COMMISSION STAFF WORKING DOCUMENT Bosnia and Herzegovina 2018 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 2018 Communication on EU Enlargement Policy
Date: 2018-04-17
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  Strasbourg, 17.4.2018  SWD(2018) 155 final  COMMISSION STAFF WORKING DOCUMENT Bosnia and Herzegovina 2018 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 2018 Communication on EU Enlargement Policy {COM(2018) 450 final}  
 
 
Table of Contents 

1. 

 INTRODUCTION .................................................................................................................... 2 

1.1.   Context ......................................................................................................................... 2 

1.2.   Summary of the report ................................................................................................. 2 
2.  FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW .......................................... 4 

2.1.  Functioning of democratic institutions and Public Administration Reform ................ 4 
2.1.1.   Democracy ............................................................................................................ 4 

2.1.2.   Public administration reform ................................................................................ 6 

2.2.  Rule of law and fundamental rights ............................................................................. 8 
2.2.1. Judiciary and fundamental rights .............................................................................. 8 

2.2.2. Justice, freedom and security .................................................................................. 21 

3.   FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT & COMPETITIVENESS .......................... 29 

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

34 

4.  BILATERAL RELATIONS WITH NEIGHBOURING COUNTRIES ................................................. 36 

ANNEX I – RELATIONS BETWEEN THE EU AND BOSNIA AND HERZEGOVINA ............................. 38 

ANNEX II – STATISTICAL ANNEX .............................................................................................. 40 

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1. 

 INTRODUCTION  

1.1.   Context  

In  February  2016,  the  country  applied  for  EU  membership  and  in  September  2016  the 
European  Council  invited  the  European  Commission  to  submit  its  Opinion  on  the  merits  of 
Bosnia  and  Herzegovina's  application.  In  December  2016,  the  Commissioner  for  European 
Neighbourhood  Policy  and  Enlargement  Negotiations  handed  over  a  comprehensive 
Questionnaire  covering  all  EU  accession  criteria.  The  country's  consolidated  answers  were 
finalised  in  February  2018  and  the  answers  handed  over  to  the  President  of  the  European 
Commission. The Commission has started the work on its Opinion, which will be prepared on 
the basis of the country's answers to the Questionnaire and follow up inquiries, dedicated peer 
reviews  as  well  as  Commission's  consultations  with  international  organisations  and  civil 
society. Pending finalisation of the Opinion preparation process, this interim report on Bosnia 
and  Herzegovina  provides  an  update  on  the  situation  in  the  country  as  well  as  on  key 
developments  on  "fundamentals'  first"  areas:  the  rule  of  law  and  fundamental  rights,  public 
administration  reform  and  economic  development.  The  full  analysis  of  Bosnia  and 
Herzegovina's situation in relation to the EU accession criteria will be carried out as part of 
the  Commission's  future  Opinion  and  its  accompanying  analytical  report.  Bosnia  and 
Herzegovina  continued  to  implement  the  Stabilisation  and  Association  Agreement  and  the 
meetings  of  the  joint  bodies  under  the  agreement  took  place,  except  for  the  parliamentary 
committee which has yet to adopt its Rules of Procedures. 
1.2.   Summary of the report1 

Regarding  the  political  criteria,  the  electoral  framework  remains  to  be  urgently  amended 
with a view to ensuring the proper organisation of the October 2018 elections and the smooth 
implementation  of  the  results.  In  this  regard  all  political  leaders  need  to  assume  their 
responsibility and to find a solution with regard to the Federation House of Peoples. 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.  The  adoption  of 
legislation  stemming  from  the  Reform  Agenda,  including  adoption  of  the  excise  tax 
legislation,  was  negatively  affected  by  tensions  between  ruling  coalition  parties  and 
obstruction  by  opposition  parties  in  Parliaments  at  state  and  entity  levels,  leading  to  a 
slowdown  of  the  reform  pace.  The Reform  Agenda  has  been  effectively implemented when 
the  state  level  and  the  entity  levels  have  cooperated  in  a  coordinated  manner.  Bosnia  and 
Herzegovina’s constitution remains in breach of the European Convention on Human Rights, 
as per the Sejdić-Finci and related cases.  

