  14 
earmarked  companies  were  largely  unsuccessful,  so  far.  This  leaves  the  assets  still  to  be 
privatised  at  two-thirds  of  the  initial  stock  of  state-owned  capital  for  privatisation.  The 
Federation entity has made some progress in preparing privatisation projects. In the Republika 
Srpska entity the privatisation of state-owned companies is more advanced. However, progress 
in  selling  or  liquidating  remaining  assets  has  been  limited.  Overall,  strategic  sectors  such  as 
transport,  energy  (and  telecom  in  the  Federation  entity)  are  still  dominated  by  state-owned 
companies.  Proceeding  with  privatisation  would  stimulate  competition  in  those  sectors  and 
relieve public finances from a recurring burden. 

Functioning of financial markets 

Financial stability 

Banking  sector  supervision  and  resolution  suffer  from  fragmentation  and  insufficient 
data sharing among relevant stake holders. The central bank's analytical capacities are still 
not  sufficient.  The  sector's  overall  capital  endowment  with  respect  to  its  risk,  the  so-called 
capital  adequacy  ratio,  recovered  to  15.8 %  by  mid-2016.  On  country  level  this  is  above  the 
regulatory  minimum  of  12 %.  However,  in  some  cases,  weak  capital  endowment  and 
insufficient surveillance are an issue. Banking sector profitability has been low, but improved 
in mid-2016. Credit risk indicators for the banking system have been improving slightly: Ratios 
of non-performing loans (NPLs) were close to 12 % in mid-2016, which is lower than in many 
peer  countries  but  still  high  in  terms  of  credit  risks.  Interest  rate  spreads  have  remained  at  a 
rather high level, at some 4.5 percentage points for corporate loans and at above 6 percentage 
points for household loans. Although spreads for household loans have declined during the last 
months,  such  high  differences  point  to  weaknesses  in  the  sector's  efficiency.  Legislative 
changes to facilitate loan restructuring and NPL solutions are still insufficient.  

Access to finance  

Bank  lending  to  the  private  sector  has  remained  low,  in  particular  loan  provisioning  to 
corporations.  The  share  of  bank  lending  to  GDP  is  low,  accounting  for  59 %  by  end-2015. 
Furthermore,  credit  lending  has  been  growing  at  a  low  rate,  largely  due  to  weak  lending  to 
private  corporations.  The  financial  system  continues  to  be  dominated  by  the  banking  sector, 
which accounted for 87 % of total financial assets. The number of banks is high in relation to 
the  available  market  size,  although  it  has  declined  to  25  after  the  licences  of  two  small  local 
banks have been withdrawn and two smaller banks have merged. The sector is dominated by a 
few larger banks, while the size of the remaining banks is rather small. The share of foreign-
owned assets in the banking sector increased to over 90 %, which is high but in line with peer 
countries. Only two majority state-owned banks remain, of which one is a development bank, 
which is in the process of liquidation. Both together account for less than 3 % of the sector's 
assets. The size of capital markets in relation to GDP is limited, with a value of capital market 
assets  accounting  for  about  33 %  of  GDP.  The  size  of  the  non-banking  sector,  mainly 
investment funds and insurance companies, increased slightly, with the sector's assets reaching 
13 % of GDP by end-2015. However, this is still markedly below pre-crisis levels. 

Functioning of the labour market 

35 

 
Figure 3 Unemployment in Bosnia and Herzegovina  (% 
of Active population) 
70,0

Figure  4  Participation  rates  in  Bosnia  and  Herzegovina 
(% of Labour Force) 

60,0

50,0

40,0

30,0

20,0

10,0

0,0

80,0

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Unemployment rate

Youth unemployment rate

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Women

Men

Reduce 

unemployed. 

labour  market  policies 

ERP  policy  guidance:  Reinforce 
the 
capacities  of  the  employment  services  and 
target  active 
in 
particular  to  vulnerable  youth,  women  and 
long-term 
the 
unsupportive tax wedge and disincentives for 
the  unemployed  and  inactive  persons  to  take 
up  formal  work.  Improve  the  co-operation 
between  the  education  system  and  labour 
market institutions. 

Substantial  and  persistent  labour  market  imbalances  point  to  a  poor  functioning  of  the 
labour  market's  allocation  mechanism, 
alongside  issues  related  to  education  and 
training.  Unemployment  rates  have  declined 
in  recent  months.  However,  the  level  of 
unemployment  is  still  high.  In  terms  of 
registered  unemployment,  the  rate  decreased 
from 43.6 % in 2014 to 42.9 % in 2015, while 
results  from  the  annual  labour  force  survey 
(using  ILO  methodology,  which  accounts  for 
undeclared  work)  point 
in 
unemployment, from 27.7 % in April 2015 to 
25.4 % in April 2016. This decline in the rate 
is  mainly  a  result  of  increased  employment,  while  the  number  of  unemployed  has  remained 
unchanged. The significant and persistent  difference between the registered and survey-based 
labour  figures  indicates  a  fairly  large  informal  labour  market.  At  the  same  time,  activity  and 
employment  rates  remained  at  strikingly  low  levels  of  44.1 %  and  31.9  %  respectively. 
Employment  in  the  public  sector  continued  to  account  for  a  large  proportion  of  employment 
(31.2 % in 2015). The high proportion of long-term unemployment, accounting for some 85 % 
of  job-seekers  reflects  a  high  structural  component  in  unemployment.  The  high  youth 
unemployment figure dropped slightly, from 62.7 % in 2014 to 62.3 % in 2015. Furthermore, 
persistent  and  large  differences  between  female  and  male  participation  rates  (32.1  %  and 
54.9 % in 2016) suggest that labour market conditions remain adverse for women.  

to  a  decline 

3.2.  The capacity to  cope with competitive pressures and market  forces  within 
the Union 

Being competitive in the EU also requires the existence of a functioning market economy. 

Bosnia and Herzegovina is at an early stage in achieving the capacity to cope with competitive 
pressures  and  market  forces  within  the  Union.  For  the  time  being,  the  limited  progress  in 
proceeding  with  the  reform  agenda  measures  has  not  yet  translated  into  noticeable 
improvements in the country's competitiveness. The overall level of education and spending on 
research and development are low. The quality of the country's physical capital is eroded and 
transport  and  energy  infrastructure  are  insufficiently  developed.  The  speed  of  structural 
adjustment and further trade integration are slow. 

36 

 
 
 
 
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: 

→ improving  the  efficiency  of  public  investment,  in  particular  with  respect  to  infrastructure 
investment;  

→ increasing the country's attractiveness for foreign and domestic investment by, for example, 
accelerating improvements in the business environment and price competitiveness; 

→ improving the quality of education and training. 

Education and innovation  

The  overall  level  of  education  is  low,  as  is  spending  on  education  and  research  and 
development.  Investment  in  research  and  development  has  remained  at  low  levels  in  recent 
years at a marginal 0.3 % of GDP, resulting – among others - in a low percentage of research 
and  development  personnel  in  the  workforce  (of  0.1  %).  This  is  below  the  regional  average. 
Public sector spending on education is relatively high at some 5 % of GDP, but the resulting 
output is one of the weakest in the region. This is probably directly linked to the complex and 
highly fragmented education system, with competences split at entity level, and in the case of 
the  Federation  entity  even  at  cantonal  level.  This  fragmentation  together  with  a  lack  of 
coordination impedes the efficient and coordinated use of scarce public funds and results in a 
lack  of  common  standards  for  various  levels  of  education,  as  well  as  in  teacher  training  and 
performance  evaluation.  Participation  in  pre-school  education  increased  slightly  compared  to 
2014  but  the  enrolment  rate  still  remains  very  low  at  15  %.  Enrolment  rates  for  tertiary 
education  are  also  low  at  around  47  %,  and  are  -  despite  an  upward  trend  -  far  below  the 
regional  average.  Completion  rates  in  higher  education  are  also  low,  averaging  at  45  %, 
implying a high degree of internal inefficiency. The country's illiteracy rate of 2.8 % is one of 
the highest in the region. A wide skills mismatch is an important impediment for graduates to 
enter  the  labour  market.  As  pointed  out  in  a  recent  EU  funded  study,  both  employers  and 
graduates believe that the education institutions do not equip students with key soft skills, such 
as  problem  solving,  organisational,  decision-making,  foreign  languages,  etc.,  which  are 
important  for  employability.  The  educational  provision  in  vocational  education  and  training 
(VET) does not function well as most VET graduates do not find employment and subsequently 
enter higher education.  

Physical capital and quality of infrastructure 

The  quality  of  the  country's  physical  capital  endowment  has  remained  low.  Private 
investment, in particular foreign direct investment, and public investment have remained below 
their long-term averages, with a 5-year average of 17.5 % of GDP, compared to an average of 
20 % during a longer term. In particular, public investment was less than 4 % in 2015. Net FDI 
inflows  dropped  from  2.6 %  in  2014  to  1.4 %  in  2015.  In  view  of  the  need  to  accelerate  the 
country's  catching-up  process,  this  low  investment  performance  is  clearly  insufficient  and  a 
serious  reason  of  concern.  Despite  political  commitments  from  the  authorities  to  raise 
investment,  public  investment  usually  is  a  victim  of  budgetary  constraints  while  private 
investment is impeded by slow progress in improving the business environment.  

ERP  policy  guidance:  Set  up  a  common 
economic  space  and  systematic  coordination 
mechanisms  between  all  government  levels. 
Adopt  a  country-wide  transport  strategy  and  a 
country-wide  energy  sector  reform  strategy  in 
compliance with the country's obligations under 

37 

 
the Energy Community Treaty. 

Transport  and  energy  infrastructures 
are insufficiently developed. The lack of 
coordination and cooperation between government levels to set up properly-functioning energy 
and  transport  markets  and  a  single  or  harmonised  legal  and  regulatory  framework  blocks  the 
required significant upgrades and the considerable growth opportunities in these sectors. At the 
same  time,  the  markets  for  electricity  and  gas  remain  fragmented  and  dominated  by  key 
incumbent companies.  

The digitalisation of the economy is relatively low. The overall fixed broadband penetration 
rate  increased  to  17  %.  The  telecommunications  sector  policy  has  not  been  adopted  by  the 
Council of Ministers, blocking potential new entrants’ market access. Bosnia and Herzegovina 
remains the only country in the region without a broadband strategy.  

Sectoral and enterprise structures 

The  structure  of  the  economy  has  remained  largely  unchanged.  The  agricultural  sector 
accounts for a relatively high 7 % of GDP and 17 % of employment, reflecting the many small, 
fragmented and inefficient farm plots. Industry (incl. construction) provides a relatively high 26 
%  of  GDP  and  30  %  of  employment.  The  service  sector  is  the  largest  sector  in  terms  of 
employment and value generation. However, this reflects to a large extent the dominant size of 
the  public  sector  and  the  important  role  of  the  trading  sector.  There  seems  to  have  been 
remarkably little change in the sectoral structure of the economy. However, lack of information 
on the informal sector might mask important changes.  

Small enterprises are a crucial part of the economy. The latest Statistical Business Register 
indicates that the majority of enterprises, namely 75 % of all enterprises are micro-enterprises 
with less than 10 employees, while small enterprises, with 10-49 employees, represent 18 % of 
all  companies.  Large  companies  with  more  than  250  employees  account  for  only  1 %  of 
enterprises. Micro- and small enterprises are mainly active in trade and to a smaller extent in 
manufacturing.  Overall,  companies  with  less  than  50  employees  account  for  93  %  of  all 
companies. Access of small, micro and start-up enterprises to bank lending is difficult, partly 
due  to  inefficient  credit  guarantee  schemes.  SME  support  schemes  are  in  place  but  their 
implementation is very cumbersome.  

Economic integration with the EU and price competitiveness 

80

120

100

60,0

70,0

20,0

50,0

30,0

80,0

40,0

Figure 5 Bosnia and Herzegovina trade integration with the EU 

Trade integration with the EU is 
high,  with  more  than  70 %  of 
exports  directed  towards  the 
EU-28.  During  the  first  8  months 
of  2016,  72.2 %  of  total  exports 
were sent to the EU-28. However, 
the regional trade structure is very 
concentrated, as more than half of 
total exports were directed to only 
3 countries, to Germany, Italy and 
Croatia.  Compared  to  the  same 
period a year before, the EU share 
dropped  slightly,  mainly  due  to 
strong  export  growth  to  non-EU 
countries,  such  as  Turkey.  The 
main  export  products  are  processed  commodities  and  raw  materials.  Overall,  the  country's 
openness to trade is relatively low when taking into account its economic size, with exports and 

Share of Imports from EU
Share of exports to EU
Trade with the EU (2008=100) (RHS)

2007

2012

2006

2011

2009

2008

2013

2010

10,0

0,0

20

60

40

0

38 

 
 
imports  accounting  for some  90 %  of  GDP.  Furthermore,  the  range  of  export  commodities is 
not very sophisticated. These two factors point to a limited competitiveness of the economy. 

The  EU  is  a  major  investor  in  Bosnia  and  Herzegovina,  accounting  for  65 %  of  total  FDI 
stocks, with Austria and Slovenia accounting for the largest shares. Non-tariff barriers to trade 
with  the  EU,  such  as  required  sanitary  standards,  remain  a  significant  problem  and  demand 
structural and regulatory reforms.  

Price competitiveness deteriorated in terms of unit labour costs. The country's currency board 
regime, with the Euro as its anchor, also resulted in a deterioration of Bosnia and Herzegovina's 
nominal price competitiveness, as the Bosnian currency appreciated against many currencies of 
important trading partners, such as the US, Turkey and Russia. However, due to the persistently 
low inflation, the real effective exchange rate depreciated slightly, counteracting to some extent 
the negative development on the country's price competitiveness.  

4. 

EUROPEAN STANDARDS 

4.1.  Internal market    

4.1.1. Free movement of goods 

The  free  movement  of  goods  ensures  that  many  products  can  be  traded  freely  across  the  EU 
based on common rules and procedures. Where products are governed by national rules, the 
principle of free movement of goods prevents these from creating unjustified barriers to trade. 

Bosnia and Herzegovina is at an early stage of preparation for the free movement of goods. No 
progress was made in this area over the past year. Major steps need to be taken to achieve a 
fully-functioning system to ensure the free movement of goods. 

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

→ further improve coordination between the relevant institutions; 

→  establish  a  register  of  technical  regulations  in  force,  and  start  to  repeal  country-wide  the 
domestic legislation that conflicts with European standards; 

→ adopt a coordinated country-wide strategy for quality infrastructure.  

General principles 

Regarding  the  general  principles,  the  framework  for  the  free  movement  of  goods  is  not  in 
place. Bosnia and Herzegovina has no coherent and country-wide approach, nor a strategy or 
action plan for aligning to the relevant acquis. Import licences or permits for certain products 
remain in place in Bosnia and Herzegovina which could potentially restrict the free movement 
of goods. No steps were taken to comply with Stabilisation and Association Agreement (SAA) 
commitments or to repeal conflicting regulations at all levels. 

Non-harmonised area 

No plans or steps have been undertaken to ensure that legislation and administrative practices 
are in compliance with Articles 34-36 of the Treaty on the Functioning of the European Union 
(TFEU).  As  yet  no  specific  body  has  been  established  or  empowered  with  regards  to  the 
obligation to notify regulations. 

Harmonised area: Quality infrastructure 

39 

 
 
 
 
 
 
institutions  for  standardisation,  metrology, 
Bosnia  and  Herzegovina  has  established 
accreditation  and  market  surveillance.  The  legislative  framework  remains  to  be  fully  aligned 
with  the  acquis.  Administrative  structures  have  been  set  up  that  operate  as  independent 
administrative bodies of the BiH Council of Ministers or as state-level coordination bodies of 
the  entity  and  Brčko  District  inspectorates.  However,  there  is  no  country-wide  strategy  for 
quality  infrastructure  and  cross-cutting  coordination  between  the  relevant  institutions  at 
different levels of government is not ensured. 

The  Institute  for  Standardisation of  Bosnia  and  Herzegovina  (BAS) is  a  full  member  of  the 
European  Telecommunications  Standards  Institute  (ETSI)  and  an  affiliate  member  of  the 
European  Committee  for  Standardisation  (CEN)  and  of  the  European  Committee  for 
Electrotechnical  Standardisation  (CENELEC).  BAS  has  adopted.1223  European  standards 
(ENs)  as  national  standards, bringing the total to  17 768 ENs - 85 %  of the ENs required for 
membership  of  CEN  and  CENELEC.  These  ENs  are  all  adopted  only  by  the  ‘cover  page’ 
method, whereby the national standards body adopts ENs in an EU language version with only 
a  cover  page  in  the  national  language(s).  Conflicting  ex-Yugoslav  mandatory  standards  have 
still not been withdrawn and there is still no register of legislation in force. BAS increased its 
staff to 40 employees of the 50 envisaged by the rulebook. The appointment of the members of 
the Standardisation Council is still pending. 

The  single  national  accreditation  body  is  the  BiH  Institute  for  Accreditation  (BATA),  a  full 
member  of 
the  European 
the  International  Organisation  for  Standardisation  (ISO), 
Telecommunications Standards Institute (ETSI) and the International Laboratory Accreditation 
Cooperation  (ILAC)  and  an  associate  of  the  European  cooperation  for  Accreditation  (EA). 
There  are  92  conformity  assessment  bodies  in  Bosnia  and  Herzegovina:  60  testing 
laboratories,  1  medical  and  9  calibration  laboratories,  1  product  certification  body  and  23 
inspection  bodies.  There  is  no  national  conformity  assessment  body  accreditation  plan.  The 
authorisation  of  conformity  assessment  bodies  and  the  application  of  conformity  assessment 
procedures throughout the country is not ensured, as the Republika Srpska entity continues to 
implement its own legislation separately.  

The  Institute  of  Metrology  of  Bosnia  and  Herzegovina  participates  in  technical  committees, 
European development programmes and cooperation projects with EU metrology institutes. In 
February  2016,  the  Republika  Srpska  entity  adopted  a  new  law  on  metrology  and  the 
Federation  entity  adopted  amendments  to  the  Federation  law  on  metrology  which  aim  at 
aligning  with  the  relevant  EU  acquis.  Cooperation  and  coordination  with  the  metrology 
institutes  of  the  entities  needs  further  improvement  and  a  country-wide  development  strategy 
remains  to  be  adopted.  The  appointment  of  the  members  of  the  Metrology  Council  has  been 
pending for over 3 years. 