The functioning of the Presidency of Bosnia and Herzegovina was affected by the expression 
of divergent positions by its individual members on a number of issues under its competence 
over foreign policy. The Council of Ministers adopted further country-wide strategies on areas 
such  as  environment  and  rural  development.  However,  with  the  exception  of  a  few  reforms 
and  the  notable  adoption  of  the  excise  legislation,  delivery  on  a  number  of  reforms  was 
delayed by lack of agreement within the ruling coalition members. Countrywide strategies in 

1 This interim report covers the period from October 2016 to February 2018. It is based on input from a variety 
of  sources,  including  contributions  from  the  government  of  Bosnia  and  Herzegovina  in  relevant  SAA 
Sub-Committee  meetings,  the  EU  Member  States,  European  Parliament  reports  and  information  from  various 
international and non-governmental organisations.  

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areas such as energy, employment or public financial management are yet to be adopted. The 
coordination  mechanism  on  EU  matters  has  started  to  function  as  of  June  2017  with  the 
preparation  of  country's  answers  to  the  Commission's  Opinion  Questionnaire.  A  national 
programme for the country’s legal approximation with the EU acquis has yet to be adopted.  

Bosnia and Herzegovina is at an early stage with the reform of its public administration and 
no progress has been achieved in the past year. A country wide public administration reform 
strategy is being developed and remains to be adopted.  Further fragmentation of civil service 
in the Federation entity and at cantonal level increased the risk of politicisation. Bosnia and 
Herzegovina has some level of preparation regarding its judicial system. Some progress was 
made regarding the judiciary, but overall, reforms progress at a slow pace. Any revision of the 
criminal  procedural  code  should  be  in  line  with  international  standards  and  should  not 
undermine the ability of institutions to tackle serious organised crime, corruption or other rule 
of  law  challenges.  There  is  also  some  level  of  preparation  regarding  the  fight  against 
corruption. However, corruption is widespread and remains an issue of concern. Bosnia and 
Herzegovina  has  some  level  of  preparation  on  the  fight  against  organised  crime.  Some 
progress  was  made,  notably  by  adopting  a  new  strategy  on  fighting  organised  crime  and 
fulfilling  the  action  plan  on  anti-money  laundering  and  financing  of  terrorism  as  a  result  of 
which  Bosnia  and  Herzegovina  will  no  longer  be  subject  to  Financial  Action  task  Force 
Monitoring.  However,  significant  efforts  are  needed  regarding  financial  investigations  and 
improving  capacities  for  countering  terrorism  as  well  as  enhancing  cooperation  with 
neighbouring countries on border management issues. 

Some progress was achieved on human rights and minorities’ issues. However, the strategic, 
legal, institutional and policy frameworks for the observance of human rights are in need of 
substantial improvement. This includes  freedom of expression where political pressure and 
intimidation of journalists continued, including physical and verbal attacks. Lack of effective 
implementation  of  legislation  on  the  prevention  of  and  protection  from  gender-based 
violence,  in  particular  domestic  violence,  remains  a  concern.  A  more  comprehensive  and 
integrated approach towrds the Roma2 population is required to foster their social inclusion. 

Bosnia and Herzegovina's alignment with EU Common Foreign and Security Policy has yet to 
be improved. 

Concerning  the  economic  development  and  competitiveness,  Bosnia  and  Herzegovina  has 
made  some  progress,  but  is  still  at  an  early  stage  of  establishing  a  functioning  market 
economy.  Some  improvements  of  the  business  environment  have  been  achieved  and  the 
financial  sector  has  been  strengthened.  Key  remaining  issues  are  a  weak  rule  of  law,  a  still 
poor  business  environment,  a  fragmented  and  inefficient  public  administration  and  major 
labour  market  imbalances,  related  to  a  poor  education  system,  weak  institutional  capacities, 
and  an  unsupportive  investment  climate.  Moreover,  the  informal  economy  remains 
significant. 

Bosnia and Herzegovina has made some progress and remained at an early stage in achieving 
the  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the  Union.  The 
overall level of education and spending on research and development has remained low. The 
quality  of  the  physical  capital  suffers  from  underinvestment.  Transport  and  energy 

2 All these groups are considered under the wider "Roma" umbrella term under the EU Framework for National 
Roma Integration Strategies. 

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infrastructure is  insufficiently  developed. The speed of structural adjustment has  been slow, 
although there has been some diversification in the country’s regional trade structure. 

Migration management  capacity,  particularly  in  dealing  with  vulnerable  groups,  remains  to 
be  strengthened.  In  this  context,  Bosnia  and  Herzegovina  needs  to  put  in  place  a  return 
mechanism for irregular migrants in line with EU standards and policies.  

2. 

FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW  

2.1. 

Functioning of democratic institutions and Public Administration Reform  

2.1.1.   Democracy 

Regarding  elections,  in  December  2016,  the  Bosnia  and  Herzegovina  Constitutional  Court 
declared  as  unconstitutional  the  Election  Law  provisions  pertaining  to  election  of  the 
delegates to the Federation entity House of Peoples. Due to the failure of the Parliamentary 
Assembly  to  implement  the  decision  within  the  given  timeline  of  six  months,  the 
Constitutional  Court,  in  July  2017,  repealed  the  unconstitutional  provisions  thus  creating  a 
legal loophole potentially hindering the implementation of 2018 General Election results. The 
2010 Constitutional Court decision has yet to be implemented in order to safeguard the basic 
democratic right of the citizens of Mostar to vote in local elections. 

Regarding the functioning of the Parliament, the adoption of legislation stemming from the 
Reform Agenda was negatively affected by tensions between ruling coalition parties, leading 
to  a  slowdown  of  the  reform  pace.  The  insistence  by  some  delegates  from  Bosnia  and 
Herzegovina on the inclusion of a voting mechanism provision which would not comply with 
European  standards  continued  to  prevent  the  Stabilisation  and  Association  Parliamentary 
Committee (SAPC) under the Stabilisation and Association Agreement (SAA) from adopting 
its  Rules  of  Procedure  and  for  its  meetings  to  take  place.  The  Republika  Srpska  entity 
National Assembly continued to adopt legislation aimed at implementing the Reform Agenda 
with  a  focus  on  health  and  social  protection  sector.  The  disagreements  between  Federation 
ruling  coalition  parties  adversely  affected  the  adoption  of  Reform  Agenda  measures  at  the 
level  of  the  Federation  entity  parliament.  The  work  of  the  Brčko  District  Assembly 
committees, including the Committee for European Integration, improved, but the Assembly’s 
expert capacities remain limited.  

The  country’s  Constitution,  which  is  Annex  4  to  the  Dayton/Paris  Peace  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 rulings in the cases  Sejdić-Finci, Zornić, Pilav 
and Šlaku of the European Court of Human Rights recognised that the country's constitution is 
in breach of the European Convention on Human Rights. A number of Constitutional Court 
decisions are yet to be implemented at various levels across the country. 

The  functioning  of  the  Presidency  of  Bosnia  and  Herzegovina  was  affected  by  the 
expression of divergent positions by its individual members on a number of issues under its 
competence over foreign policy. The Council of Ministers remained committed to advancing 
the country’s EU integration agenda. It adopted further country-wide strategies on areas such 
as  environment  and  rural  development.  However,  delivery  on  a  number  of  reforms  was 
delayed by lack of agreement within the ruling coalition members. Countrywide strategies in 

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areas such as energy, employment or public financial management are yet to be adopted. The 
role  and  capacity  of  the  Directorate  for  European  Integration  will  need  to  be  further 
strengthened. The second cycle of the meetings of joint bodies under the SAA took place as 
planned,  except  for  the  SAPC.  The  coordination  mechanism  on  EU  matters  has  started  to 
function  as  of  June  2017  with  the  harmonisation  of  country's  answers  to  the  Commission's 
Opinion Questionnaire. 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 and is 
essential for planning and streamlining the EU approximation process throughout the country. 

The  Federation  of  Bosnia  and  Herzegovina  Government  prepared  some  legislative  acts 
stemming from the Reform Agenda action plan.   