The Market Surveillance Agency and the inspection bodies of the entities and Brčko District 
over  the  reporting  period  implemented  23  projects  as  part  of  proactive  surveillance,  and  18 
cases  were  initiated  on  reactive  surveillance.  As  a  result  of  86  product  safety  inspections, 
1 031  unsafe  products  were  withdrawn  from  the  market  and  destroyed,  and  businesses  have 
harmonised  37 741products  with  safety  requirements.  Coordination  and  cooperation  between 
the agency and  inspections in  the entities and the Brčko District  continue to  develop through 
the  work  of  the  coordination  board,  but  further  improvement  is  needed.  The  market 
surveillance system remains largely based on mandatory standards and pre-market control. Full 
alignment of the law on market surveillance with the acquis has not yet been achieved. 

Harmonised area: sectoral legislation. 

There  are  no  developments  on  the ‘New  and  Global  Approach’  or  Old  Approach  product 
legislation, or on procedural measures. The application of legislation throughout the country 

40 

 
is  not  assured,  as  the  legislative  framework  remains  fragmented  and  the  Republika  Srpska 
entity  continues  to  implement  its  legislation  separately.  Prioritisation  of  legal  alignment  in 
accordance  with  market  needs  remains  to  be  ensured.  The  division  of  competences  between 
administrative  levels  on  procedural  measures  remains  unclear.  Bosnia  and  Herzegovina 
should  align  with  EU  REACH  legislation  and  continue  strengthening  the  administrative 
capacities necessary for an effective implementation of REACH. 

On  medical  products  pricing,  conditions  for  the  refusal  of  products  to  be  added  to  the 
reimbursement list are designed to be aligned with the EU acquis. Economic operators involved 
with civil explosives are subject to registration at entity and state level and are required to keep 
track  of  sales.  However,  Bosnia  and  Herzegovina  lacks  a comprehensive  legal  framework  on 
the  transport  of  dangerous  goods;  norms  are  not  harmonised  across  the  entities,  with 
international  agreements  or  with  the  EU  acquis.  Smuggling  of  explosives  is  only  countered 
through  border  checks  and  random  traffic  controls.  National  legislation  applies  general  good 
laboratory  practice  requirements  to  veterinary  medical  products,  pesticides,  food  additives, 
feed additives and biocides. Accreditation in relevant standards is required for laboratories for 
food and feed controls. Regulation of fertilisers is designed to be aligned with the EU acquis. 
The BiH Agency for Drugs and Medical Devices remains understaffed. 

4.1.2. Movement of persons, services and right of establishment 

Bosnia  and  Herzegovina  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  still  needs  to  be 
established. 

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

→ ensure that entity-level legislation fully incorporates the recommendations of the Insurance 
Agency  of  Bosnia  and  Herzegovina  before  adoption,  thus  strengthening  the  agency’s  role  in 
coordinating legal harmonisation and alignment with the EU acquis; 

→ adopt new banking legislation including a bank resolution framework; 

→ adopt legislation further aligning with the latest EU acquis on accounting and auditing. 

The  movement  of  persons  and  the  mobility  of  the  labour  force  within  the  country  remain  a 
concern. New labour laws were adopted in the Republika Srpska entity in December and in the 
Federation entity in April 2016 as well as the related implementing legislation. The absence of 
harmonisation in  employment legislation,  employment-based rights  and other  related taxation 
issues effectively prevent mobility inside the country. 

(see also 4.1.8. — employment and social policies, public health policy). 

On the  right  of  establishment,  in  February  the  Republika Srpska entity amended  the law on 
Registration  of  Business  Entities  to  introduce  more  efficient  and  less  costly  own-initiative 
liquidation  procedures  for  legal  entities  that  have  not  harmonised  their  establishment  form  in 
line with the company law. 

On  freedom  to  provide  services,  16  postal  service  providers  —  3  public  and  13  private  — 
have been licensed by the Bosnia and Herzegovina Agency for Postal Traffic. The decision on 
the costs of issuing licences and the fees for providing postal services, which sets the costs of 
licences for both public and private operators as a fixed percentage of their respective revenues, 
is now in force and being implemented. However, there is still no state-level strategy for postal 
services  and  no  state-level  law  on  postal  services  to  ensure  a  consistent  and  acquis-aligned 
regulatory framework and a reserved area remains in place. The lack of harmonisation between 

41 

 
 
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. The Agency for 
Postal Traffic continued implementing the amended rulebook on licensing postal services. 

On  the  mutual  recognition  of  professional  qualifications,  a  roadmap  for  implementing  the 
EU  acquis  on  regulated  professions  was  adopted  in  December  2015.  This  sets  out  the 
obligations  of  relevant  authorities  involved  in  implementing  the  acquis  for  doctors,  dentists, 
pharmacists,  nurses,  midwifes,  veterinary  surgeons  and  architects. 
It  also  makes 
recommendations for negotiations with the EU and participation in the relevant EU bodies 

On financial services, in February the Federation entity adopted the law on factoring, aimed at 
providing  SMEs  with  additional  financing  options  beyond  bank  loans.  Banking  agencies  in 
cooperation  with  the  Central  Bank  carries  out  stress  tests  on  a  quarterly  basis,  as  a  result  of 
which in the baseline scenario 4 out of 25 banks were identified as potentially undercapitalised 
by end-2016. Overall, the banking system was assessed as adequately capitalised. Following a 
failure  to  meet  the  regulatory  requirements,  the  Republika  Srpska  entity  liquidated  a  state-
owned bank, and payment of insured deposits began in May. 

In  the  Federation  entity  the  Ombudsman  for  financial  services  is  now  operational,  and  the 
implementing legislation governing its work has been adopted. 

Bosnia  and  Herzegovina  continued  its  efforts  to  create  a  single  economic  area  for  insurance 
services  within  the  country.  The  Insurance  Agency  of  Bosnia  and  Herzegovina  made 
recommendations  on  draft  entity-level  laws  to  ensure  equal  conditions  across  the  country  for 
insurance companies and clients. The Republika Srpska entity adopted a new law on third party 
motor  vehicle  insurance.  The  Federation  entity  adopted  amendments  to  the  law  on 
intermediation  in  private  insurance  aiming  at  a  gradual  and  phased  liberalisation  of  the 
premium  system  throughout  the  country.  Both  entities  adopted  rulebooks  on  insurance 
supervision in September 2015. The entities adopted decisions on insurance company reserves, 
on  the  voting  members  in  the  protection  fund  assembly  and  rulebooks  on  Ombudsman 
procedures. 

On  capital  markets,  in  October  2015  the  Republika  Srpska  entity  amended  the  law  on 
investment  funds  which  aims  at  providing  more  legal  certainty  to,  and  supporting  further 
development of, investment funds. However, the entities’ legislative frameworks remain to be 
further aligned with the EU acquis. Securities market participants with their head office in one 
entity still need to obtain a licence to operate in the other entity. 

The  Federation  entity  adopted  a  new  company  law  in  October  (applicable  from  December) 
which aims at simplifying the establishment and functioning of businesses, including affiliated 
companies, and providing a clearer definition of the role of management structures.  

Concerning  corporate  accounting  and  auditing,  in  October  the  Republika  Srpska  entity 
adopted the law on accounting and auditing aimed at further aligning with the latest acquis on 
annual and consolidated financial statements and statutory audit. The Federation entity has yet 
to further align with the acquis in this area. The smooth operation of the Committee for Public 
Oversight of the Chamber of Auditors of the Federation entity needs to be ensured by adopting 
its financial plans and providing adequate financial resources in the budget. 

4.1.3. Free movement of capital 

Bosnia  and  Herzegovina  remains  moderately  prepared  in  the  area  of  free  movement  of 
capital.  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. 

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

42 

 
 
  improve  coordination  in  designing  and  implementing  legal  reforms  in  the  area  of  foreign 
direct investment; 

→  address  the  remaining  shortcomings  on  anti-money  laundering,  particularly  by  resolutely 
implementing the action plan on this issue. 

As  regards  movement  of  capital,  Bosnia  and  Herzegovina  has  continued  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  direct  investment,  there  remains  a  lack  of  coordination  across  the  country  in 
designing  and  implementing  legal  reforms.  However,  the  Federation  entity  adopted  a  law  on 
foreign investment which entered into force in September 2015 and which matches similar laws 
both at state level and in the Republika Srpska entity. Restrictions on foreign direct investment 
continue to apply in the media sector, where a 49 % limit on foreign-owned capital remains in 
place. 

The  country's  small  and  fragmented  capital  markets  continue  to  suffer  from  challenging 
economic  conditions  and  operate  at  relatively  low  levels.  At  the  same  time,  the  securities 
market  remained  dominant  in  terms  of  capital  market  growth  since  both  entities  nevertheless 
continued to secure both short-term and long-term financing through local capital markets. 

Bosnia  and  Herzegovina  has  a  payments'  clearing  system  and  real-time  gross  settlement 
operations within the Central Bank. In 2015, the value of transactions in these two categories 
increased by 5.2 % from 2014. 

According to the Financial Action Task Force (FATF) Bosnia and Herzegovina remains a high-
risk country with strategic deficiencies in anti-money laundering/countering the financing of 
terrorism.  The  country  provided  a  written  high-level  political  commitment  to  address  the 
identified deficiencies and developed an action plan with FATF.  

Bosnia and Herzegovina also continued to implement the action plan on removing deficiencies 
in  its  anti-money  laundering  system.  Amendments  to  the  law  on  the  prevention  of  money 
laundering and terrorism financing were adopted in June 2016. In the same month, amendments 
to the criminal code of the Federation entity entered into force, changing  the definition of the 
crime  of  money  laundering  and  financing  of  terrorist  activities.  However,  not  all  the 
supervisory bodies established by the law have so far begun operation.  

Bosnia  and  Herzegovina  needs  to  complete  the  measures  in  the  action  plan  without  delay, 
particularly on the registration and financial reporting of the non-governmental sector. 

4.1.4. Customs and taxation  

Bosnia and Herzegovina is moderately prepared on customs and taxation. No progress was 
made in these areas. The customs policy law has not been implemented, and VAT and excise 
legislation remain to be aligned with the EU acquis. 

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  the  Indirect  Taxation  Authority  (ITA)  and  the  tax 
administrations of the entities, including through joint audits; 

 amend the law on excises and align it with the EU acquis. 

43 

 
 
The  new  customs  policy  law  has  not  been  implemented  in  areas  where  the  adoption  of 
implementing rules remains pending. The new law provides for additional simplified customs 
procedures, but these require usage of the electronic signature. The law on electronic signature 
in Bosnia and Herzegovina has been in force since 2006; however, the institutional framework 
necessary for the secure and successful implementation of the law is still not in place. 

Bosnia  and  Herzegovina  remained  an  observer in  the  Common  Transit  Convention.  The  ITA 
continued to develop an IT application for the New Computerised Transit System for national 
use. However, the system cannot be used until the issue relating to the electronic signature has 
been solved. 

A new rulebook on controls of indirect taxes and the post-clearance audit manual remain to be 
adopted.  Registration  and  follow-up  procedures  for  customs  cases  over  the  violation  of 
intellectual property rights decreased from over 200 in 2014 to 75 in 2015.  

The  customs  tariff  was  updated  in  line  with  the  2016  version  of  the  EU  Combined 
Nomenclature.  The  implementation  of  the  regional  convention  on  Pan-Euro-Mediterranean 
Preferential Rules is still pending.  

Bosnia  and  Herzegovina  ratified  its  participation  in  Fiscalis  2020  in  November  and  Customs 
2020 in December. 

Preparations for fully implementing Asycuda World in the form of the establishment of a new 
customs  declaration  processing  system  have  been  finalised.  The  system  supports  the 
implementation of the current customs policy law and is functional throughout the country.  

In the area of taxation, the law on VAT remains to be aligned with the EU acquis. e-VAT (a 
system enabling electronic VAT reporting) is still not implemented. The small brewery taxation 
scheme is still in force and effectively discriminates against imported beer imports.   

The law on excise duties remains to be aligned with the EU acquis.  

Both the Republika Srpska and Federation entities adopted new laws on corporate income tax 
and  enforcement  of  them  started  in  January  and  March  2016,  respectively.  The  ITA’s 
administrative and operational capacity remains to be strengthened. The tax administrations in 
Bosnia  and  Herzegovina  (Indirect  Taxation  Authority  of  BiH,  Tax  Administration  of  the 
Federation  of  Bosnia  and  Herzegovina,  Tax  Administration  of  Republika  Srpska  and  Tax 
Administration  of  the  Brčko  District)  signed  a  Memorandum  of  Understanding  on  data 
exchange and coordination in June 2016 with the aim to improve the collection of direct and 
indirect taxes including through data exchange and joint audits. This should lead to improved 
cooperation between the ITA and the entities' tax administrations. The entities also need to step 
up their efforts to improve mutual cooperation and exchange of information in the area of direct 
taxation, as well as to strengthen the administrative capacity of their tax administrations. 

4.1.5. Competition 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  area  of  competition.  No 
progress  has  been  achieved  in  this  area.  The  country  is  relatively  advanced  in  aligning  with 
and  implementing  the  rules  on  antitrust  and  mergers.  However,  further  efforts  are  needed  to 
improve legislative alignment and enforcement on State aid.  

In the coming year Bosnia and Herzegovina should in particular: 

→ ensure the Competition Council functions more efficiently; 

→ further align and implement the State aid legislation and ensure efficient functioning of the 
State Aid Council; 

44 

 
 
→ ensure existing aid schemes are brought into line with the SAA obligations. 

Antitrust and merger 

The legislative framework is broadly in line with the acquis and the SAA. 

The  law  on  competition  is  largely  aligned  with  Article  101  of  the  TFEU  on  restrictive 
agreements and Article 102 on abuses of dominant position. It provides for an ex ante control 
of  the  effects  on  competition  of  mergers  above  certain  turnover  thresholds,  in  line  with  the 
principles  of  the  EU  Merger  Regulation.  Secondary  legislation  providing  further  substantive 
rules  and  guidance  on  how  competition  rules  should  be  applied  is  broadly  in  place  and 
complies with the relevant EU acquis.  

As  regards  the  institutional  framework,  the  Competition  Council  is  responsible  for 
implementing  the law on competition. It is  composed of six  members appointed from among 
legal and economic experts. They are assisted by 26 staff members. The Competition Council 
functioning  is  still  hampered  by  the  cumbersome  nomination  procedure  for  the  chairperson, 
tight procedural deadlines and the ethnicity-based veto rights of CC members. 

The  Competition  Council  may  act  upon  a  complaint  or  notification,  or  on  its  own  initiative. 
When  carrying  out  an  investigation,  it  may  issue  requests  for  information  and  carry  out 
unannounced  on-site  inspections.  It  may  impose  fines  and  remedies  in  case  of  breach  of 
competition rules. It applies a leniency policy for fines in cartel cases where companies provide 
information.  The  Competition  Council  may  prohibit  or  authorise  mergers,  the  latter  with  or 
without conditions. The Competition Council may also provide opinion on draft legislation that 
may affect competition. The Competition Council decisions may be appealed before the Court 
of Bosnia and Herzegovina, as administrative court. 

On  enforcement  capacity,  the  Competition  Council  staff  has  26  staff  members,  which  is 
adequate but greater specialisation and a further increase in investigative capacity is necessary. 
Regarding  implementation,  the  activity  of  the  Competition  Council  has  been  stable  and 
significant  over  the  period  2013-  2015,  with  16  decisions  concluding  to  anticompetitive 
practices. All of them imposed fines, for a not insignificant total amount of EUR 650 000. The 
Competition  Council  needs  to  step  up  its  enforcement  activities,  in  particular  on  cartels,  by 
conducting  more  on-site  inspections,  imposing  remedies  more  often  in  merger  cases  or 
promoting  more  intensively  its  leniency  programme.  On  appeal,  the  Competition  Council 
decisions  are  generally  upheld  by  the  courts,  but  the  courts'  capacity  to  handle  complex 
competition  cases  must  be  reinforced.  In  2013-2015,  the  Competition  Council  issued  21 
opinions on draft legislation with potential adverse impact on competition 

State aid 

The  legislative framework is  partially  in  line with  the  acquis  and  with  the  provisions  of  the 
SAA. 

The law on the state aid system is only partially aligned with the EU acquis. The decisions on 
the  purpose,  criteria  and  conditions  for  granting  State  aid,  which  should  ensure  further 
alignment  with  secondary  legislation,  are  still  not  adopted  in  the  Brčko  District  and  at  state 
level. A regional aid map needs to be drawn up. 

As regards the institutional framework, the State Aid Council is responsible for ensuring the 
state  aid  system  law  is  applied  consistently.  The  Council  is  composed  of  eight  members, 
appointed  by  the  BiH  Council  of  Ministers  and  by  the  governments  of  the  Federation  and, 
Republika  Srpska  entities  and  of  Brčko  District.  It  is  assisted  by  a  secretariat  providing 

45 

 
expertise,  technical  and  legal  assistance  and  which  is  not  part  of  a  ministry.  Its  efficient 
functioning is not ensured as the Republika Srpska entity is withholding its budget share.  

The  state  aid  system  law  provides  for  obliging  the  State  aid  grantor  to  notify  all  State  aid 
measures to the State Aid Council before the measures are put in place. It does not include a 
standstill clause required under EU rules or a possibility to issue a negative decision. The State 
Aid  Council  can  order  recovery  of  an  illegal  aid,  with  interest,  when  the  non-notified  aid  is 
deemed incompatible with State aid rules. It can launch investigations and carry out subsequent 
assessments  of  State  aid  granted  if  there  are  sufficient  indications  that  the  aid  is  used 
unlawfully. 

The  enforcement  capacity  of  the  State  Aid  Council  is  insufficient.  Its  secretariat  is  not 
adequately  staffed:    only  five  of  the  nine  posts  planned  have  been  filled  and  its  financing  is 
inadequate because the Republika Srpska entity has not paid its full contribution. It remains to 
be seen how effectively the legislation is being implemented. The State Aid Council issued 15 
decisions over the reporting period (against 9 in 2014), all of which were positive or found no 
aid. A significant number of State aid measures are put in place before they are notified to and 
approved by the State Aid  Council. Further efforts are therefore needed to ensure that all aid 
measures are notified to the State Aid Council and approved before being granted. Alignment 
of existing State aid schemes with obligations arising from the SAA and EU State aid rules has 
not  yet started, even  though the process should have  been  completed by July  2012. Intensive 
training  and  awareness-raising  about  the  State  aid  rules  continued  at  all  levels.  The 
transparency of all State aid granted remains to be ensured. 

Liberalisation 

The  law  on  competition  and  the  law  on  state  aid  are  applicable  to  public  undertakings  and 
undertakings  with  special  or  exclusive  rights.  The  rules  on  financing  of  services  of  general 
economic interest are not fully aligned with the State aid acquis. There are no monopolies of a 
commercial character within the meaning of Article 37 TFEU. 