The Republika Srpska Government continued to prepare legislation under the framework of 
the Reform Agenda action plan. The entity's Voluntary Pension Fund started its operation as 
the  first  of  its  kind  in  Bosnia  and  Herzegovina.  The  Republika  Srpska  Government  has 
embarked on an ambitious reform program to restructure its railways. The entity continued to 
separately  work  on  harmonising  its  legislation  with  the  EU  acquis  and  developed  its  own 
approximation  methodology,  which  foresees  the  adoption  of  annual  approximation  action 
plans  by  its  Government,  without  cooperation  with  other  levels  of  governance  across  the 
country.  

The adoption of new banking legislation was a good step towards harmonisation of economic 
reforms between the entities. 

The Brčko District Government has continued to play a constructive role in the adoption of 
the  EU  related  strategies  and  documents,  notably  in  the  area  of  transport,  environment  and 
rural  development.  However,  the  overall  pace  of  implementation  of  the  Reform  Agenda 
measures has slowed down in 2017.  

The  entities’  legislations  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 lack of cooperation between them and a relatively 
low level of financial autonomy at municipal level. 

The Ombudsman’s  Office continued  to  lack adequate  human resources and to  face  serious 
financial  constraints  despite  recent  budgetary  increases.  This  is  detrimental  to  its  overall 
performance, including to the implementation of the anti-discrimination legislation.  

Regarding civil society, there was some progress in establishing institutional mechanisms for 
cooperation between governments and civil society organisations (CSOs), as well as in public 
financing of CSOs. A Charter on Cooperation between the Council of Ministers of Bosnia and 
Herzegovina and CSOs was signed in November 2017. A strategic framework for cooperation 
with civil society still needs to be developed at all governance levels. A number of institutions 
at  various  levels  of  government  designated  contact  points  in  charge  of  dialogue  and 
cooperation with CSOs. Consultations with CSOs were occasionally held in specific sectors, 
also  thanks  to  the  use  of  institutional  mechanisms  such  as  e-consultation  web  platforms. 
Public funding calls and, in some cases, results of selections were publicly available, but some 
funding mechanisms for distribution of funds remained non-legally binding and were not fully 
implemented.  Transparency  remained  weak  due  to  lack  of  monitoring  and  evaluation 
mechanisms. The “Alliance  for EU  Integration” – a  platform bringing  together civil society 
actors  –  published  their  Alternative  Responses  to  Commission’s  Opinion  Questionnaire  in 
October 2017.  

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On civilian oversight of the security forces, large quantities of unsafely stored and unstable 
ammunition, weapons and explosives (AWE) continued to pose a risk. The AWE Masterplan 
to  finalise  the  disposal  by  2020  of  all  concerned  material  held  by  the  military  was 
complemented  in  December  2016  with  specific  measures  related  to  weapons'  disposal.  The 
large stockpiles held by the 16 Law Enforcement Agencies in the country and the widespread 
illegal presence of weapons among the population remain issues of concern. 

2.1.2.   Public administration reform 

Bosnia and Herzegovina is at an early stage with the reform of its public administration. No 
progress  has  been  achieved  in  the  past  year  and  the  Commission's  recommendations  from 
2016  have  not  been  implemented.  There  has  been  an  increase  in  political  support  for 
development of a country-wide public administration reform strategy. The civil service in the 
Federation  entity  and  at  cantonal  level  remained  fragmented.  Weaknesses  in  policy 
development  and  coordination  and  accountability  remain  to  be  addressed.  A  national 
programme for approximation of legislation with the acquis remains to be adopted.  

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

→  adopt  and  start  implementation  of  a  new  country-wide  strategic  framework  for  public 
administration reform and for public financial management; 

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

→  adopt a national programme for legal approximation with the EU acquis.  

Policy development and coordination 

The  policy  making  system  in  Bosnia  and  Herzegovina  remains  very  fragmented.  Separate 
legislative frameworks for policy planning are in place for state level and entities. There has 
been no progress towards a country-wide approach to policy development and coordination. 
Country-wide  requirements  and  common  standards  for  the  development  of  sector  strategies 
have  not  been  established  so  far.  Coordination  among  different  levels  of  government  and 
quality review of policy contents remain insufficient. Hence, improving quality and ensuring 
coherence  and  financial  affordability  of  public  policies  across  the  country  remains  a  major 
challenge. 

Administrative  coordination  on  EU  matters  was  established  through  the  coordination 
mechanism  in  August  2016.  A  national  programme  for  legal  approximation  with  the  EU 
acquis has yet to be adopted. 

The legal framework for inclusive and evidence-based policy and legislative development 
is  not  fully  coherent,  and  the  legal  requirements  are  not  complemented  with  detailed 
guidelines  or  quality  control  to  ensure  effective  implementation.  Financial  impact  of  policy 
proposals  should  be  assessed  at  all  levels  according  to  legal  requirements,  but  this  is  not 
systematically  implemented.  Due  to  limited  capacity,  regulatory  impact  assessments  and 
public consultations are not carried out systematically. The limited quality of and practice in 
monitoring and reporting as well as lack of a formal requirement to publish key government 
planning documents are serious obstacles to public scrutiny of government work.  

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Public financial management 

Public  financial  management  reform  programmes  have  been  adopted  at  all  levels  of 
government, except in Republika Srpska entity. A country-wide reform strategy remains to be 
developed. 

Considerable  shortcomings  exist  regarding  institutions'  internal  control  mechanisms  at  all 
levels, rendering the system vulnerable to  inefficiency and waste, particularly in the area of 
public  procurement.  Ministries  of  Finance  at  various  levels  lack  administrative  capacity  for 
further implementation of reforms in public finance management. 

Bosnia  and  Herzegovina  has  not  yet  achieved  sufficient  budget  transparency.  Annual 
budgets  are  published,  but  no  consolidated  monthly  reports  exist  at  any  level  of 
administration. The lack of harmonisation on the charts of accounts at state and entity level 
hampers  access 
to  consolidated  data.  Follow-up  on  external  audit  findings  needs 
improvement. There have been initiatives to prepare and plan a citizens’ budget, especially for 
some institutions at the level of the Council of Ministers, but their development needs still to 
be followed through. 

Accountability of the administration 

The organisation and  the  typology of public administration bodies remains unclear, with  no 
detailed  functional  criteria  for  differentiating  between  independent  bodies  and  bodies  which 
are subordinated to ministries. Also, there are no clear procedures for establishing, merging or 
abolishing  administrative  bodies.  Clear  lines  of  accountability  are  not  ensured  among 
institutions.  Also,  decision-making  is  very  centralised,  with  little  delegation  from  political 
level to senior civil servants. Performance management is not developed. 

The financial independence of the Ombudsman from the executive remains a concern and the 
implementation  of  its  recommendations  remains  low,  thus  affecting  citizens'  right  to  good 
administration.  The  right  to  access  public  information  is  not  ensured  uniformly  across 
government levels due to shortfalls in legislation and inconsistent implementation at all levels. 
Mechanisms for monitoring implementation remain weak. Efficiency of courts in dealing with 
administrative  cases  has  improved,  thus  strengthening  citizens'  right  to  administrative 
justice. The citizens' right to seek compensation in cases of wrongdoing is regulated at all 
levels, but implementation cannot be verified due to lack of data on practical implementation. 

Service Delivery to citizens and business 

The legal framework for a user-oriented administration has been improved. The Office for 
Supervision and Accreditation has been set up through the necessary adoption of a series of 
rulebooks, and made operational through finalisation of recruitment procedures as of January 
2018. A new Law on Electronic Identification and Trust Services has been developed and is 
in  the  phase  of  opinion  obtaining,  after  which  it  will  be  referred  to  the  adoption  procedure. 
Ensuring  its  adoption  and  the  operability  of  the  Office  for  Supervision  and  Accreditation  is 
needed,  in  order  to  meet  all  conditions  for  the  functional  use  of  the  e-signature  in  the  open 
system. The current legal framework at different levels enshrines the key principles of good 
administrative  behaviour.  Harmonisation  between  laws  on  administrative  procedures  and 
their legislative amendments needs to be ensured. Special administrative procedures still need 
to  be  reviewed  and  either  abolished  or  brought  in  line  with  the  law  on  administrative 
procedure at various administrative levels.  