4.1.6. Public procurement 

Bosnia and Herzegovina has some level of preparation in this area. Some progress has been 
achieved in the field of public procurement in the last year with the adoption of new rulebooks 
on  conditions  and  usage  of  e-auctions,  a  rulebook  on  monitoring  public  procurement 
procedures as well as adoption of a new strategy and action plan for development of the public 
procurement  system  on  Bosnia  and  Herzegovina  in  2016-2020.  Further  efforts  are  needed  to 
harmonise  the  legislation  with  the  EU  acquis  in  general,  and  in  particular  on  public-private 
partnerships  and  concessions.  Procurement  is  particularly  vulnerable  to  corruption  and  more 
efforts are needed to prevent this during the procurement cycle.  

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

→ further align the public procurement legislation with the 2014 EU acquis; 

→ further strengthen the monitoring role of the Public Procurement Agency by implementing 
the  new  rulebook  on  monitoring,  and  make  the  procurement  process  more  transparent  by 
improving the use of the e-procurement system; 

→ 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 2014 public procurement law is 
broadly in line with the EU legislation from 2004. The law ensures respect for the principles of 
value  for  money,  free  competition,  transparency  and  equal  treatment.  However,  the  country 

46 

 
 
still  needs  to  align  with  the  EU  legislation  of  2014  in  this  area.  The  principle  of  non-
discrimination is not fully applied as Bosnia and Herzegovina maintains a system of domestic 
preferences  which  will  be  gradually  phased  out  by  2020.  New  rulebooks  on  conditions  and 
usage of e-auctions as well as a rulebook on monitoring public procurement procedures have 
been  adopted  while  adoption  of  a  rulebook  on  training  of  public  procurement  officers  is 
pending. 

Bosnia and Herzegovina needs to further align with the EU acquis, including on concessions 
and  public  private  partnerships.  The  legal  framework  for  the  concessions  system  is  still 
fragmented  and  formal  channels  for  cooperation  between  the  concessions  commissions  at 
different levels need to be created.  

The Public Procurement Agency of Bosnia and Herzegovina (PPA) is mandated to initiate, 
implement  and  monitor  public  procurement  reform  in  all  sectors.    The  PPA  needs  to  further 
increase  its  capacity  to  ensure  it  can  carry  out  all  its  responsibilities.  A  new  strategy  for 
development of the public procurement system in 2016-2020 was adopted in October.  

Implementation and enforcement capacity 

The  estimated  value  of  contracts  concluded  following  public  procurement  procedures  was 
5.02 % of GDP in 2015, a decrease compared to 8.14 % in 2014. The total number of tender 
procedures as well as the number of concluded contracts is on the rise.  Among them, the most 
commonly used procedure was direct agreement in 86 % of cases. 

The  PPA  needs  to  be  further  strengthened,  including  through  training,  to  improve  the 
monitoring  of  procurement  procedures.  The  PPA  maintains  the  central  procurement  portal 
where tender and contract notices and other important information and guidance are published. 
An  e-auction  module  has  been  introduced,  but  overall  e-procurement  is  still  at  a  very  early 
stage. An increasing number of contracting authorities has reported to PPA and the collected 
statistics are published by the PPA in the annual report providing 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 the identification of potential 
weaknesses and irregularities. 

Regarding the contracting authorities’ capacity to implement and enforce public procurement 
processes,  the  2014  public  procurement  law's  provisions  on  more  detailed  planning, 
preparation and publication of public procurement activities remain to be applied. Specialised 
procurement functions still need to be established in each contracting authority and provided 
with public procurement officials who have the relevant skills and capabilities. There has been 
no improvement in implementation of the provisions on integrity and conflict of interest in 
public procurement procedures. Training of all stakeholders on conflicts of interest is required, 
in line with the anti-corruption strategy, in order to anticipate risks in public procurement. 

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  EU  acquis  on 
remedies, except for the lack of competitive and transparent procedures or reviews required by 
the  acquis  on  public  private  partnerships  and  works  concessions.  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 2015, the PRB received 2011 complaints (a 77 % increase compared to 2014) of which it 
resolved 85 %. A further several hundred cases with the estimated value below BAM 800 000 
are pending parliament's decision regarding competences of the relevant institution to review 

47 

 
them following the creation of two branch offices. Over the same period, the Court of Bosnia 
and  Herzegovina  delivered  115  judgments  in  cases  brought  against  PRB  decisions,  ruling 
against it in 58 cases.  

The PRB has been enlarged to 17 members and three offices, but due to lack of coordination 
between the central office and the two new branch offices it has had difficulty implementing 
its  mandate.  Its  implementation  capacity,  especially  to  deal  with  the  complexity  and  high 
number of procurement-related appeals, needs to be strengthened and harmonised between the 
three  PRB offices.  The publication of almost  500 decisions by the PRB and by the Court  of 
Bosnia  and  Herzegovina  in  2015  had  contributed  to  the  transparency  of  the  procurement 
process. However, no decisions were published in 2016. 

4.1.7. Intellectual property law 

Bosnia and Herzegovina is moderately prepared in the area of intellectual property law. No 
progress  was  made  on  adopting  a  strategy  on  enforcing  intellectual  property  rights  or  on 
strengthening the capacity and coordination of enforcement institutions.    

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

→ adopt a strategy on enforcing intellectual property rights; 

→ strengthen the capacity and coordination of enforcement institutions. 

The  Institute  for  Intellectual  Property  continues  to  function  well,  although  concerns  about  its 
administrative  capacity  persist.  Three  Information-Education  Centres  have  been  established 
within  the  institute  to  strengthen  its  information  and  educational  role,  although  they  are  not 
operational yet due to budgetary constraints. 

On  copyright  and  neighbouring  rights,  37  copyright  works  and  related  rights  were  entered 
into the institute’s records, and certificates of deposit and registration were issued accordingly. 

In  the  area  of  industrial  property  rights,  the  International  Convention  for  the  Protection  of 
New Varieties of Plants (the UPOV Convention) and the European Patent Convention remain 
to be ratified. Since October 2015 the Institute for Intellectual Property is using WIPO/IPAS3 
software  to  automate  trademark  processes.  A  new  database  for  registering  European  and 
domestic patents has also been developed with the help of the European Patent Office. 

Regarding  enforcement,  the  ITA  received  61  requests  for  customs  measures  and  issued  38 
decisions on temporary retention and seizure of goods. The State Investigation and Protection 
Agency  temporarily  seized  6  387  sound  and  video  carriers.  The  Republika  Srpska  Market 
Inspection Agency seized goods worth around EUR 16 500 due to lack of proof of origin. The 
Brčko District market inspectorate carried out 68 inspections and temporarily seized goods 
valued at around EUR 8 200. 

To  ensure  the  protection  of  intellectual  property  rights,  Bosnia  and  Herzegovina  needs  to 
strengthen the capacity of enforcement institutions and cooperation between  them.  Setting up 
an  inter-ministerial  body  to  coordinate  the  enforcement  of  IPR  would  be  an  appropriate 
measure in the medium term. An enforcement strategy remains to be adopted. A reliable system 
for  collecting  and  analysing  data  and  for  data  exchange  between  the  various  enforcement 
institutions is still lacking. 

3 World Intellectual Property Organisation/Industrial Property Automation System. 

48 

 
 
                                                            
4.1.8. Employment and social policies, public health policy 

Preparations  remain  at  an  early  stage.  There  has  been  some  progress  in  this  area.  While  
unemployment  fell  slightly, 
largely  structural  and  remains  high  overall. 
Unemployment among women and young people remain high. There has been some progress 
on employment policy and public health. New labour laws were adopted in line with last year's 
recommendation. 

is  still 

it 

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

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

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

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

On  employment  policy,  new  labour  laws  were  adopted  in  the  Republika  Srpska  entity  in 
December and in the Federation entity in March. Implementing legislation was also adopted.    

Labour market participation marginally increased in 2015 to 44.1 %, with both male and female 
participation rates  increasing  slightly. The employment rate also rose somewhat to  32.2 %  in 
2016,  while  female  employment  dropped  marginally  from  23.2  %  to  22.4  %.  Job  creation 
gained some momentum and the overall unemployment rate dropped to 25.4 % in 2016. This is 
mainly  a  result  of  the  decrease  of  the  male  unemployment  rate  to  22.5  %  in  2016  while  the 
female unemployment rate decreased only marginally to 30.0 % in 2016. Overall, about 85 % 
of unemployment remains long-term. 

Active  labour  market  measures  including  training,  internships,  self-employment  and  public 
works  intended  to  support  the  employment  of  vulnerable  groups  such  as  persons  with 
disabilities  and  long-time  unemployed  people,  have  not  been  effectively  implemented  and 
unemployment  rates  among  the  population  targeted  remains  high.  Additional  capacity  and 
financing  are  needed  to  stimulate  people  to  search  actively  for  jobs.  Passive  labour  market 
measures remain dominant. 

The  Republika  Srpska  entity  government  adopted  an  annual  employment  action  plan  while 
implementation of the Republika Srpska employment strategy for 2016-2020 started. 

As  regards  social  policies,  social  contributions  are  not  harmonised  and  continue  to  differ 
between the entities, the Brčko district and cantons. In the field of health and safety at work, 
state-level  legislation  on  working  hours,  obligatory  holidays  for  mobile  workers  and 
tachographs in road transport was amended in March to bringing it into line with the relevant 
EU acquis. 

On  social  dialogue,  there  is  still  no  progress  towards  establishing  the  State  Economic  and 
Social  Council  due  to  the  continued  lack  of  state-level  legal  provisions  on  recognising  the 
social  partners.  Following  the  adoption  of  labour  laws  in  both  entities,  social  partners  were 
more active in negotiating collective agreements. The threshold for representativeness of trade 
unions was lowered in the newly adopted labour codes. In compliance with the new labour law, 
a new general bipartite collective agreement was signed in February by the Union of Employers 
of  the  Federation  entity  and  the  Confederation  of  Independent  Trade  Unions  of  BiH.  In  the 
Republika Srpska entity new general collective bipartite agreement has not been negotiated yet 
but five special collective agreements were signed and entered into force in August.  However, 
social dialogue remains weak at all levels. 

49 

 
 
The  legislative  framework  on  social  protection  needs  better  implementation.  The  new  social 
protection legislation and the implementation  of existing legislation vary between the entities 
and Brčko District. There are no systematic measures designed to integrate the most vulnerable 
persons into the labour market or to actively look for a job and to reduce long-term dependency 
on the social assistance system. Vulnerable persons continue to face problems with low access 
to training due to the lack of enabling services, such as social service centres and employment 
bureaus.  In  the  Federation  entity,  the  situation  differs  also  between  cantons.  Due  to  the 
financial  constraints  at  all  levels  of  government,  the  social  protection  benefits  prescribed  by 
social protection laws are not fully implemented in practice, as some benefits are not being paid 
or amounts are reduced in line with the available funding.  

Social inclusion policies are still not harmonised across the entities and between cantons and 
neither is the provision of social protection services for disadvantaged people, such as persons 
with disabilities and the elderly. 

Social  protection  rights  and  benefits  are  predominantly  determined  based  on  status.  War 
veterans benefit from a large proportion of total expenditure on social assistance. Inequalities in 
the provision of social benefits between the entities remain an issue of concern. Additionally, 
people moving  between entities and cantons face obstacles in accessing social  protection and 
assistance, an issue that is especially affecting returnees. Amendments to the federation law on 
the  fundamentals  of  social  protection,  protection  of  civilian  victims  of  war  and  protection  of 
families  with  children  were  adopted  in  June.  They  transfer  responsibility  for  regulating  the 
monthly  allowance  in  times  of  austerity  from  the  Federation  Parliament  to  the  Federation 
Government.  The  rights  of  persons  with  disabilities  who  are  placed  in  social  protection 
institutions are still not adequately protected. Participation of women  in  the workforce is low 
and there is still maternity-related discrimination in employment. 

On public health policy, Bosnia and Herzegovina signed the Council of Europe Convention on 
the  counterfeiting  of  medical  products  in  December.  The  Agency  for  Healthcare  Quality  and 
Accreditation  revised  the  accreditation  standards  for  'baby-friendly  hospitals'  and  accredited 
four such hospitals. Universal immunisation coverage of children (18-29 months) in line with 
EU  standards  has  still  not  been  reached.  Primary  free-of-charge  healthcare  for  children  is 
available only if the cantonal health institutes contracted this service with local primary health 
institutions — a measure which is not equally implemented in practice. The Republika Srpska 
entity established a Council for healthcare in April. 

Bosnia and Herzegovina nominated national contact persons for three of the forums under the 
Tessy platforms dealing with prevention and control of communicable diseases: preparedness 
and response to public health threats, detection of public health threats, and microbiology. The 
Republika Srpska entity adopted an annual work plan for prevention of communicable diseases 
and a set of by-laws regulating standards for drinking water in September 2015. 

On  alcohol  and  drugs,  in  July  2016  the  Republika  Srpska  entity  adopted  a  strategy  for 
controlling drugs and preventing drug abuse for 2016-2021. 

In  the  field  of  blood,  tissues  and  cells  the  Federation  entity  issued  a  by-law  in  March 
regulating facilities' spatial standards, equipment, and staff. The by-law includes procedures for 
verifying  health  institutions  laboratories'  for  conducting  organ  transplants.  The  Republika 
Srpska  entity  established  a  Council  for  transfusion  in  April  and  adopted  by-laws  regulating 
conditions for blood donation in December.    

The Republika Srpska entity has not yet adopted its mental health strategy for 2016-2020.     

On  pharmaceuticals,  in  September  2015  the  Federation  entity  adopted  a  decision  on  the 
procedure  for  recognising  the  fulfilment  of  preconditions  for  production  and  wholesale  of 

50 

 
medicines.  In  December  the  Republika  Srpska  entity  adopted  a  set  of  by-laws  regulating  the 
spatial  standards,  equipment  and  staff  of  pharmaceutical  facilities  and  of  facilities  for 
producing medical devices. 

Cancer screening policies are not systematically in place in the country. 

4.1.9.   Education and research 

Preparations on education and research and innovation policy are at an early stage. There was 
some  progress  in  these  sectors.  Bosnia  and  Herzegovina  actively  participated  in  different 
cultural programmes as well as research networks and activities.  

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

  strengthen  the  capacity  of  state-level  education  agencies  to  develop  EU  standards  and 
increase the level of quality assurance in education; 

  establish  an  effective  coordination  mechanism  in  the  Federation  entity  to  improve 
cooperation between bodies responsible for quality assurance across the country; 

 step up efforts to strengthen its research and innovation capacity. 

There  was  some  progress  in  education.  A  state-level  policy  document  setting  priorities  for 
developing higher education in Bosnia and Herzegovina for 2016-2026 was adopted in March. 
The  Republika  Srpska  entity  adopted  its  education  development  strategy  for  2016-2021  in 
April,  setting  priorities  for  further  education  reform  as  well  as  next  steps  for  teacher  training 
and professional development.   

Coordination  between  the  country’s  education  ministries  improved.  Two  meetings  of  the 
Conference of Education Ministers were held during the reporting period. Two cantons adopted 
laws on adult education. The State Agency for Pre-school, Primary and Secondary Education 
adopted  the  common  core  curricula  for  cross-curricular  areas.  The  national  pre-school 
enrolment rate for children aged 3-6 rose by 8.16 % compared to the previous school year.  

Bosnia and Herzegovina continues to participate actively in the Western Balkans Platform on 
Education  and  Training  and  hosted  the  2016  Ministerial  meeting  in  Sarajevo.  The  country 
continues to participate in the external dimension of the Erasmus+ programme and its Western 
Balkans  Youth  Window,  as  well  as 
in  policy  support  networks  and  electronic 
platforms.   However,  the  lack  of  effective  coordination  at  state  level  remains  an  issue  of 
concern and it may put at risk the country's full participation in the EU's education programme.  

Implementation of the action plan for implementing the ‘baseline qualifications framework’ has 
not  started  yet  due  to  the  lack  of  the  state-level  intersectorial  commission  responsible  for 
implementing the action plan. An effective coordination mechanism has not been established in 
the Federation and the two existing coordination bodies are still acting in parallel. 

Coordination  between  bodies  responsible  for  quality  assurance  is  weak  at  the  level  of  pre-
school,  primary  and  secondary  education.  In  higher  education,  coordination  and  cooperation 
between the state-level Agency for Development of Higher Education and Quality Assurance 
and the Republika Srpska Agency for Accreditation should be improved. Further efforts should 
be  made  to  establish  national  education  statistics.  Cooperation  between  education  institutions 
and  the  business  sector  still  needs  to  be  improved.  The  relevance  of  education  to  the  labour 
market remains weak. The education sector, especially in higher education, remains a high-risk 
area for corruption and political interference. 

51 

 
 
In  the  field  of  culture,  the  Creative  Europe  Desk  generated  great  interest  among  cultural 
stakeholders  across  the  country.  Both  Creative  Europe  offices,  in  Sarajevo  and  Banja  Luka, 
organised workshops and information days across the country. 

There  was  limited  progress  in  the  field  of  research  and  innovation.  The  BiH  Council  for 
Science was established in December as an advisory and technical body in the area of science 
and technology. The country’s investment in research and innovation remained low. 

4.1.10. 

WTO issues 

Bosnia and Herzegovina's preparation for EU accession is at an early stage in this area. Some 
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  its  negotiations  with  Brazil,  Ukraine  and  the  Russian  Federation.  The  country's 
current  legislation  still  needs  to  be  revised  in  order  to  comply  with  WTO  requirements.  The 
country  should  consider  applying  for  accession  to  the  Wassenaar  Arrangement,  which  can 
facilitate preparations to implement the acquis for dual-use items export control. 

4.2.   Sectoral policies    

4.2.1. Industry and SMEs 

Bosnia and Herzegovina remains at an early stage in the area of policy on industry and SMEs. 
Some progress was made in this field. 

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

→ address the lack of a single economic space, including through harmonised and coordinated 
country-wide industrial and SME policies, in line with Reform Agenda priorities; 

→ address the outstanding business environment challenges by lowering the costs of business 
entry and exit procedures, and implementing the law on electronic signatures, online filing of 
taxes, and support measures for start-ups and export-oriented enterprises. 

In  January  the  Federation  entity  adopted  an  action  plan  for  industrial  policy  for  2016-2019 
harmonised with the Reform Agenda priorities. In October 2015 the Federation entity further 
amended  the  law  on  fostering  foreign  investment  and  in  November  2015  approved  a  plan  to 
privatise 16 companies. 

Regarding SME policy, some progress was made towards establishing a country-wide network 
for  reporting  on  implementation  of  the  Small  Business  Act.  In  February  the  Council  of 
Ministers adopted the report  on Small  Business Act implementation in 2015. It also assigned 
the  coordination  role  to  the  Ministry  of  Foreign  Trade  and  Economic  Relations,  which 
appointed a new national coordinator in April. An agreement with the EU on participation in 
the  EU  Programme  for  the  Competitiveness  of  Enterprises  and  Small  and  Medium-Sized 
Enterprises (COSME) was signed in June 2016. Bosnia and Herzegovina will be able to access 
COSME funding once the ratification process is completed. 

The institutional set-up for SME development and SME policy coordination remains weak and 
fragmented  across  state-  and  entity  levels  or  below.  This  constitutes  a  major  constraint  on 
aligning  industrial  and  SME  policies  and  underlines  the  continuing  need  for  a  coordinated 
country-wide SME strategy. In March 2016 the Republika Srpska entity adopted a 2016-2020 
strategy  for  SME  development  at  entity  level,  and  in  September  2016  the  Federation  entity 
similarly adopted an action plan for SME support for 2016-2018.  

Bosnia  and  Herzegovina’s  overall  ranking  in  the  World  Bank  Doing  Business  2016  report 
slightly improved, mainly on the basis of obtaining electricity permits for new businesses. The 

52 

 
 
 
 
Federation entity adopted a new company law in October which aims at improving corporate 
governance, and Republika Srpska adopted amendments to the law on registration of business 
entities  in  June.  In  March  the  Republika  Srpska  entity  adopted  a  new  law  on  bankruptcy  in 
order  to  speed  up  bankruptcy  procedures  and  debt  settlement,  and  in  June  it  adopted 
amendments to the law on tax procedures. The Federation entity started establishing ‘one stop-
shops’ for investors which will be aligned with a similar system in the Republika Srpska entity. 
Despite  some  progress  the  business  environment  remains  difficult:  business  registration 
procedures  remain  cumbersome  and  costly,  and  the  requirement  for  a  company  to  register  in 
both entities if it has a commercial presence has not been addressed. 

Business  support  services  and  SME  support  remain  limited.  In  January  the  Federation  entity 
adopted an action plan for support to infrastructure, business incubators, clusters and start-ups. 
The Federation entity also collected an initial listing of parafiscal charges to prepare a registry 
of parafiscal revenues in the first quarter of 2016. 

The  certification  of  municipalities  with  business-friendly  environments  continues  in  both 
entities; to date, 10 municipalities have been certified in the  Republika Srpska entity and 5 in 
the Federation entity. 

4.2.2. Agriculture and fisheries 

Preparations in these areas are at an early stage. Some progress was achieved on food safety, 
veterinary and phytosanitary policies.  

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

→ design and adopt a countrywide strategic plan for rural development and agree to establish 
the national structures for obtaining pre-accession assistance to the agricultural sector through 
the Instrument for Pre-accession Assistance for Rural Development; 

→  further  align  its  official  veterinary  and  phytosanitary  control  systems  with  European 
standards; 

→ further upgrade its administrative capacity, in particular inspection services and laboratories. 

In the area of agriculture and rural development policy, Bosnia and Herzegovina has yet to 
prepare a state-level strategic plan for rural development. An updated state-level harmonisation 
programme  for  agriculture,  food  and  rural  development  still  needs  to  be  adopted.  State-level 
legislation on wine and on organic production has yet to be adopted. An agreement to establish 
the institutional structures that would enable the country to benefit from the Instrument for Pre-
accession Assistance for Rural Development is  still pending. The administrative capacity and 
coordination within the agriculture and rural development sector still need to be improved. 

The effectiveness and EU compliance of support measures remain insufficient to increase the 
sector's  productivity and competitiveness. There is  still no agreement on the legal framework 
for  conducting  an  agricultural  census.  Agricultural  statistics  and  the  agricultural  information 
system  are  yet  to  be  established  and  consolidated  country-wide.  The  national  agricultural 
information strategy is not yet adopted. The land registration systems are yet to be harmonised 
throughout the country, and the land management requires strengthening.  

On  food  safety,  in  September  2015  four  Bosnia  and  Herzegovina  dairy  establishments  were 
authorised to export ultra-heat treated milk and certain dairy products to the EU and the country 
has  since  increased  the number  of  approved  establishments  to  eight.  Some  progress  has  been 
made on implementing Bosnia and Herzegovina’s action plan on the production and processing 
of dairy products for export to the EU. However, certain inefficiencies have yet to be remedied. 
In this context, new state-level veterinary and food safety laws and amendments to the national 

53 

 
 
agriculture  and  rural  development  law  are  yet  to  be  adopted.  The  country’s  official  food  and 
feed  controls  system  remains  to  be  made  fully  compliant  with  the  acquis  and  duly 
implemented.  The  exchange  of  information  and  coordination  within  the  control  chain  need 
further improvements to make it efficient and enable the country to meet EU requirements and 
standards for export of other goods of animal origin to the EU market. The implementation of 
the Hygiene Package has yet to take place in a full and harmonised way across the country. 

Institutional  and  administrative  capacity,  particularly  those  of  the  inspection  services,  require 
further upgrading to enable the import control system and internal market controls to be fully 
implemented  in  accordance  with  EU  legislation.  Food  business  operators  still  need  further 
education and training on specific EU safety and quality requirements. 

Bosnia and Herzegovina continued to implement the food safety monitoring plan. The country's 
crisis  management  plan  and  operative  emergency  measures  remain  to  be  adopted.  Further 
implementing  legislation was adopted to  strengthen the country’s risk assessment system and 
harmonise the maintenance of food safety databases. 

Bosnia  and  Herzegovina  continued  to  fully  participate  in  the  European  Commission’s  rapid 
alert system for food and feed, implementing appropriate inspections and reporting back to the 
Commission  on  the  results.  In  total,  7  notifications  were  received  through  the  system  and  3 
notifications were submitted to the system, including those related to imported products. There 
was no risk to consumer health and safety in these cases. 

The  capacity  of  laboratories  continued  to  be  strengthened  and  the  number  of  accredited 
laboratory methods for diagnostics was increased, thereby improving the official food and feed 
controls. However, a central database for the official food and feed control system has yet to 
become  fully  operational.  A  state-level  strategy for  laboratory  testing  of  samples,  as  required 
by the official food and feed controls system, still needs to be developed. 

On  veterinary  issues,  Bosnia  and  Herzegovina  continued  with  the  control,  prevention  and 
eradication  of  communicable  animal  diseases.  It  implemented  animal  control  measures, 
including  those  against  brucellosis  and  tuberculosis  in  cattle.  The  country  successfully 
completed the 5-year programme of control and eradication of rabies, so it has been rabies-free 
for the last 2 years. New multiannual operational programmes  for controlling and eradicating 
rabies and brucellosis for 2016-2022 need to be adopted. The animal disease notification and 
outbreak  information  management  system  still  requires  further  upgrades  to  become  fully 
functional. Laboratories’ capacity was further improved in terms of equipment and an increased 
number of accredited laboratory methods for diagnosing animal diseases. 

The  country’s  residue  monitoring  plan  continued  to  be  implemented.  Shortcomings  in  the 
animal identification, registration and movement control system, including the central database, 
do not allow the authorities to efficiently plan and implement relevant animal health measures. 
A country-wide strategic framework for managing animal by-products has yet to be established 
in line with the acquis. 

Further implementing legislation adopted in the phytosanitary sector in January improved the 
registration  of  plant  protection  products.  A  manual  and  guidelines  developed  in  April  for 
phytosanitary  inspectors  harmonised  their  standard  operating  procedures  and  controls  as 
regards both the internal market and at border crossings. After the approved export of potatoes 
to the EU in July 2015, the special surveillance of potatoes for quarantine pests continued. The 
registration  of  relevant  producers,  importers,  exporters  and  distributors  in  a  single  phyto-
registry  continues.  The  work  of  official  diagnostic  laboratories  and  controls  at  border 
inspection  points  are  broadly  in  line  with  the  acquis.  Nevertheless,  accreditations  of 
laboratories  need  further  improvements.  Institutional  and  administrative  capacity  still  need 

54 

 
further  strengthening,  in  particular  those  of  phytosanitary  inspectors  for  the  internal  market 
official  controls.  The  network  of  Plant  Health  Protection  Administration  regional  offices  has 
yet to become  fully operational. The registration of new varieties in the  country’s variety list 
needs  to  progress  to  enable  greater  trading  potential.  The  principles  of  integrated  pest 
management have to be implemented in a harmonised manner across the country. 

Agricultural producers need further training on EU requirements and standards for using plant 
protection products and applying maximum residue limits. 

Bosnia  and  Herzegovina  continued  improving  the  implementing  legislation  on  genetically 
modified  organisms  and  issued  16  decisions  approving  the  placing  of  genetically  modified 
feed  on  the  Bosnia  and  Herzegovina  market.  The  BiH  Council  for  genetically  modified 
organisms  continued  to  act  in  its  advisory  and  monitoring  role.  The  registry  of  genetically 
modified food and feed is fully operational. The process is guided by the principles of control 
and transparency  and  provides for proper  traceability and labelling of these  products. Further 
harmonisation of the legislation in this field is required to further upgrade operating procedures 
country-wide. 

Policies  in  the  fisheries  sector  need  to  be  harmonised  across  the  country.  Bosnia  and 
Herzegovina  needs  to  step  up  efforts  to  implement  the  acquis  in  this  sector  in  a  harmonised 
manner to increase the potential for exporting fish and fishery products to the EU.  

4.2.3. Environment and climate change 

Bosnia and Herzegovina is at an early stage of preparation/has some level of preparation in 
this area. Some progress has been achieved in further aligning policies and legislation with the 
acquis, in particular in the water and waste sectors. However, significant efforts are needed on 
implementation and enforcement.  

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

→  adopt  a  country-wide  environment  approximation  strategy  and  accordingly  enhance  the 
legal framework, strengthen administrative capacity and monitoring systems and improve inter-
institutional coordination among all authorities on environmental protection; 

→ formalise the procedures for appointment and the functions of the National Focal Point for 
Bosnia and Herzegovina for the implementation of environmental conventions; 

→  ratify  the  Paris  Agreement  under  the  UN  Framework  Convention  on  Climate  Change  and 
start  implementing  its  contribution  to  it;  implement  the  Low  Emissions  Development  and 
Adaptation to Climate Change Strategy. 

Environment 

In  the  area  of  horizontal  legislation,  there  is  still  no  national  policy  and  strategy  on  the 
environment. There are just a few specific schemes on climate change, biodiversity, landscape 
protection  and  radioactive  waste  management,  as  well  as  a  number  of  sectoral  strategies  at 
entity  and  Brčko  District  level.  Draft  country-wide  strategic  documents,  developed  with  EU 
assistance and fostering harmonised approximation with the EU environmental acquis have yet 
to  be  adopted.  They  include  environmental  approximation  strategy  and  its  implementing 
documents,  specific  implementation  plans  for  selected  priority  environmental  directives  and 
environmental policy documents. Alignment with the EU acquis faces major obstacles due to 
the complex political and administrative structure of the country, lack of awareness at political 
level,  understaffing  and  lack  of  funding.  There  are  no  specific  laws  on  environmental 
inspections at the level of entities, Brčko District and cantons. Inspections are regulated by the 
general  laws  on  inspections  and  related  implementing  legislation  in  relevant  areas  and 

55 

 
 
performed by the necessary administrative structures. Most implementation plans at entity level 
on environmental impact assessment (EIA) and strategic environmental assessment (SEA) are 
still not sufficient. The UNECE Protocol on Strategic Environmental Assessment and the Basel 
Convention  on  hazardous  waste  have  yet  to  be  adopted,  as  has  an  environmental  monitoring 
data management and reporting strategy. Public participation remains to  be improved in  both 
entities.  Bosnia  and  Herzegovina  acceded  to  the  Aarhus  Convention  in  2008  and  established 
until  2013  three  Aarhus  Centres.  The  official  nomination  of  the  National  Focal  Point  for 
implementation  of  the  Aarhus  Convention  is  still  pending.  The  legislation  regulating  public 
access to environmental information and public participation in decision-making process is not 
in full compliance with EU acquis. Bosnia and Herzegovina has not transposed yet a number of 
horizontal  environmental  directives  such  as  on  environmental  liability,  INSPIRE4  and 
environmental crime. 

Legislative alignment with the acquis on air quality is at an early stage. Ambient air quality 
laws in both entities set zones and agglomerations but further regulation of national emission 
ceilings  is  required,  as  well  as  emission  registries.  The  air  monitoring  system  was  improved 
with  4  more  monitoring  stations,  although  a  well-functioning  country-wide  air  monitoring 
network still needs to be established. The country has yet to align with the EU  acquis on the 
reduction in the sulphur content of certain liquid fuels (heavy fuel oil limiting value for sulphur 
content  being  1.00  %)  and  did  not  transpose  the  provisions  of  the  Directive  1999/32/EC  and 
subsequent  amendments  relevant  for  gas  oil,  including  marine  gas  oils,  in  terms  of  limiting 
values at 0.10 % by mass. Legislation on emissions of volatile organic compounds (VOC) has 
not  been  adopted  yet.  Air  quality  plans  for  areas  where  pollutant  levels  exceed  limit  values 
remain to be adopted. 

For  waste  management  a  country-wide  strategy  has  yet  to  be  developed.  Strategies  at  entity 
level  for  municipal,  industrial  and  hazardous  wastes  are  in  preparation.  Strategic  planning  of 
related  investment,  setting  up  national  and  regional  enforcement  authorities  and  awareness-
raising activities have  started. In  the Federation entity the management of  municipal  waste is 
regulated  in  detail  by  cantonal  laws.  The  Federation  entity  is  implementing  the  2008-2018 
waste  management  strategy  and  the  2012-2017  waste  management  plan.  Amendments  to  the 
RS law on waste management were adopted in December, introducing provisions on packaging 
and packaging waste management. Alignment with EU legislation on sewage sludge, batteries, 
packaging, polychlorinated biphenyls (PCB) / persistent organic pollutants (PCT) and end-of-
life vehicles is at a very early stage. Further efforts are needed on alignment with EU acquis 
provisions  on  landfill  directive  and  on  closing  or  rehabilitating  non-compliant  landfills. 
Legislation on the shipment of waste is harmonised with the Basel Convention. 

On  water  quality,  the  country  still  lacks  a  consistent  and  harmonised  country-wide  strategy 
and  investment  plans  on  water  management  that  would  include  implementing  legislation  and 
monitoring.  The  Federation  entity  is  implementing  its  water  management  strategy  for  2010-
2022.  The  Republika  Srpska  entity  adopted  its  strategy  for  integrated  water  management  for 
2015-2024  in  March.  Alignment  with  the  acquis  on  water  quality  is  well  advanced  at  entity 
level. Action plans for implementing the Directives on drinking water and floods at entity level 
have been developed. Investment in infrastructure has brought some improvements in access to 
drinking water and wastewater discharges. The Sava river basin management plans are yet to 
be  adopted.  An  action  plan  for  flood  protection  and  river  management  in  Bosnia  and 

4  Directive  2007/2/EC  of  March  2007  establishing  an  Infrastructure  for  Spatial  Information  in  the  European 
Community (INSPIRE) 

56 

 
                                                            
  
Herzegovina  for  2014-2017  is  being  implemented.  Preparation  of  flood  hazard  and  risk 
mapping for the country is ongoing. 

Alignment  with  the  acquis  in  the  field  of  nature  protection,  in  particular  the  Habitats  and 
Birds Directive, is at an early stage. Nature protection laws remain to be adopted, as do the list 
of  potential  Natura  2000  sites  and  implementing  legislation.  The  planning  of  hydropower 
projects  requires  compliance  with  EU  environmental  legislation  including  Birds  and  Habitats 
Directives  and  the  Environmental  Impact  Assessment  Directive.  The  revised  strategy  and 
action plan for biological diversity in Bosnia and Herzegovina for 2015-2020 was adopted in 
April  in  line  with  the  requirements  under  the  UN  Convention  on  Biological  Diversity. 
Activities started on establishing structures for implementing the Convention on International 
Trade in Endangered Species of Wild Fauna and Flora. 

Alignment with the EU acquis on industrial pollution control and risk management is at an 
early stage. A national emissions reduction plan, developed in line with the Large Combustion 
Plant  Directive,  was  adopted  in  December  2015  and  submitted  to  the  Energy  Community 
Secretariat. 

On  chemicals,  a  national  plan  for  implementing  the  Stockholm  Convention  on  Persistent 
Organic Pollutants was adopted in March 2016. The Republika Srpska entity adopted a number 
of regulations and amendments in order to further align with EU standards. The alignment of 
the entities' legislation with the REACH Regulation5 is uneven. Bosnia and Herzegovina should 
continue strengthening the administrative capacities necessary for its effective implementation. 
The effective implementation of the CLP regulation6 is pending on measures to be published in 
2018. The transposition of Asbestos Directive and the Directive on protection of animals used 
for scientific purposes (2010/63) has not started yet.  
Bosnia and Herzegovina is already a Party to the Rotterdam Convention7, but further efforts are 
required to fully implement the Convention. 

Significant further efforts are needed to align with the EU acquis on environmental noise. 

Regarding civil protection, Bosnia and Herzegovina is currently preparing to gain access to the 
EU Civil Protection Mechanism. The competent authorities and administrative capacity at the 
state level for disaster risk management are the Coordination Body for Protection and Rescue 
and  the  Ministry  of  Security.  There  are  also  civil  protection  authorities  at  entity  and  district 
level.  At  the  local  level  there  are  civil  protection  services  within  the  municipalities  and 
municipal  civil  protection  headquarters  with  mayors  as  commanders  of  the  headquarters.  An 
operational  emergency  communication  centre  is  in  place  but  not  yet  linked  to  the  Common 
Emergency Communication and Information System. 

Climate change 

The  level  of  alignment  is  limited.  Implementation  of  the  2013  national  climate  change 
adaptation and low emission development strategy for Bosnia and Herzegovina, consistent with 
the  EU  2030  framework  on  climate  and  energy  policies  and  well  integrated  into  all  relevant 
sectors, should be a priority.  

As for the UN Framework Convention on Climate Change (UNFCCC), the First Biennial 
Report  submitted  in  2015  covered  the  period  2010-2011.  The  Third  National  Report  is  in  its 

5 Regulation concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) 
6 Regulation on the classification, labelling and packaging of substances and mixtures (CLP) 
7 Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides 

in International Trade 

57 

 
                                                            
final stage and its submission is expected by the end of this year. It will contain Green House 
Gas  (GHG)  inventory  reports  for  2002-2009  and  2012-2013,  whereas  the  Second  Report, 
currently  under  preparation  as  well,  will  contain  inventory  data  for  2014.  Bosnia  and 
Herzegovina  signed  the  Paris  Agreement  in  April  2016  and  should  now  give  priority  to  its 
ratification and the implementation of Bosnia and Herzegovina contribution to it. 