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Strategic Framework for public administration reform 

All levels of administration are actively contributing to the development of the country-wide 
public  administration  reform  strategic  framework.  Consensus  on  the  current  draft  is  in 
place  but  political  support  needs  to  be  confirmed.  The  Public  Administration  Reform 
Coordinator’s  Office  continued  to  implement  projects  of  the  previous  strategy,  financed  by 
the PAR Fund. The validity of the PAR Fund, which is an important instrument for financing 
public  administration  reform,  needs  to  be  confirmed  so  as  to  ensure  the  financial 
sustainability of the next reform strategy. Better donor coordination and a new database on 
the donor financial assistance for the next reform strategy are needed. 

2.2.  Rule of law and fundamental rights  

2.2.1. Judiciary and fundamental rights  

The  EU's  founding  values  include  the  rule  of  law  and  respect  for  human  rights.  A  proper 
functioning  judicial  system  and  an  effective  fight  against  corruption  are  of  paramount 
importance, as is the respect for fundamental rights in law and in practice.  

Bosnia  and  Herzegovina  has  some  level  of  preparation  to  implement  the  acquis  and 
European Standards in this area. Some progress was made regarding the judiciary but overall, 
reforms proceeded at a slow pace. Corruption is widespread and remains an issue of concern. 
Regarding  the  enforcement  of  human  rights,  the  country  made  some  progress,  notably  with 
the adoption of the revised Roma action plan on employment, housing and health care, while 
overall  observance  of  human  rights  remained  in  need  of  substantial  improvements.  The 
provision on the death penalty in the constitution of the Republika Srpska entity still needs to 
be repealed.   

Functioning of the judiciary 

Bosnia and Herzegovina’s justice system has some level of preparation. Some progress was 
made in addressing some of the 2016 report's recommendations, namely through the adoption 
of the action plan on the implementation of the 2014-2018 justice sector reform strategy and 
the  establishment  of  the  monitoring  and  reporting  structures.  The  High  Judicial  and 
Prosecutorial  Council  (HJPC)  adopted  a  detailed  action  plan  to  implement  the  European 
Commission's recommendations on issues within the HJPC remit, including the reinforcement 
of  disciplinary  procedures.  However,  most  measures  are  to  be  addressed  by  the  legislator. 
Reduction of the utility-cases backlog in the courts and reforming enforcement procedures are 
still  a  challenge.  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: 

  implement  the  action  plan  of  the  2014-2018  justice  sector  reform  strategy,  allocate  a 
realistic  budget  and  ensure  that  the  monitoring  and  reporting  system  is  effectively 
functioning; 

  implement  the  action  plan  adopted  by  the  HJPC  notably  with  a  view  of  strengthening 
disciplinary  sanctions  and  integrity  in  the  judiciary,  including  through  improved  assets 
declarations;  develop  more  qualitative  criteria  for  appointment  and  appraisal  of  judges  and 
prosecutors; upgrade training, including through the establishment of an effective mentorship 
system;  revise  the  HJPC Law on the basis of the European Commission's recommendations 
and the relevant Venice Commission Opinion; 

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  improve  impartiality  and  efficiency  by  upgrading  the  existing  case  management  system 
within the HJPC in order to monitor random allocation of cases effectively and provide more 
accurate  statistical  data  in  line  with  CEPEJ  methodology;  reform  the  execution  procedure 
laws  to  reduce  effectively  the  utility-cases  backlog  in  courts  and  improve  the  enforcement 
procedure throughout Bosnia and Herzegovina.   

Strategic documents  

The  action  plan  of  the  2014-2018  countrywide  justice  sector  reform  strategy,  with  new 
adjusted  timelines  for  implementation,  was  adopted  by  the  Council  of  Ministers  in  March 
2017.  The  ministerial  conference  (justice  ministers  at  all  levels  and  presidents  of  the  Brčko 
District Judicial Commission and the HJPC) is responsible for supervising the implementation 
of  the  strategy.  It  adopted  its  rules  of  procedure  in  June  2017  and  established  the  technical 
structures  to  monitor  the  implementation  of  the  strategy.  These  structures  are  now  fully 
operational and produced a first activities' implementation report adopted at the session of the 
ministerial  conference  held  in  March  2018.  The  ministerial  conference  supported  the 
extension  of  the  strategy's  timeframe  beyond  2018,  to  be  approved  by  the  Council  of 
Ministers,  and  the  signing  a  memorandum  of  understanding  with  CSOs  representatives  on 
regular monitoring and reporting on the implementation of the strategy. The authorities need 
to  take  more  decisive  action  to  implement  the  strategy,  notably  by  providing  adequate 
budgetary allocations for each activity envisaged, and demonstrate that the implementation of 
the strategy has a measurable impact.  