Regarding  transparency  of  climate  action,  the  responsibility  for  compiling  GHG  inventory 
reports lies with Hydro-meteorology services of the Federation and Republika Srpska entities, 
respectively,  This  area  should  be  regulated  in  line  with  the  EU  monitoring,  reporting  and 
verification.  Further  efforts  are  required  to  align  with  the  climate  acquis  including  the 
emissions  trading,  Fuel  Quality  Directive,  ozone  depleting  substance,  fluorinated  gases, 
carbon  capture  and  storage  directive  and  other  relevant  legislation.  The  administrative 
capacity of the ministries involved need to be strengthened at all levels, particularly in support 
of the implementation of INDC.8      

4.2.4. Transport policy 

Bosnia and Herzegovina has reached some level of preparation in this area. Some progress 
was  made  over  the  past  year,  including  the  adoption  of  a  framework  transport  strategy  and 
action  plan.  More  efforts  are  needed  to  strengthen  the  financial  and  technical  capacity  of  the 
authorities in all transport sectors.  

In the coming year Bosnia and Herzegovina should in particular: 

→ strengthen the regulatory framework and its coordination and administrative capacity to help 
ensure the country will continue to benefit from the connectivity agenda; 

→ establish fully operational accident investigation bodies for air and waterborne transport; 

→ redouble the efforts in view to conclude the negotiations with Croatia on all border crossing 
points. 

As  regards  the  general  transport  acquis,  a  state-level  framework  transport  policy  document 
for the period 2015-2030 is in place. In July Bosnia and Herzegovina adopted the country-wide 
Framework  transport  strategy  and  action  plan,  based  on  related  entity  strategies.  Bosnia  and 
Herzegovina  has  no  specific  law  on  investigations  in  traffic  accidents  but  addressed  related 
obligations in the law on aviation and law on railways. A fully operational investigation body 
exists  since  2015  only  for  railways.  There  is  no  legislation  on  waterborne  accidents 
investigations. The investigations are performed at present by the port authorities. Bosnia and 
Herzegovina has implemented the summer-time arrangements properly. It should make further 
efforts to complete the legislative alignment with the acquis on public services obligations and 
to put into place the precise calculation methodology for awarding public service contracts in 
the  field  of  road  transport.  For  all  modes  of  transport  there  is  a  need  to  strengthen  the 
administrative capacity. 

On road transport, Bosnia and Herzegovina has aligned with the acquis on road traffic safety 
but  faces  serious  shortcomings  in  implementation.  A  country-wide  strategy  on  road  traffic 
safety remains to be adopted. Legislation on transport of dangerous goods only exists at entity 
level, thus creating problems in intra-entity and international transport. A company, institution 
or other legal body responsible for conducting the conformity assessment of the equipment law 
on  the  carriage  of  dangerous  goods  has  not  been  appointed  yet.  The  country  has  to  continue 
aligning with the social and safety acquis in this area and develop some enforcement capacity, 

8 Intended Nationally Determined Contribution 

58 

 
 
                                                            
in  particular  for  targeting  the  reduction  in  fatalities  and  increasing  roadside  checks  of 
commercial  vehicles.  On  the  enforcement  of  social  legislation,  further  improvements  are 
needed in roadside checks due to the serious lack of human, technical and financial resources 
for  inspections.  Legislation  on  market  access  to  goods  and  passenger  transport,  including  the 
international  market  for  coach  and  bus  services,  remains  to  be  further  improved.  Bosnia  and 
Herzegovina  has  neither  sufficient  capacity  nor  resources  to  provide  for  the  legislative  and 
administrative implementation of intelligent transport systems. 

Bosnia  and  Herzegovina  has  partly  aligned  its  legislation  with  the  acquis  on  rail  transport. 
The  separation  of  train  operations  from  infrastructure  management  has  progressed.  The 
independence  of  infrastructure  managers  to  make  decisions  has  not  been  fully  achieved.  The 
issue of private rail companies cannot be clearly addressed since the incumbent rail companies 
are  partially  privatised,  without  a  common  view  on  what  is  actually  considered  as  subject  to 
privatisation. 

There is a functioning independent Railways Regulatory Body as the Bosnia and Herzegovina 
safety and regulatory authority. The railway market is not yet opened, primarily due to safety 
concerns.  Only  the  certified  undertakings  have  access  to  the  network.  The  'rail  network 
statements' by the two infrastructure managers are not published. Bosnia and Herzegovina has 
implemented  legislation  on  railway  safety  and  fully  applies  the  Convention  concerning 
International  Carriage  by  Rail  (COTIF).  Licensing  needs  further  improvement  in  both 
regulatory  and  procedural  terms.  On  railway  interoperability,  the  technical  specifications  for 
interoperability and COTIF regulations are transposed by the Bosnia and Herzegovina Railway 
Regulatory Board as railway regulations. 

On  maritime  transport  there  is  no  alignment  with  the  EU  acquis.  Bosnia  and  Herzegovina 
lacks  ports  and  a  fleet,  and  has  a  coastline  of  27  km.  Bosnia  and  Herzegovina  ratified  the 
Maritime Labour Convention in 2010 which entered into force on 20 August 2013. Bosnia and 
Herzegovina  should  continue  its  efforts  to  become  party  to  all  basic  conventions  of  the 
International  Maritime  Organization  and  to  follow  up  on  its  membership  application  to  the 
Paris Memorandum of Understanding. Bosnia and Herzegovina participates in the EU Strategy 
for the Adriatic-Ionian Region. 

In  the  area  of  inland  waterway  transport,  alignment  is  needed  with  the  relevant  EU 
legislation and a state-level authority for inland waterways needs to be established. Bosnia and 
Herzegovina participates in the EU strategy for the development of the Danube Region and is a 
signatory  to  the  main  international  agreements  on  inland  waterways  as  well  as  a  number  of 
bilateral  agreements  with  neighbouring  countries,  such  as  the  Sava  River  Commission 
Agreement.  The  development  of  the  Sava  river  is  based  on  the  Bosnia  and  Herzegovina 
transport  master  plan  of  2001  and  the  Study  on  Market  and  Demand  for  River  Transport  in 
Bosnia  and  Herzegovina  of  2008.  However  it  has  been  considerably  slowed  down  by  the 
delayed  rehabilitation  of  the  Sava  River  navigation  route.  Bosnia  and  Herzegovina  has  not 
adopted legislation on merchant shipping.  Navigation  falls under the  authority of the entities, 
which have adopted legislation on maritime and inland navigation. 

In the area of aviation, Bosnia and Herzegovina has achieved a good level of alignment with 
the acquis. While considerable progress was made on implementing the first transitional phase 
of  the  ECAA  Agreement,  Bosnia  and  Herzegovina  still  needs  to  transpose  some  parts  of  the 
acquis. On 'single European sky' (SES) legislation, the country completed the transposition and 
implementation  at  local  level  of  the  SES  I  legislation  and  partially  transposed  the  SES  II 
acquis.  Its  legislation  is  partially  aligned  with  EU  legislation  on  aviation  safety,  whereas  a 
working  arrangement with  EASA covers all aspects  of the  acquis in  civil  aviation safety  and 
environmental protection of products, organisations and personnel.  

59 

 
On  combined  transport,  the  legal  framework  is  not  aligned.  The  country  has  a  transport 
master plan from 2001 and a multimodal transport study from 2008. But there is no possibility 
to  establish  functional  transport  chains  before  certain  infrastructure  bottlenecks  are  removed. 
A number of inland multimodal nodes were envisaged to feed the Corridor V, which links the 
ports,  specifically  by  railway  connection.  The  Bosnia  and  Herzegovina  economy  neither 
generates  nor  receives  substantial  shipments  in  multimodal  traffic,  for  which  it  is  primarily 
a transit country.  

4.2.5. Energy 

Bosnia  and  Herzegovina  remains  at  an  early  stage  of  preparations  in  this  area.  Some 
progress was made over the past year. Bosnia and Herzegovina adopted a national renewable 
energy  action  plan  and  a  national  emissions  reduction  plan.  The  country  needs  to  invest 
significant  efforts  to  meet  its  international  commitments  stemming  from  the  Energy 
Community (EnC).  

In the coming year, as a matter of urgency, Bosnia and Herzegovina should in particular: 

→  adopt  a  country-wide  energy  strategy  and  strengthen  coordination  and  cooperation  at  all 
levels of governance; 

→ adopt a legal framework for electricity in compliance with the Third Energy Package; adopt 
a  legal  framework  for  gas  in  compliance  with  the  Third  Energy  Package,  so  that  the  EnC 
sanctions for serious and persistent breaches can be lifted; 

→ fully transpose and implement the EU acquis on energy efficiency, including on energy end-
use efficiency and energy services, and adopt and submit the national energy efficiency action 
plan to the EnC Secretariat.  

Bosnia and Herzegovina has yet to adopt a concrete and comprehensive country-wide energy 
strategy.  The  Federation  entity  initiated  the  development  of  its  energy  strategy  to  ensure  an 
equal  starting  point  with  the  Republika  Srpska  entity  towards  developing  a  countrywide 
strategy. In the absence of strategic planning at state-level, the country is failing to adequately 
address  issues  of  security  of  supply,  diversification  of  supply  sources  and  efficient  usage  of 
indigenous resources. The country’s active membership at the Security Coordination Centre, a 
Belgrade-based  company  of  system  operators  of  Bosnia  and  Herzegovina,  Montenegro  and 
Serbia established in 2015, has improved the level of security of electricity supply. 

Entity-level legislative frameworks relevant for the oil sector do not allow for cooperation or a 
harmonised approach, thus preventing the development of legislation and the establishment of a 
body on compulsory  oil  stocks and petroleum products at state-level. There are no oil stocks 
currently  held  in  the  country.  Bosnia  and  Herzegovina  has  some  storage  capacity at  different 
locations within the country and in the Croatian port of Ploče but due to the lack of a country-
wide  approach  neither  facility  is  used  for  storage  purposes.  Bosnia  and  Herzegovina  is  a 
member of ENTSO-E, represented by its independent system operator. 

The  long-term  transmission  network  development  plan  for  2015-2024  approved  by  the  State 
Electricity Regulatory Commission in August 2016 identifies priority electricity transmission 
transmission 
interconnections  with  neighbouring  countries.  Two  400  kV  electricity 
interconnections with Croatia, and with Serbia and Montenegro respectively (the 'Transbalkans 
corridor') are included in the list of projects of EnC interest of 2013.  There is no progress on 
electricity  interconnection  with  Croatia,  and  the  Transbalkans  corridor  is  progressing  slowly, 
with  no  progress  in  Bosnia  and  Herzegovina.  Progress  on  two  gas  interconnections  with 
Croatia,  also  listed  as  projects  of  EnC  interest  in  2013,  is  stalled  due  to  lack  of  political 
agreement and a country-wide energy strategy. The development of a power market between 

60 

 
 
Bosnia  and  Herzegovina  and  its  neighbours  is  hampered  by  the  lack  of  a  state-level  legal 
framework  and  a  fragmented,  incomplete  and  unharmonised  entity-level  framework.  The  gas 
market depends on a single source of supply and is dominated by fully bundled key incumbent 
companies. 

Bosnia and Herzegovina has not aligned its legislative framework for gas and electricity with 
the  Third  Energy  Package,  thus  hindering  the  establishment  and  functioning  of  an  internal 
energy  market.  The  draft  law  on  electricity  transmission,  regulator  and  system  operation 
prepared  in  2016  with  assistance  of  the  EnC  Secretariat  has  not  yet  been  submitted  for 
adoption.  Bosnia  and  Herzegovina  has  not  established  an  appropriate  market  environment. 
Market  actors  are  identified  within  the  limits  of  the  current  legislative  framework  for 
electricity, but the fragmented and non-compliant legislation in the gas sector does not make it 
possible to  identify them adequately or  afford them a consistent  status. The current  model of 
legal and functional unbundling of the company for transmission of electricity from generation 
and supply is not in line with any of the unbundling models under the EU acquis. Neither the 
entities  nor  the  Brčko  District  have  legally  unbundled  distribution  system  operators  from 
supply operators. There is no single or harmonised legal and regulatory framework in Bosnia 
and Herzegovina for tendering new generation capacity. In May, the EnC Secretariat referred 
a case for lack of transposition of the Third Energy Package to the Ministerial Council. 

The legal framework for electricity at state-level ensures the compliant operation of a balancing 
market  but  not  of  organised  trading  platforms  or  access  to  power  exchange.  The  market  still 
operates  on  the  basis  of  bilateral  contracts  between  dominant  power  utilities  and  registered 
traders.  The  retail  electricity  market  is  still  divided  along  the  boundaries  of  the  service 
territories  of  the  three  major  power  utilities.  Most  customers  -  except  for  several  large 
commercial  users  -  remain  supplied  by  incumbent  utilities.  The  regulatory  frameworks  allow 
regulation of generation prices for supply of households and small consumers through regulated 
universal  service  tariffs  not  taking  into  account  the  electricity  market  price,  resulting  in 
a complete absence of switching of suppliers. 

Due  to  continued  lack  of  alignment  with  the  acquis  in  the  gas  sector  the  country  remains  in 
serious  and  persistent  breach  of  its  commitments  as  a  signatory  of  the  EnC  Treaty.  The  gas 
market  is  foreclosed  and  all  consumers  are  supplied  at  a  regulated  price  by  incumbent 
companies  without  legal  possibilities  to  switch  suppliers.  Price  regulation  and  adjustment  for 
electricity  and  gas  is  partly  non-transparent.  There  are  no  plans  to  phase  out  existing  cross 
subsidies.  Third  party  access  to  gas  pipelines  in  both  entities  is  not  in  compliance  with  the 
acquis. No regulatory authority with competences for gas exists at state level.  The state level 
and the entities' energy regulatory authorities are adequately staffed and financed, but exposed 
to  political  pressure,  particularly  in  the  selection  of  new  board  members.  Bosnia  and 
Herzegovina’s  regulatory  legal  set-up  does  not  comply  with  the  requirements  of  the  Third 
Energy Package. Following a commitment to adopt the relevant energy legislation at state and 
entity level in compliance with the Third Energy package, the EnC Ministerial Council decided 
in October 2016 to temporarily suspend any sanction until end of March 2017. 

Regarding renewable energy, the country submitted in April to the EnC Secretariat its national 
renewable  energy  action  plan  (NREAP).  The  case  initiated  against  the  country  was  closed. 
There is no state-level legal framework on renewable energy. The legislation at entity level is 
not  compliant  with the EU  acquis. The capacities  are limited in  respective ministries at State 
and entities level and adequate as regards regulatory authorities.   

Bosnia and Herzegovina committed to a binding target of 40 % renewable energy in gross final 
energy  consumption  in  2020.  In  2014,  according  to  the  energy  balance  published  by 

61 

 
EUROSTAT,  Bosnia  and  Herzegovina  achieved  a  42.3  %  share  of  energy  from  renewable 
sources overachieving the 40 % target for 2020 due to revision of biomass data.  

Support schemes for promoting generation of electricity from renewable energy sources (RES) 
are  established  at  entity  level.  There  are  also  incentives  for  using  biofuels  in  transport.  The 
current  capacity  of  the  transmission  system  to  manage  RES  input  is  sufficient.  Hydropower 
planning  is  carried  out  at  entity  level.  Such  development  should  be  in  conformity  with  the 
relevant  EU  legislation  on  environment  and  the  assessment  of  potential  new  projects  should 
take into account the impact on areas of high nature interest. There is no system in place at state 
level to deliver certificates of origin. The systems at entity level are not compliant with the EU 
acquis. 

In  terms of  new RES  investments, administrative procedures  for permitting authorisation  and 
licensing are cumbersome. The relevant authorities should simplify the procedures and create a 
more  favourable  environment  for  RES  investments.  The  transmission  grid  capacity  for 
connection of renewable energy facility is sufficient for the current production level but has to 
be increased in case of a rise in applications for RES connections.    

Regarding  energy  efficiency,  the  country  does  not  have  a  national  energy  efficiency  action 
plan  in  line  with  the  EnC  requirements;  a  working  group  for  the  preparation  of  an  energy 
efficiency  action  plan  was  (re-)established  in  March  2016.  The  federation  law  on  energy 
efficiency is pending approval in the House of Peoples since 2014, preventing the development 
of the country’s action plan. This is subject to an open infringement case initiated by the EnC 
Secretariat.  In  Republika  Srpska,  a  new  labelling  regulation  entered  into  force  in  April  2016 
and it published a report on the implementation of the EEAP in June 2016. Energy efficiency 
bodies, acting also as energy efficiency funds, exist in both entities to ensure the promotion of 
energy efficiency initiatives. Bosnia and Herzegovina is not fully aligned with the EU  acquis 
on  energy  efficiency  nor  on  the  energy  performance  of  buildings,  and  still  needs to  adopt  all 
relevant implementing regulations (e.g. regulation on inspection of heating and air conditioning 
systems, energy performance of buildings’ calculation methodology and software). 

On nuclear energy, nuclear safety and radiation protection, Bosnia and Herzegovina has no 
nuclear  power  production  sites  in  its  territory  nor  plans  to  build  any.  In  November  the  State 
Regulatory  Agency  for  Radiation  and  Nuclear  Safety  Law  adopted  four  regulations  on 
managing radioactive waste and protection, safety and training and medical protection from ion 
radiation.  Bosnia  and  Herzegovina  has  ratified  most  of  the  international  treaties,  conventions 
and protocols in this area. In terms of meeting international commitments on data submission, 
the infrastructure available to the agency needs to be improved and coordination and reporting 
from all relevant parties needs to be improved. Bosnia and Herzegovina is not a member of the 
European  Community  Urgent  Radiological  Information  Exchange  system  (ECURIE). 
Monitoring  of  radon  is  conducted  only  ad  hoc,  and  data  collection  is  neither  systematic  nor 
centralised.  The  lack  of  cooperation  between  the  two  authorised  laboratories,  and  their 
systematic approach, is an issue that needs to be addressed.   

4.2.6. Information society and media 

Preparations  in  the  field  of  the  information  society  and  media  remain  at  an  early  stage. 
Backsliding continued.  

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

  adopt  and  implement  a  fee  collection  model  that  would  ensure  the  financial  stability  and 
political independence of the public broadcasting system; 

 finalise the digital switchover; 

62 

 
 
  secure  the  political,  financial  and  operational  independence  of  the  Communication 
Regulatory Agency (CRA). 

Regarding electronic communications and information and communications technologies, 
the  electronic  communications  law  is  still  based  on  the  1998  EU  regulatory  framework  and 
needs to be further brought into line with the EU acquis. The institutional framework does not 
ensure  the  political  independence  or  adequate  financial  and  operational  independence  of  the 
CRA,  which  undermines  certainty  for  the  sector  and  raises  concerns  over  its  efficiency.  No 
progress has been made towards introducing the European emergency number 112. 

The CRA continued to implement competitive safeguards and the last phase of rebalancing of 
the fixed telephony retail tariffs. Besides the three incumbent operators, 13 alternative operators 
provide  voice  services  in  fixed  telephony. For  mobile  telephony,  there  are  three  licensed 
incumbent  operators  and  five  providers  of  mobile  services.  Competition  is  developing  in  the 
fixed broadband market. The overall fixed broadband penetration rate increased to 17 %. The 
Director of the CRA was appointed in April. The prices for regional roaming services further 
decreased on 1 July 2016 following the 2014 agreement with the former Yugoslav Republic of 
Macedonia, Montenegro and Serbia. 

regulation 

implementation  of  market 

However,  effective 
remains  a  concern.  The 
telecommunications  sector  policy  has  not  been  adopted  by  the  Council  of  Ministers,  thus 
preventing  new  entrants’  access  to  the  market.  Bosnia  and  Herzegovina  remains  the  only 
country in the region that does not have a broadband strategy. CRA continues to struggle with 
its political, institutional, and financial independence which affects its operations and fulfilment 
of its mandate. In July the Council of Ministers adopted a proposal by the Ministry of Transport 
and  Communications  aimed  at  implementing  a  new  procedure  for  deciding  on  the  use  of  the 
CRA's accumulated surplus income. Such a decision would further disregard the CRA's powers 
and threatens to further damage its financial independence  

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. 

As  regards  audiovisual  policy,  the  digital  equipment  for  the  first  phase  of  the  digitalisation 
process  was  installed  in  the  Republika  Srpska  entity  in  2016.  The  CRA  issued  broadcasting 
licences to the three public service broadcasters by March 2016. However, broadcasters are yet 
to  establish  a  network  operator,  as  required  by  the  legislation,  as  a  legal  entity  that  would 
manage  the  digital  switchover  for  both  public  and  commercial  broadcasters.  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 authorities have yet to address the issue of the lack of financial stability and sustainability 
of the public broadcasting system, as the RTV fee collection rates continued to drop. Opposing 
political  demands  of  the  ruling  political  parties  sidelined  the  discussion  on  adopting  a  new, 
more  effective  and  implementable  model  of  RTV  fee  collection  that  would  strengthen  the 
public broadcasting system, securing its political independence and financial stability. 

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  adoption  of  the  law  on  financial  management  and 
control in the Federation entity in April and with ensuring better coordination through regular 
meetings  of  the  Central  Harmonisation  Units  and  Supreme  Audit  Institutions  Coordination 

63 

 
 
Boards.  Further  efforts  should  be  made  with  adoption  of  the  outstanding  PIFC  strategies  and 
ensuring a coherent public internal financial control (PIFC) legal framework in the country.  

In the coming year Bosnia and Herzegovina should in particular: 

  adopt  and  start  implementing  PIFC  strategies  at  State  level  and  in  the  Republika  Srpska 
entity and ensure systematic monitoring and reporting of all PIFC strategies; 

  adopt  the  legal  framework  on  financial  management  and  control  in  the  Republika  Srpska 
entity; 

 ensure adequate staffing of the Central Harmonisation Units.  

Public internal financial control 

The strategic framework in not yet in place for the whole country. The Federation entity and 
the Brčko District have adopted PIFC strategies last year, but the revised strategic framework at 
the state level and in the Republika Srpska entity still needs to be adopted. Only the Federation 
entity  has  started  to  implement  the  renewed  strategy  paper  of  2015,  but  monitoring  and 
reporting on the implementation is weak.  

The Central Harminisation Units (CHUs) have been established at state and entity levels but 
not yet in the Brčko District. The CHUs' staffing is well below the authorised staffing levels, in 
particular at entity level where there are seven staff altogether in both CHUs. The three CHUs 
reconvened the CHU Coordination Board in February after a five year pause. The Board now 
meets regularly. The CHUs prepare and submit consolidated annual reports to their respective 
governments.  The  CHU  at  the  state  level  adopted  the  rulebook  on  annual  reporting  on  the 
system  of  financial  management  and  control  in  the  Bosnia  and  Herzegovina  institutions  in 
December.  The  annual  reports  of  the  CHUs  at  the  state  and  Republika  Srpska  entity  levels 
cover both financial management and the control framework and internal audit.  

The concept of financial management and control is still at an early stage of development, 
and the legal framework is not yet in place for the whole country. At the state level this area is 
regulated  by  the  law  on  budgets  and  at  the  Federation  entity  in  the  law  on  financial 
management and control, which was adopted in April. The Republika Srpska entity is currently 
preparing  a  law  that  would  address  this  area.  Delegation  and  managerial  accountability 
arrangements,  the  distribution  of  management  information,  and  the  risk  management  and 
financial management of public enterprises are not applied in practice.  

The legal framework for internal audit is now 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 weak due to lack of staffing and appropriate training and certification. 

64 

 
External audit 

the  constitutional  and 

legal  framework,  none  of 

Regarding 
the  four  Supreme  
Audit  Institutions  (SAIs)  —  for  Bosnia  and  Herzegovina,  the  two  entities  and  the  Brčko 
District  —  are  anchored  in  the  respective  constitutions  or  the  Brčko  District’s  Statute.  Their 
functional,  operational  and  financial  independence  is  addressed  by  the  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).  The 
recent  inclusion  of  the  Republika  Srpska  SAI  in  the  treasury  system  risks  limiting  the 
independence  of  its  financial  operations.  The  ban  on  new  recruitment  by  the  Federation 
Government has limited the functional and operational independence of the Federation SAI. 

Concerning  institutional  capacity,  the  SAIs  at  state  level  and  Republika  Srpska  entity  level 
have sufficient staff. However, the SAIs of the Brčko District and especially of the Federation 
entity lack capacity to cover the wide scope of external audit, which is disproportionally bigger 
in the case of the Federation entity than at the other levels. 

The  cooperation  among  the  SAIs  in  the  Coordination  Board  has  improved  and  the  meetings 
have become more regular and frequent. As concerns the quality of audit work, the four SAIs 
aim  to  ensure  that  financial  and  performance  audits  and  quality  control  conform  to 
international  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.  The 
Coordination Board of SAIs in Bosnia and Herzegovina adopted an IT development plan for 
2016-2020.  Increased  use  of  information  technology  and  sampling  methodologies  has 
improved the efficiency of audit procedures. 

Concerning  the  impact  of  audit  work,  the  annual  reports  are  submitted  to  the  legislatures 
regularly.  They  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 follow-up by auditees 
to  recommendations  is  between  50  %  and  60  %  at  all  levels.  The  implementation  of  audit 
recommendations  is  formally  monitored  by  the  SAIs  at  the  time  of  the  next  audit.  The  SAIs 
and CHUs should strengthen their cooperation to improve the internal control environment. 

Protection of the EU’s financial interests 

Legislation  is  not  aligned  with  the  acquis.  Fraud  prevention  is  addressed  under  the  national 
anti-corruption  strategies.  There  is  no  formally  appointed  national  anti-fraud  coordination 
service  or  related  network,  but  this  role  has  been  taken  by  the  State  Investigation  and 
Protection  Agency.  It  ensures  cooperation  with  the  European  Commission  and  provides 
support to the European Commission investigators during on-the-spot checks.  

Protection of euro against counterfeiting 

The country is addressing counterfeiting-related issues under its strategy for fighting organised 
crime.  The  country  is  a  party  to  the  1929  International  Convention  for  the  Suppression  of 
Counterfeiting  Currency  since  2009.  The  legislation  is  not  yet  aligned  with  the  acquis. 
Regulations that define counterfeiting or identify the competent authorities and procedures to 
deal  with  counterfeit  money  are  flawed.  Medals  and  tokens  similar  to  euro  coins  are  not  yet 
regulated.  Technical  analysis  of  counterfeit  money,  including  euro  banknotes  and  coins,  is 
performed  by  the  Central  Bank,  in  the  two  departments  (total  of  five  employees  in  both 
departments).  In  addition,  the  entities  and  some  cantonal  ministries  of  interior,  Agency  for 
Forensic Examinations court experts also perform technical analysis of counterfeit banknotes. 
No cooperation agreements have been concluded yet with the Commission or the European 

65 

 
Central  Bank.  Bosnia  and  Herzegovina  participates  in  the  regional  Balkan  Network  for  Euro 
Protection initiative. 

4.2.8. Statistics  

Preparations in the area of statistics remain at an early stage for many sectors. There has been 
some progress over the past year. Results of the population and housing census, conducted in 
October  2013  were  published  on  30  June  2016.  Some  progress  was  achieved  in  the  area  of 
business statistics. An agricultural census has not been conducted as the legal framework has 
not been agreed.  

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

  further  apply  the  European  System  of  National  and  Regional  Accounts  (ESA)  2010,  in 
particular regarding national accounts and government finance statistics;  

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

  finalise  the  classification  of  statistical  regions  according  to  NUTS  and  provide  GDP  per 
capita data harmonised at NUTS II level, in line with the SAA obligations. 

In  terms  of  the  statistical  infrastructure,  the  law  on  statistics  of  Bosnia  and  Herzegovina 
remains  to  be  aligned  with  the  principles  of  the  European  statistics  Code  of  Practice.  The 
director of the Bosnia and Herzegovina Agency for Statistics (BHAS) and the deputy directors 
have been appointed.  Coordination in the national statistical system between BHAS and other 
producers and cooperation with the providers of statistics remains to be strengthened as well as 
cooperation between  BHAS  and  the  entity  offices,  particularly  in  view  of  applying  European 
methodology in a harmonised manner. The exchange of data between BHAS and the Indirect 
Taxation Authority (ITA) remains inadequate and requires further improvement. BHAS is only 
partially  using  Eurostat’s  electronic  Dataflow  Administration  and  Management  Information 
System (EDAMIS) to send data to Eurostat. 

Bosnia and Herzegovina has yet to provide per capita GDP figures harmonised at the NUTS II 
level, in line with SAA provisions. Provisional NUTS level II regions are defined until level III 
regions would be defined by Bosnia and Herzegovina.  

On  macro-economic  statistics,  there  is  limited  progress  in  applying  ESA  2010  in  national 
accounts. While annual and quarterly national accounts are produced on a regular basis, sector 
accounts remain unavailable, supply and use tables are not compiled regularly, nor are input-
output tables and regional accounts produced. A decision is required on the sector classification 
of  general  government.  Fiscal  notifications  in  line  with  ESA  2010  and  financial  accounts  are 
not  compiled.  Government  finance  statistics  (GFS)  are  not  aligned  with  ESA  methodology. 
Accrual  accounting is  applied  for expenditures only.  A harmonised index of consumer prices 
(HICP) remains to be compiled. The Balance of Payments according to the last manual (BPM6) 
is  being  produced  but  is  still  not  transmitted  to  Eurostat.  Pilot  data  on  international  trade  in 
services  statistics  for  2014  was  compiled  for  the  first  time  in  line  with  EU  acquis  and 
transmitted to Eurostat in November 2015. External trade statistics are being produced monthly 
and  provided  to  Eurostat.  However,  additional  improvements  in  terms  of  data  quality  are 
required.  

While some business statistics are produced in line with the EU acquis, further development 
of  this  area  is  required.  BHAS  is  extending  the  coverage  of  the  Regulation  on  structural 
business  statistics  and,  data  for  four  annexes  are  submitted  to  Eurostat.  Some  progress  was 
made  on  short-term  business  statistics  but  further  improvement  of  industry,  construction  and 

66 

 
 
services  statistics  remains  necessary.  The  statistical  business  register  (SBR)  requires  further 
development,  as  data  received  from  relevant  administrative  sources  remains  insufficient. 
Foreign Affiliates Statistics (FATS) has been produced for 2013 by BHAS for inward - and by 
the Central Bank for outward statistics, and further efforts should be undertaken to achieve full 
compliance  with  FATS  regulations.  Regarding  tourism  statistics,  Bosnia  and  Herzegovina  is 
currently producing only accommodation statistics. Transport statistics remain at an early stage 
of  preparation.  Research  and  development  statistics  are  compiled  for  four  sectors  (business, 
higher education, public budgets and NGOs). The Community Innovation Survey (CIS) is on 
conducted on a regular basis.  The  Information and Communication Technology  (ICT)  survey 
for  enterprises  and  households  (for  reference  year  2015)  is  being  conducted  in  2016  but  the 
data are not yet submitted to Eurostat.  

A  major  development in  the area  of social  statistics was the publication of the results of the 
population  and  housing  census  on  30  June  2016.  According  to  the  final  assessment  of  the  
International  Monitoring  Operation  (IMO)  of  October  2016,  the  census  was  conducted  in 
compliance with international standards and recommendations. The labour force survey (LFS) 
is implemented on an annual but not yet on a quarterly basis. Labour cost statistics are being 
compiled and provided to Eurostat. Basic statistics on education, such as number of pupils and 
teachers  in  pre-school,  primary,  secondary  and  higher  education,  are  produced  on  an  annual 
basis, but significant development of this area is required, especially for expenditure data. The 
European  system  of  integrated  social  protection  statistics  is  under  development.  The  EU 
Income and Living Conditions (SILC) survey is not carried out. Structure of Earnings statistics 
and  statistics  on  job  vacancies  are  not  produced  National  Health  Accounts  are  produced 
annually and submitted to Eurostat. A Memorandum of Understanding between BHAS and the 
Ministry of Security of Bosnia and Herzegovina to clearly determine the role of each institution 
in  producing  migration  and  asylum  statistics  has  still  to  be  concluded.  Further  significant 
improvements are required in the area of crime statistics.  

The  lack  of  a  recent  agriculture  census  is  a  major  limitation  for  agricultural  statistics. 
Relevant legislation for an agricultural census remains to be adopted. Consequently, a statistical 
framework to conduct statistical surveys and analysis in agriculture is not in place. Bosnia and 
Herzegovina  is  producing  only  a  very  limited  number  of  statistical  indicators  in  the  area  of 
agriculture, together with some experimental estimates.  

Annual  energy  statistics  are  available  for  all  energy  sources  produced,  except  for  renewable 
energy.  Short  term  statistics  are  available  for  electricity,  gas  and  coal.  Energy  balances  are 
produced for all energy sources, except for renewable energy.  

In environmental statistics, waste statistics are compiled on an annual basis, but without data 
on waste treatment facilities. Water statistics are compiled on an annual basis, but compliance 
remains low. Environmental accounts are available on a very limited basis. 

4.3.  Justice, freedom and security    

Bosnia and Herzegovina has some level of preparation in this area. Some progress was made, 
with the adoption of a strategy on integrated border management (IBM) and a new legislative 
framework  on  migration  and  asylum.  However,  the  country  needs  still  to  meet  international 
standards on anti-money laundering and countering the financing of terrorism. Further efforts 
are necessary on coordination and implementation.  

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

→  further  improve  capacity  for  countering  terrorism  through  better  cooperation  and 
coordination  and  exchange  of  criminal  intelligence,  prevention  of  radicalisation  and 
deradicalisation programmes; 

67 

 
 
→  further  improve  the  implementation  of  IBM  policy,  especially  by  strengthening  the  Joint 
Risk  Analysis  Centre,  border  control  capacity  and  migration  management  capacities, 
particularly in dealing with vulnerable groups; 

→  ensure  that  policies  to  reduce  drug  demand  are  implemented  effectively  and  that  drugs 
seized are destroyed. 

 (See also the specific recommendations on the fight against organised crime in section 2.3.) 

4.3.1. Visa, border management, asylum and migration 

Legal and irregular migration 

Institutional set-up and legal alignment 

In  November  2015  Bosnia  and  Herzegovina  adopted  a  new  law  on  foreigners  to  further 
harmonise  its  legal  framework  with  EU  acquis,  particularly  on  temporary  residence  for 
seasonal  workers,  business  managers  and  experts.  According  to  the  new  law,  the  maximum 
detention time in an immigration centre cannot exceed 18 months. Most of the implementing 
rules  related  to  migration  were  adopted,  notably  on  the  procedures  on  the  entry  and  stay  of 
foreigners, functioning of the immigration centres and taking biometrics from foreigners.   

In March the country adopted a strategy on migration and asylum and an action plan for the 
2016-2020 period, aiming to improve its strategic framework on migration management. 

A  comprehensive  Housing  Policy  that  includes  provisions  for  social  inclusion  of  IDPs  and 
returnees is still pending. 

Implementation and enforcement capacity 

The  Immigration  Department  of  the  Bosnia  and  Herzegovina  Ministry  of  Security  is  in 
charge of implementing and coordinating the overall migration policy. The Department closely 
cooperates  with  relevant  domestic  institutions  and  agencies.  Its  administrative  capacity  (15 
employees)  is  insufficient  (20 %  of  the  posts  remain  vacant).  The  staff  receives  regular 
training.   

The Immigration Centre has a capacity of 120 individuals, which is adequate for the current 
influx  of  migrants.  Staff  are  regularly  trained  on  international  regulations  and  standards  as 
regards the treatment of migrants hosted in the centre.  

The centre has separate sections for vulnerable groups of migrants. Moreover, capacities have 
been increased through cooperation with NGOs over hosting vulnerable groups in safe houses. 
The centres also have in place measures to prevent infiltration by people smugglers.  

Current legislation and cooperation agreements with foreign donors enable effective voluntary 
and  forced  return  of  irregular  immigrants  to  countries  of  origin.  Their  effective 
implementation remains to be fully ensured. Bosnia and Herzegovina has ratified readmission 
agreements  with  EU  and  third  countries,  including  with  Turkey  and  Albania,  as  well  as 
implementation protocols with 13 EU Member States. The implementation of these agreements 
is  overall  smooth.  In  2015  EU  Member  States  issued  5  380  return  decisions  to  Bosnia  and 
Herzegovina  citizens;  the  return  rate  was  80.6  %,  well  above  the  EU  average  of  42.2  %. 
Regional  cooperation  on  the  return  of  extra-regional  irregular  migrants  to  their  countries  of 
origin should be further strengthened. 

Overall  there  remains  a  need  to  strengthen  mechanisms  for  collecting,  sharing  and  analysing 
data  on  migration.  Statistics  show  an  increasing  trend  of  people  coming  to  Bosnia  and 
Herzegovina  from  the  high-migratory-risk  countries.  In  2015  the  number  was  293 943 
individuals,  compared  with  230 974  in  2014  and  209 490  in  2013,  mostly  from  Turkey  and 

68 

 
 
Albania  but  also  from  China,  India  and  Afghanistan.  179  people  were  intercepted  while 
illegally crossing the border in 2015, compared with 189 in 2014 and 228 in 2013.  In the first 
six  months  of  2016,  the  Border  Police  intercepted  97  individuals  while  illegally  crossing  the 
state border, which represents a 30 % increase compared to the same period of 2015. 