The draft Law on Bosnia and Herzegovina Courts needs to be finalised under the leadership 
of  the  Bosnia  and  Herzegovina  Ministry  of  Justice,  in  line  with  the  standards  related  to 
criminal  jurisdiction  set  in  the  Treaty  on  the  Functioning  of  the  European  Union.  The 
adoption  of  this  law  is  needed  to  reinforce  legal  certainty  and  functioning  of  the  judiciary, 
notably in the fight against serious crime. 

Management bodies 

Shortcomings  remain  in  the  law  on  the  High  Judicial  and  Prosecutorial  Council,  notably 
concerning  appointment,  appraisal  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  2014  opinion  of  the  Venice  Commission  and  the 
recommendations  issued  by  the  European  Commission,  notably  on  the  basis  of  the  peer 
reviews.  Despite  this  clear  guidance  there  has  not  been  any  new  draft  law  since  2013.  This 
issue needs to be addressed as a matter of priority. 

The  HJPC  started  addressing  issues  regarding  transparency  of  its  sessions,  strengthening 
voting procedures as well as disqualification of judges and prosecutors.  The HJPC adopted in 
November  2017  a  detailed  action  plan  with  clear  deadlines  for  the  implementation  of  the 
Commission recommendations within the HJPC remit, in the areas of financial declarations, 
appointment  and  disciplinary  procedures,  performance  appraisal,  HJPC  rules  of  procedure, 
judicial training, including an effective monitoring mechanism. The Council needs to continue 
to improve its capacity in the areas of strategic, budget and human resources planning, as well 
as its public relations work. The 2018 budget of the HJPC is EUR 5.07 million compared to 
EUR  4.86  million  in  2017.  At  the  end  of  2017,  135  out  of  173  positions  of  the  HJPC 
organisation  chart  were  staffed.  These  figures  encompass  both  the  permanent  and 
project-based personnel.  

9 

 
 
 
Independence and impartiality 

In  October  2017,  the  HJPC  adopted  controversial  conclusions  that  could  have  endangered 
judicial  independence  and  prosecutorial  autonomy  as  they  envisaged,  inter  alia,  the 
possibility  of  dismissing  judges  and  prosecutors  on  the  basis  of  alleged  past  war-time 
activities  without  conducting  disciplinary  procedures.  In  November  the  HJPC  adopted  new 
conclusions replacing the previous ones with a view to complying with European standards. 

This episode revealed the vulnerability of the judiciary to various types of pressure.  Judicial 
independence and prosecutorial autonomy must be further strengthened, including in practice. 
Politically motivated threats against courts and prosecutor’s offices must be detected on time 
and  properly  addressed.  The  constitutional  and  legal  framework  remains  weak  as  to  the 
guarantees of independence, impartiality and autonomy of judges and prosecutors.  

The case management system for judges and prosecutors provides for random case allocation 
but  its  security  and  transparency  need  to  be  upgraded.  Reassignments  without  a  specific 
justification are possible and no reallocation control system is in place. 

Accountability 

The  HJPC  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 
started being implemented. The HJPC rules of procedures were amended to better regulate the 
disqualification procedure in case of conflict of interest. The HJPC also started addressing the 
issue  of  the  very  loose  regulations  on  declarations  of  assets  which  require  some  financial 
statement from judges and prosecutors but do no set any publicity or verification mechanism. 
The template for asset declaration has been modified but it is still in need of improvements. 
Moreover,  verification  needs  to  be  strengthened,  notably  by  allowing  cross-checking  with 
databases of other relevant administrations. 