According to the country's statistical data, 44 third-country nationals were returned to Bosnia 
and Herzegovina in 2015 under various readmission agreements, compared with 58 in 2014. In 
2015 the country’s authorities returned 103 foreign citizens, compared with 131 in 2014. The 
voluntary return programme resulted in 179 foreigners being returned from the country in 2015, 
a  6  %  increase  on  the  169  that  were  returned  in  2014.  The  Immigration  Centre  hosted  193 
foreigners in 2015, an 11.5 % decrease on the 2014 figure of 218. 

Asylum 

Institutional set-up and legal alignment 

A new law on asylum entered into force in February 2016 with a view to further harmonise the 
country’s  asylum  policy  with  international  standards  and  the  EU  acquis,  notably  on  rights  of 
asylum  applicants  and  beneficiaries  of  international  protection  to  work,  education,  social  and 
medical  welfare,  reunification  of  families  and  the  ‘non-refoulement’  principle.  Most  of  the 
implementation rules have been adopted.  

The Asylum Department of the Bosnia and Herzegovina Ministry of Security is in charge of 
implementation  of  the  asylum  policy.  The  Department  cooperates  with  other  relevant 
institutions,  including  the  Immigration  Department,  the  border  police  and  the  Service  for 
Foreigners’ Affairs. The Department handles the first instance decisions on granting or denying 
asylum applicants the status of international protection. 

Implementation and enforcement capacity 

The Asylum Department is still short of staff. Employees attend regular training sessions. The 
services of interpreters are used mainly through outsourcing with translation agencies, 

The  asylum  process  is  laid  down  in  law  and  has  been  so  far  implemented  satisfactorily. 
Identification of asylum applicants includes taking and storing biometric data in a database at 
the  Asylum  Department.  So  far  there  has  been  no  backlog.  No  case  of  refoulement  has  been 
reported. 

In  2015,  there  were  in  total  42  applications  for  asylum  filed  by  46  individuals.  There  were 
nine  more  pending  cases  for  nine  individuals  carried  over  from  2014,  so  the  Asylum 
Department  considered  a  total  of  51  applications  by  55  individuals  in  2015.  A  total  of  five 
people were granted the status of subsidiary protection, 10 applications by 10 individuals were 
rejected, and 23 applications by 24 individuals were aborted as the applicants left or attempted 
to  leave  the  country  or  failed  to  show  up  for  an  interview.  13  requests  by  16  individuals 
remained pending at the end of 2015. In the first six months of 2016 there were 16 new asylum 
applications filed by 20 individuals. 

The  infrastructure  and  accommodation  capacities  are  adequate  for  the  current  inflow  of 
asylum applicants. The Asylum Centre has a capacity of 150 beds and can be expanded to 300 
beds in the event of a sudden influx. The centre is managed by the Asylum Department of the 
Ministry  of  Security  and  its  operations  are  mostly  financed  through  the  state  budget.  The 
authorities  have  developed  legal  and  institutional  means  to  manage  eventual  sudden  influxes, 
but  the  current  resources  remain  below  what  needed  to  fulfil  the  task.  The  country  has  no 
agreement  with  the  European  Asylum  Support  Office.  The  Strategy  and  Action  Plan  on 
Migrations  and  Asylum  2016-2020,  adopted  in  March,  refers  to  the  need  to  strengthen 
reception capacity in the country and increase regional and international cooperation 

69 

 
Visa policy 

On  visa  policy,  in  2015  120  visas  were  issued  at  the  border,  a  107 %  increase  on  the  2014 
figure  of  58.  In  the  first  six  months  of  2016,  20  visas  were  issued  at  the  border,  a  37.5 % 
decrease on the 32 visas issued in the same period of 2015.  

Implementation of the visa-free regime with the EU continued. To counter cases of abuse of the 
visa-free  regime  by  the  nationals  of  Bosnia  and  Herzegovina  in  EU  Member  States  and 
Schengen  associated  countries,  the  country  continued  to  take  measures  to  address  the 
phenomenon,  as  recommended  in  the  Commission’s  reports  on  post-visa-liberalisation 
monitoring.  In 2015 a decrease was registered in the number of unfounded asylum applications 
lodged  by  the  citizens  of  Bosnia  and  Herzegovina  in  the  EU  Member  States  and  Schengen 
associated countries.   

Implementing the strategy for reintegrating returnees remained a challenge. Obstacles to lasting 
return  and  local  integration  include:  difficulties  with  economic  reintegration;  access  to 
healthcare, social protection and pensions, and the employment of minority returnees. 

Schengen and external borders 

Institutional set-up and legal alignment 

The legal framework for border control is to some extent harmonised with the EU acquis and 
is  implemented  smoothly.  Since  2014,  the  border  police  has  in  place  a  team  to  constantly 
monitor changes in the EU acquis and align with those changes whenever possible. 

A new integrated border management strategy, which is largely in line with the EU’s IBM 
concept, and a 2015-2018 framework action plan entered into force in January 2016. An annual 
action  plan  for  2016  was  adopted  in  March  to  improve  coordination  of  all  IBM  agencies  by 
combining actions, including regarding customs control and cross-border crime, that could be 
financed  through  their  individual  budgets.  The  IBM  strategy  should  be  brought  fully  in  line 
with the EU IBM concept. 

Implementation and enforcement capacity 

The border police remained understaffed. In June 2016 there were 523 (around 20 %) vacant 
positions  out  of  the  2 646  included  in  the  organisation  chart.  Specialised  training  is  regularly 
provided to improve the quality of border checks and other operations in the field.   

Implementation  of  the  IBM  strategy  is  hampered  by  the  fact  that  the  Joint  Risk  Analysis 
Centre (JRAC) has limited human resources and weak coordination capacity. This is because 
some of the liaison officers that should be designated by participating agencies on a 24/7 basis 
have  not  yet  been  hired.  Moreover,  the  outstanding  issue  of  permits  for  access  to  relevant 
databases interrupts  the regular information  exchange process  and impedes timely reaction in 
the field.  Additional improvements are required to  the JRAC’s connection with the local risk 
analysis centres in participating agencies and to the information exchange process. 

Further improvements are needed on infrastructure and equipment at border crossing points, 
including  border  surveillance  and  information  technology  system.  Budget  limitations  are 
resulting in a lack of specialised equipment for more appropriate border controls. 

Inter-agency  cooperation,  such  as  that  between  the  border  police  and customs  at  the  border 
crossing points, is satisfactory, but improvements are needed on information exchange. 

The  Central  Investigation  Office  is  an  investigative  component  of  the  border  police  that  is 
assigned police powers that can  be applied throughout  the whole country. It often cooperates 
with  local  police  forces  on  arrests  and  detention  away  from  the  border  itself.  The  Office’s 
operational  capacity  is  limited  due  to  the  lack  of  equipment  and  staff.  The  Office  also  has 

70 

 
insufficient equipment, but has adequate expertise for detecting forged documents and access to 
its databases. 

On  international  cooperation,  the  country  is  a  signatory  to  the  Convention  on  Police 
Cooperation in Southeast Europe, the Operational and Strategic Agreement with Europol, and a 
number of agreements with neighbouring countries, including on joint patrols, joint cooperation 
centres and local border traffic. The Joint Centre for Police Cooperation in Trebinje functions, 
but with limited capacity.  

Local  border  traffic  agreements  are  implemented  with  Croatia,  Montenegro  and  Serbia.  The 
projects  on closing illegal  border  crossings  with  Croatia  and  Montenegro  were  finalised.  The 
agreement  with  Serbia  is  in  the  final  stage  of  implementation.  The  border  demarcation 
agreement with Montenegro entered into force in April 2016. The border police works closely 
with  Frontex  and  Interpol  through  active  engagement  in  international  police  operations  and 
other events. A working arrangement with Frontex is in place. 

As part of the fight against corruption, the border police implements its Rulebook on internal 
reporting,  corruption  and  protection  of  whistle-blowers.  Disciplinary  proceedings  were 
started  against  seven  police  officers  in  2015.  Video  surveillance  systems,  complaint  boxes  at 
every border crossing point and a phone line for citizens to report corruption are also used to 
fight corruption at border crossing points. However, the track record in this respect needs to be 
further developed. 

4.3.2. Anti-money laundering 

Bosnia and Herzegovina still needs to meet international standards of the Financial Action Task 
Force (FATF) on anti-money laundering / countering the financing of terrorism (see also 4.1.3). 

The number of criminal reports has increased. In total, 22 reports were submitted, three verdicts 
were confirmed and two verdicts of guilt were rendered. 

The  Financial  Intelligence  Department  has  39  employees  (around  90 %  of  its  intended 
capacity).  It  organised  three  training  sessions  for  people  with  reporting  obligations  under  the 
new  law.  Memoranda  of  understanding  with  12  foreign  financial  intelligence  units  made 
continued electronic exchanges of information possible with all other members of the Egmont 
Group.  The  Financial  Intelligence  Department  exchanged  information  with  32  countries.  It 
submitted four reports on money laundering, but no reports were submitted on the financing of 
terrorism.  In  2015  there  were  31  cases  of  money  laundering  in  the  reporting  period,  and  113 
persons were reported.  

4.3.3. Drugs 

Bosnia and Herzegovina remained a country of drugs transit and storage. Production of drugs is 
small-scale and mostly limited to marijuana cultivation. Domestic demand for drugs increased 
slightly,  especially  for  polydrugs.  There  is  no  national  strategy  or  action  plan  for  drug 
suppression.  The  Republika  Srpska  National  Assembly  adopted  a  2016-2021  strategy  for 
supervision and suppression of narcotic drugs in July. Legislation to prevent and suppress the 
abuse of narcotic drugs and establish a focal point for drug issues at national level has yet to be 
adopted.  The  Bosnia  and  Herzegovina  Commission  for  Suppression  of  Abuse  of  Narcotic 
Drugs  was  reappointed  in  December,  but  is  not  functioning.  The  Commission  for  Drugs 
Destruction was appointed, but no destruction of drugs took place.   

Operational  activities  continued  to  be  coordinated  on  a  case-by-case  basis.  Cooperation  with 
the  European  Monitoring  Centre  for  Drugs  and  Drugs  Addiction  continued.  The  number  of 
reported crimes related to drug abuse increased. In total 1 546 criminal reports were submitted. 
947 indictments were confirmed, and 866 verdicts of guilt were rendered. Most cases related to 

71 

 
 
 
illicit  production  and  trafficking  in  narcotic  drugs  and  to  possession  and  enabling  of  use  of 
narcotic drugs.   

4.3.4. Police  

An effective institutional framework at state level is still lacking. The system for electronic data 
exchange  of  police  and  prosecution  registries  is  not  functioning  in  the  Federation  entity.  The 
general  lack  of  coordination  and  cooperation  between  law  enforcement  agencies  hampers  the 
ability  of  the  police  to  deliver  a  full  range  of  services.  In  December  2015  and  March  2016, 
respectively,  the  State  Investigation  and  Protection  Agency  signed  agreements  on  mutual 
assistance  and  operational  cooperation  with  the  police  in  the  cantons,  the  Federation  and 
Republika Srpska entities, and the Brčko District. A memorandum of understanding to improve 
police  cooperation  in  crisis  situations  was  signed  between  the  Federation  of  Bosnia  and 
Herzegovina and five cantons in October 2015. The Republika Srpska Ministry of the Interior 
and the Chief Prosecutor signed a Protocol to establish a forum for cooperation between district 
prosecutors’ offices and public security centres in April. 

New  law  on  police  internal  affairs  was  adopted  in  the  Republika  Srpska  entity  in  June. 
Legislation  was  adopted  in  three  cantons  (Sarajevo,  Tuzla  and  Goražde)  to  secure  a  greater 
level  of  financial  and  operational  independence  for  police  forces,  thus  reducing  the  risk  of 
undue  political  influence.  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  needed  to  limit:  undue  influence,  particularly  in  the  appointment  and 
dismissal 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 still needs to be strengthened. 

4.3.5. Fighting organised crime  

Institutional set-up and legal alignment  

A  2014-2016  strategy  on  combating  organised  crime  is  in  place.  However,  there  is  no 
efficient  mechanism  to  oversee  implementation  of  the  high  number  of  action  plans  by  the 
various  law  enforcement  agencies  across  the  country,  which  would  secure  consistency  in 
implementation and harmonized approach in tackling the organized crime.  

Under the 2013-2016 strategy for controlling small arms and light weapons activities continued 
on the possession and carrying of weapons by civilians. The 2015 joint minimum standards on 
the  possession  and  carrying  of  weapons  by  civilians  began  to  be  incorporated into  respective 
legislation  across  the  country.  Five  cantons  and  the  Republika  Srpska  entity  have  already 
enacted  the  new  laws  in  this  field.  Fighting  organised  crime  and  corruption  remains 
fundamental to countering criminal infiltration of the political, legal and economic systems. 

Minimum  standards  for  asset  seizures  have  yet  to  be  consistently  incorporated  into  the 
legislation across the country. The legislation on the confiscation of criminal assets is partially 
aligned  with  the  acquis.  Further  alignment  is  required  at  state,  Republika  Srpska  entity  and 
Brčko District levels. 

The legal framework on human trafficking still has yet to be harmonised with the acquis. The 
Federation  criminal  code  has  not  yet  been  fully  harmonised  with  the  state-level  legal 
framework,  thus,  creating  problems  for  law  enforcement  and  judicial  authorities  in  daily 
activities. Other levels of authority took measures to further harmonise their legal frameworks 

72 

 
 
 
with the acquis. Institutions continued to implement rulebooks regulating proper treatment and 
protection of both domestic and foreign victims of human trafficking and witnesses in human 
trafficking cases. 

Bosnia and Herzegovina continues to be a country of origin, transit and destination for human 
trafficking.  Implementation  of  the  2016-2019  action  plan  on  fighting  human  trafficking  is 
ongoing.  A  comprehensive,  multidisciplinary  and  victim-oriented  approach  to  trafficking  still 
needs  to  be  developed  and  identification  of  victims  needs  to  be  improved.  The  country  still 
lacks a comprehensive system to identify the overall trends and challenges in addressing human 
trafficking. 

An agreement on operational and strategic cooperation with Europol was signed between 
the Bosnia and Herzegovina Minister of Security and the Europol Director in August 2016.  

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

Implementation and enforcement capacity 

There  have  been  30  first  instance  convictions  for  organised  crime.  In  the  same  period,  43 
organised  crime  investigations  against  238  suspects  were  ordered,  while  84  persons  were 
indicted  in  19  indictments  for  organized  crime.  Some  large-scale  operations  took  place, 
including 
in  cooperation  with  EU  Member  States.  In  2015  criminal  assets  worth 
EUR 1 015 365 were subject to confiscation orders in a total of 116 cases. 

The Federation entity still faces serious delays in implementing legislation on seizures because 
the agency responsible for managing seized assets is not yet fully operational. 

The number of potential victims of human trafficking detected in 2015 decreased to 35, down 
from 49 potential victims detected in 2014. Almost half of the detected potential victims were 
minors,  and  more  than  three  quarters  of  them  were  women.  In  the  first  half  of  2016,  six 
potential  victims  of  trafficking  were  detected.  The  trafficking  was  mainly  aimed  at  labour 
exploitation, sexual exploitation, forced begging and forced marriages. 

Institutions  for  fighting  human  trafficking  continued  their  cooperation  and  coordination.  A 
2016-2019 action plan for fighting human trafficking started to be implemented as of 1 January 
2016.  Regional  monitoring  teams  continued  to  meet  regularly.  The  Task  Force  for  Fighting 
Human  Trafficking  and  Irregular  Immigration  continued  to  coordinate  activities  between  law 
enforcement  and  prosecution,  especially  on  processing  and  proactive  protection.  Joint 
investigations continued but the capacities of prosecutors and law enforcement officers need to 
be further improved.  

The  State  Prosecutor’s  Office  continued  to  implement  international  cooperation  agreements 
signed  with  several  EU  Member  States.  The  State  Investigation  and  Protection  Agency 
intensified financial investigations into human trafficking cases but its capacity requires further 
improvement. Police academies continued to provide training on human trafficking policy, the 
EU acquis and best EU practices.  

Identification,  prosecution  and  protection  require  significant  improvements,  especially  for 
evidentiary  proceedings  in  court  trials.  Practitioners  also  need  further  training.  The 
coordination role of the Task Force for Fighting Human Trafficking needs to be strengthened. 
Existing IT systems need to become fully operational to support multidisciplinary risk analysis-
based and victim-oriented fighting of human trafficking. 

73 

 
4.3.6.  

Fight against terrorism 

Institutional set-up and legal alignment  

The framework action plan to accompany the 2015 – 2020 strategy on the prevention and fight 
against terrorism was adopted by the BiH Council of Ministers in October 2016. 

In  the  fight  against  terrorism  Bosnia  and  Herzegovina  has  been  seriously  affected  by  the 
phenomenon  of  foreign  terrorist  fighters  and  radicalisation.  According  to  official  data,  188 
men, 61 women, and 81 children with Bosnia and Herzegovina citizenship are believed to have 
travelled  to  Syria  and  Iraq  from  Bosnia  and  Herzegovina  and  from  the  Bosnian  diaspora 
between  December  2012  and  December  2015.  Pockets  of  radicalisation  have  been  identified 
across the country, in particular in the Wahhabi community.  

Implementation and enforcement capacity 

Provisions in the state criminal code on sanctions against foreign terrorist fighters started to be 
used in criminal proceedings. Seven people were arrested on suspicion of having taken part in 
the fighting in Syria and two individuals were arrested at the border crossing, preventing them 
from departing to foreign battlefields.  

In 2015, 12 people were indicted for the criminal offence of organising a terrorist group, while 
four people were indicted for the criminal offence of publicly encouraging terrorist activities in 
conjunction with the criminal offence of illegal forming and joining foreign para-military and 
para-police  formations.  The  Bosnia  and  Herzegovina  Court  handed  down  three  first-instance 
verdicts  for  the  crime  of  terrorism  against  three  people.  Cases  of  hate  speech  need  to  be 
addressed more forcefully. 

The  capacities  of  the  counter-terrorism  task  force  still  need  to  be  further  strengthened.  The 
task force’s operational component is still awaiting rules for its financing and confirmation of 
the  formal  status  of  its  members.  The  counter-terrorism  capacity  of  the  Bosnia  and 
Herzegovina’s Prosecutor’s Office increased as eight new prosecutors joined the office.  

The phenomenon of foreign fighters terrorist requires a dedicated approach by the intelligence 
and  law  enforcement  community  and  a  consistent  judicial  policy  towards  offenders.  Efforts 
need  to  be  intensified  to  identify,  prevent  and  disrupt  the  flow  of  foreign  terrorist  fighters 
travelling  to  conflict  areas  such  as  Iraq  and  Syria.  Deradicalisation  and  prevention  of 
radicalisation programmes have yet to be developed and introduced. 

4.3.7.  

Judicial cooperation in civil and criminal matters 

Concerning judicial cooperation in civil matters, Bosnia and Herzegovina has not yet acceded 
to  several  instruments  developed  within  the  framework  of  the  Hague  conference  on  private 
international law, such as the Convention of 19 October 1996 on jurisdiction, applicable law, 
recognition,  enforcement  and  co-operation  in  respect  of  parental  responsibility  and  measures 
for the protection of children, and the Protocol of 23 November 2007 on the law applicable to 
maintenance obligations. 

A cooperation agreement with Eurojust has yet to be concluded. Issues on the implementation 
of  data  protection  legislation  in  prosecutors'  offices  in  Bosnia  and  Herzegovina  have  so  far 
prevented  Eurojust  from  opening  negotiations  on  such  a  cooperation  agreement.  Bosnia  and 
Herzegovina  was  involved  in  30  cases  registered  at  Eurojust.  Bosnia  and  Herzegovina 
participated in 7 coordination meetings and 2 joint investigation teams. 

The Bosnia and Herzegovina Court received seven new requests to provide international legal 
aid in criminal matters in the reporting period and completed 10 cases in total. 

74 

 
 
 
The international judicial cooperation legislative framework is in place and functional, yet not 
always  efficient.  The  relevant  department  within  the  Bosnia  and  Herzegovina  Ministry  of 
Justice,  which  is  responsible  for  implementation  of  the  legislation  and  adherence  to  the 
conventions, is understaffed. Moreover, there is a lack of harmonised case law throughout the 
country and therefore, inconsistent implementation of international standards by judges due to 
the  fragmentation  of  the  judicial  system.  Legislation  on  international  legal  assistance  and 
bilateral regional cooperation agreements need to be amended to introduce direct court-to-court 
cooperation to improve the efficiency of judicial cooperation. 

ANNEX I – RELATIONS BETWEEN THE EU AND BOSNIA AND HERZEGOVINA 

Bosnia  and  Herzegovina  participates  to  the  Stabilisation  and  Association  Process  and  is  a 
potential  candidate  for  EU  membership.  The  country  submitted  its  application  for  EU 
membership  in  February  2016.  Following  the  recognition  of  meaningful  progress  in  the 
implementation  of  the  Reform  Agenda,  in  September  2016  the  EU  Council  invited  the 
European Commission to submit its opinion on Bosnia and Herzegovina's application for EU 
membership. 

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.  Bosnia  and  Herzegovina  initialled  in  July  2016  a  protocol  for  the 
technical adaptation of the SAA to take into account its bilateral traditional trade with Croatia. 
The signing of the protocol, triggering its provisional application, is pending. The suspension of 
the Autonomous Trade Measures will be lifted once the protocol on the adaptation of the SAA 
is signed. 

The EU provides guidance to the country’s authorities on reform priorities on the country's EU 
membership path. Political and economic dialogue took place between the EU and Bosnia and 

75 

 
 
 
 
 
 
 
Herzegovina in the framework of the SAA/IA structures. Under the 7th IA cycle, four meetings 
of sub-committees and – after 1 June 2016 – two technical consultations took place as planned. 
The  first  Stabilisation  and  Association  Council  meeting  under  the  SAA  in  December  2015 
followed  by  the  first  meeting  of  the  SAA  Committee  established  the  necessary  institutional 
structures for the future cycles of sub-committees. The first SAA cycle was launched in 2016 
with two sub-committees meetings.  

The  Stabilisation  and  Association  Parliamentary  Committee  (SAPC)  was  established  in 
November  2015  as  part  of  the  Stabilisation  and  Association  Agreement  bodies.  However,  it 
failed  to  adopt  its  Rules  of  Procedures  due  to  insistence  of  some  delegates  from  Bosnia  and 
Herzegovina for the inclusion of a voting mechanism provision which would not comply with 
European standards. The European Parliament adopted a Resolution on the Commission report 
on Bosnia and Herzegovina in April.  

A  Reform  Agenda  adopted  by  the  country  authorities  in  July  2015  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 continued to be implemented 
throughout 2016 at state and entity level with encouraging initial results. 

The Structured Dialogue on Justice continued to address the outstanding institutional issues 
related to the functioning the judiciary. In particular, the ministerial meetings in the framework 
of the Structured Dialogue which were held in October, December, February and July provided 
guidance on the reform of the state-level judiciary. 

 As  regards  the  common  foreign  and  security  policy  (CFSP),  Bosnia  and  Herzegovina 
aligned itself, when invited, with 20 out of 26 relevant EU declarations and Council decisions 
(77  %  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 is in place since September 2015. 

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 
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 2016. 

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. 
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.  

76 

 
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 
EUR  160  million  as  well  as  over  EUR  40  million  for  further  flood  recovery  measures  was 
adopted in December 2014 and is being implemented. In the absence of 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 
countrywide sector strategies remains a key requirement 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  has  joined  the  Europe  for  Citizens  and  the  COSME 
programme  as  well  and  has  started  its  participation  in  the  programmes  as  of  2016.  The 
ratification of COSME is pending. 

77 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX II – STATISTICAL ANNEX 

Note 
1) 

Note 

STATISTICAL DATA (as of 5.10.2016) 
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 (%) 
Employment growth (national accounts data), relative 
to the previous year (%) 
Labour productivity growth: growth in GDP (constant 
prices) per person employed, relative to the previous 
year (%) 
Unit labour cost growth, relative to the previous year 
(%) 
**3 year change (T/T-3) in the nominal unit labour cost 
growth index (2005 = 100) 
Labour productivity per person employed: GDP (in 
PPS) per person employed relative to EU average 
(EU-27 = 100) 
Gross value added by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 

2011 
3 840e 
51 209 

2011 
26 210 

13 400 
3 500 
7 300 

28 

1.0 

: 

: 

: 

: 

: 

2012 
3 836e 
51 209 

2012 
26 193 

13 391 
3 500 
7 700 

29 

-1.2 

: 

: 

: 

: 

: 

2013 
3 832e 
51 209 

2013 
26 743 

13 672 
3 600 
7 900 

29 

2.5 

: 

: 

: 

: 

: 

2014 
3 827e 
51 209 

2014 
27 304 

13 959 
3 600 
8 000 

29 

1.1 

: 

: 

: 

: 

: 

8.1 
21.5 
4.9 

7.4 
21.1 
4.7 

8.0 
21.6 
4.5 

7.1 
21.3 
4.7 

2015 
3 819e 
: 

2015 
28 540 

14 591 
3 800 
8 300 

29 

: 

: 

: 

: 

: 

: 

: 
: 
: 

2003 
3 833e 
51 209 

2003 
14 728 

7 530 
2 000 
: 

: 

3.9 

: 

: 

: 

: 

: 

: 
: 
: 

78 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 (%) 
Gross fixed capital formation by the general 
government sector, as a percentage of GDP (%) 

2) 

2) 
2) 
2) 
2) 

: 
: 

: 
: 
: 
: 
: 

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) 

Note 

2003 
: 
: 
: 

: 

: 

: 

: 

3) 

3) 

3) 

65.6 
105.1 

17.9 
0.2 
29.9 
53.2 
: 

2011 
102.3 
: 
: 

: 

: 

: 

: 

66.8 
104.9 

17.5 
0.5 
29.1 
52.0 
: 

2012 
98.6 
: 
: 

65.9 
102.8 

16.8 
0.2 
30.0 
49.8 
: 

2013 
103.8 
: 
: 

66.9 
: 

: 
: 
: 
: 
: 

: 
: 

: 
: 
: 
: 
: 

2014 
103.9 
: 
: 

2015 
107.1 
: 
: 

: 

: 

: 

66.4 

66.0 

69.1b 

3 715 

3 513 

4 406b 

6 023 

5 847 

6 738b 

: 

: 

: 

: 

Inflation rate and house prices 
Consumer price index (CPI), change relative to the 
previous year (%) 
**Annual change in the deflated house price index 
(2010 = 100) 

Note 
4) 

2003 
0.6 

2011 
3.7b 

: 

: 

2012 
2.0 

: 

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 (%) 
**Five year change in share of world exports of goods 
and services (%) 
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 (%) 

Note 
5) 

2003 
-1 439 

2011 
-1 270 

2012 
-1 160 

5) 

5) 

5) 

5) 

5) 
5) 

5) 

5) 

5) 

5) 

5) 

5) 

-3 671 

-4 131 

-4 091 

-3 741 

-4 142 

-3 793 

297 

473 

944 

108 

945 

104 

949 

179 

979 

104 

1 061 

69 

1 462 

1 810 

1 881 

1 889 

2 030 

1 830 

298 
-16.5 

: 

45 
-7.3 

: 

55 
-8.1 

: 

62 
-7.8 

: 

100 
-7.1 

: 

66 
-6.1 

: 

338.0 

344.6 

258.8 

174.6 

386.1 

221.2 

0.0 
: 

-4.1 
: 

46.4 
: 

64.4 
: 

6.2 
: 

42.8 
: 

338.0 

340.4 

305.2 

239.1 

392.2 

264.0 

: 

: 

: 

196.5 

153.3 

122.9 

225.8 

184.7 

-53.0 

-55.9 

-55.4 

-55.4 

-53.5 

1.2 

4.2 

3.8 

6.4 

2.9 

Public finance 
***General government deficit / surplus, relative to 
GDP (%) 
***General government gross debt relative to GDP (%) 

Note 

2003 
0.7 

2011 
-1.2 

27.6 

32.8 

2012 
-2.0 

36.6 

2013 
-2.2 

37.7 

2014 
-2.0 

2015 
0.7 

41.6 

41.9 

79 

2013 
-0.2s 

: 

2013 
-723 

2014 
-0.9 

2015 
-1.0 

: 

: 

2014 
-1 029 

2015 
-833 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total  government revenues, as a percentage of GDP 
(%) 
Total government expenditure, as a percentage of 
GDP (%) 

Note 

6) 

6) 

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) 
**Annual change in financial sector liabilities (%) 
**Private credit flow, consolidated, relative to GDP (%)  7) 
7) 
**Private debt, consolidated, relative to GDP (%) 
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 (2010 = 
100) 
**3 year change (T/T-3) in the trade-weighted effective 
exchange rate index, 42 countries (2005 = 100) 
Value of reserve assets (including gold) (million euro) 

8) 
9) 

6) 

10) 

11) 

40.9 

40.2 

43.3 

44.6 

2003 
: 

2011 
: 

: 

: 

43.8 

45.8 

2012 
: 

: 

42.7 

44.8 

2013 
: 

: 

43.8 

43.2 

45.8 

42.6 

2014 
: 

2015 
: 

: 

: 

1 592 

3 163b 

3 141 

3 423 

3 738 

4 183 

2 810 

7 372 

7 624 

8 229 

8 830 

9 534 

: 

: 

: 

: 

: 

: 

2 619 

7 619 

7 947 

8 194 

8 423 

8 624 

9.9 
5.7 
34.0 
: 
10.87 
1.16 
1.956 

: 

: 

1.3b 
2.2 
52.8 
: 
7.43 
0.12 
1.956 

1.4 
1.5 
54.3 
: 
7.20 
0.14 
1.956 

4.8 
1.3 
54.5 
: 
7.23 
0.12 
1.956 

5.2 
0.9 
54.4 
: 
6.32 
0.09 
1.956 

4.6 
1.4 
54.1 
: 
5.74 
0.09 
1.956 

100.4 

99.6 

97.8 

98.1 

97.3 

: 

: 

: 

: 

: 

1 428 

3 284b 

3 328 

3 614 

4 001 

4 400 

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 (%) 

Note 

12) 

2003 
: 
: 
: 
: 

: 

: 

2011 
7 938 
4 204 
-3 734 
99p 

70.3 

59.7 

2012 
7 799 
4 018 
-3 781 
97p 

72.7 

61.4 

2013 
7 756 
4 285 
-3 472 
98p 

73.5 

60.0 

2014 
8 283 
4 439 
-3 844 
100p 

2015 
8 105 
4 595 
-3 510 
102p 

72.1 

71.6 

58.9 

60.8 

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) 

Labour market 
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 (%) 

Note 

2003 
0.9 

2011 
-0.9 

2012 
-0.9p 

2013 
-1.3p 

2014 
-1.5p 

2015 
: 

7.7 

: 
: 

: 

: 
: 

Note 

2003 
: 

2011 
58.3 

5.4 

: 
: 

2012 
58.7 

: 

: 
: 

: 

: 
: 

: 

: 
: 

2013 
58.7 

2014 
59.2 

2015 
59.2 

42.5 

42.5 

42.8 

43.2 

43.2 

53.7 
31.4 
27.0 

: 
: 

54.2 
31.1 
27.2 

20.6 
21.5 

53.3 
32.2 
27.7 

18.9 
22.2 

54.6 
31.9 
28.5 

53.9 
32.4 
28.2 

17.1 
22.1 

17.9 
22.0 

: 

: 
: 
: 

: 
: 

80 

13) 
13) 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13) 
13) 
14) 

14) 

15) 

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) (%) 

: 
: 
: 

: 

41.6 

: 
: 
: 

: 

: 

: 

: 
: 
32.5 

62.1 

27.6 

26.1 
30.0 
57.9 

22.3 

8.9 
48.9 
30.0 

65.3 

28.2 

26.5 
30.8 
63.1 

23.1 

7.7 
51 
32.7 

62.5 

27.6 

26.7 
29.1 
59.1 

22.9 

7.9 
52.7 
31.9 

7.5 
52.4 
31.2 

63.1 

63.2 

27.6 

27.9 

25.3 
31.2 
62.7 

25.9 
30.9 
62.3 

23.4 

22.8 

29.1 

26.8 

28.0 

31.6 

27.7 

13.5 

15.5 

15.7 

17.2 

16.4 

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 
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) 
Mobile broadband penetration (per 100 inhabitants) 
Fixed broadband penetration (per 100 inhabitants) 

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 
(%) 
Government budget appropriations or outlays on R&D 
(GBAORD), as a percentage of GDP (%) 
Percentage of households who have internet access 
at home (%) 

Environment 
*Index of greenhouse gas emissions,  CO2 equivalent 
(1990 = 100) 
Energy intensity of the economy (kg of oil equivalent 
per 1 000 euro GDP at 2010 constant prices) 
Electricity generated from renewable sources relative 
to gross electricity consumption (%) 
Road share of inland freight transport (based on 
tonne-km) (%) 

Note 
16) 

2003 
484 

: 

: 
: 
: 

2011 
816 

: 

33.4 
: 
29.9 

2012 
826 

: 

: 
: 
30.3 

2013 
827 

: 

: 
: 
25.9 

2014 
830 

2015 
830 

: 

: 

: 
: 
25.2 

: 
: 
26.3 

Note 

2003 
: 

2011 
191.4 

2012 
196.0 

2013 
202.5 

2014 
209.3 

2015 
217.0 

271.6e 

825.8e 

873.2e 

910.4e 

920.7 

887.0 

Note 

Note 

: 
: 

2003 
18.2 

: 

2003 
: 
: 

: 

: 

Note 

2003 
: 

: 

: 

: 

: 
: 

2011 
20.1 

35 

2011 
: 
: 

: 

29.8 

2011 
: 

: 

: 

: 
: 

2012 
20.1 

48 

2012 
: 
0.27 

: 

: 

2013 
: 
0.33 

: 

: 

2012 
: 

2013 
: 

: 

: 

: 

: 

: 
: 

: 
: 

: 
: 

2013 
20.1 

2014 
20.1 

2015 
20.1 

50 

128 

128 

2014 
: 
0.30 

0.05 

: 

2014 
: 

: 

44.5 

2015 
: 
: 

: 

: 

2015 
: 

: 

: 

64.0 

65.9 

68.1 

70.3 

72.5 

Energy 

Note 

2003 

2011 

2012 

2013 

2014 

2015 

81 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 

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) 

: 
2 914 

0 
-96 
3 380 
11.3 

2003 
: 

1 722 
: 

: 

: 

: 

Note 

17) 

18) 

3 483 

4 618 

4 515 

4 617 

6 046 

: 
4 061 

0 
653 
5 392 
15.3 

2011 
: 

1 675 
455 

: 
3 973 

0 
647 
5 112 
14.1 

2012 
: 

1 680 
446 

: 
3 816 

0 
379 
5 012 
17.5 

2013 
: 

1 670 
447 

: 
3 768 

0 
1 670 
7 794 
16.2 

2014 
: 

1 712b 
444 

: 

: 
: 

: 
: 
: 
: 

2015 
: 

1 728 
455e 

577 

539 

530 

533 

564e 

1 086 

1 070 

1 089 

1 099 

1 093e 

688 

793 

1 119 

0 

0 

19) 

204 

287 

674 

906 

0 

265 

688 

686 

720e 

1 224 

1 081 

1 138 

0 

319 

0 

0 

238 

290 

: = not available 
b = break in series 
e = estimate 
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)  GDP calculated by the expenditure approach is higher than GDP calculated by the production approach. 
3)  2013 and 2013: excluding natural persons (entrepreneurs). 
4)  2003: retail price index. 
5)  2011–15: based on IMF balance of payments manual, sixth edition. 
6)  2011–15: based on IMF monetary and financial statistics manual, 2000. 
7)  Data for MFIs. 2013–15: based on the quarterly GDP estimate (production approach) until the official annual GDP statistics 

are published by the BH Agency of Statistics. 

8)  Short-term lending rates in national currency to non-financial corporations (weighted average). 
9)  Demand deposit rates in national currency of households (weighted average). 

10)  Real effective exchange rate. 
11)  2003: excluding gold. 
12)  Based on Paasche export and import unit value indices in BAM (2010 = 100). 
13)  The analysis of employment by sector does not sum to 100% because Section U is not included. 
14)  The analysis of employment between public and private sector does not sum to 100% as some types of ownership are 

excluded. 

15)  2003: not calculated using the ILO methodology; taken from the Bureau for Employment; excluding data from Brčko District. 
16)  Net salary. 2003: excluding data from Brčko District. 
17)  2003 and 2011–14: the utilised agricultural area consists of arable land, kitchen garden, permanent crops and permanent 

grassland as cadastral data (not as UAA). 2014–15: including fallow land. 

18)  2011: 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. 

19)  2003: including dried pulses. 

82 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
83