Efforts  need  to  be  stepped  up  to  strengthen  disciplinary  procedures.  The  scope  of  some 
disciplinary  offences  is  still  to  be  clarified  and  relevant  jurisprudence  needs  to  be  collected 
and published. In 2017 the Office of the Disciplinary Prosecutor registered 1077 complaints 
against  holders  of  judicial  and  prosecutorial  functions  (17.2  %  more  compared  to  2016).  It 
initiated 25 disciplinary proceedings which resulted in 19 sanctions being imposed  -  mainly 
salary  reductions,  one  dismissal  and  one  demotion  of  the  Chief  Prosecutor  to  the  status  of 
prosecutor.  Disciplinary  committees  have  issued  24  decisions  on  merits,  including  the 
previous  years'  remaining  cases.  The  sanctioning  policy  needs  to  be  stricter  as  deterrent 
sanctions in disciplinary rulings against judges and prosecutors remain rare. Decisions not to 
prosecute  need  to  be  based  on  a  clear  reasoning  and  there  needs  to  be  a  possibility  for 
challenging those decisions and having effective legal remedy.  

The Office of the Disciplinary Prosecutor needs to become independent from the HJPC. The 
HJPC  can  still  reverse  the  final  decision  of  the  Disciplinary  Prosecutor,  who  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 performance, appraisal and 
promotion systems. 

Codes of ethics for judges and prosecutors exist, but there is not yet any formal enforcement 
mechanism with the power to initiate disciplinary cases. Corruption in the judiciary still needs 
to be more forcefully addressed.  

10 

 
 
 
Professionalism and competence 

Procedures regulating appointment and career management of judges and prosecutors need to 
be improved as a matter of priority to ensure that they become more transparent, efficient and 
merit-based. A clear distinction needs to be introduced between procedures for first entry into 
the  judicial  career  and  procedures  for  transfer  and  promotion.  The  performance  appraisal 
system needs to be mandatory for all judges and prosecutors, including at the State-level, and 
be based not only quantitative criteria but also on qualitative ones. A clear correlation should 
be  established,  on  the  one  hand,  between  performance  appraisal  and  career  advancement, 
notably for managerial positions, and on the other hand, between performance appraisal and 
disciplinary  procedures.  The  HJPC  started  addressing  some  of  these  issues,  notably  by 
amending its internal rules. Moreover, the legislator has to address the lack of effective legal 
remedy  against  the  final  decision  on  appointment  and  performance  evaluation  by  amending 
the Law on HJPC.  

Quality of justice 

Training  for  judges  and  prosecutors  in  Bosnia  and  Herzegovina  is  provided  through  the 
judicial  and  prosecutorial  training  centres  in  the  entities,  and  through  the  internal  training 
structure of the Court of Bosnia and Herzegovina. Multiannual training programmes still need 
to be systematically developed on the basis of a sound needs assessment, and an independent 
monitoring  and  assessment  system  has  to  be  introduced.  The  content,  methodology  and 
delivery  of  training  need  upgrading,  particularly  on  building  specific  capacity  to  handle 
line  with  European  Commission's 
complex  cases  and  basic 
recommendations.  Courts'  presidents  and  chief  prosecutors  need  to  be  more  involved  in 
identifying the training needs of their staff. The HJPC needs to supervise all judicial training 
activities in line with its legal obligations. Both training centres require sufficient budgeting to 
maintain sustainable training programmes.  

judgecraft  skills, 

in 

Monitoring  and  measuring  of  the  day-to-day  activities  of  courts  and  prosecutors’  offices 
take place through the case management system, evaluating the performance of judges based 
on  the  annual  workload.  Statistical  data  on  the  performance  of  the  judicial  system  is  not 
systematically collected or analysed.  

The  courts’  work  is  becoming  increasingly  transparent  through  more  allocation  of  access 
password to anonymised judicial decisions free of charge for judges, prosecutor and following 
the payment of an annual fee for defence attorneys, individual or legal entities. The conditions 
for  recording  court  proceedings  need  to  be  improved  and  more  court  decisions  need  to  be 
made  available  to  a  larger  number  of  parties,  while  further  complying  with  data  protection 
legislation through systematic anonymisation.  

Activities  undertaken  in  order  to  increase  the  consistency  of  jurisprudence  across  the 
country, in the absence of a supreme court ensuring uniform interpretation of the law, slowed 
down significantly in 2017, with the civil joint panel of the highest-level courts in Bosnia and 
Herzegovina meeting twice and the administrative and criminal panels holding no meetings.  

In  addition  to  judicial  conciliation,  other  alternative  dispute  resolution  methods,  notably 
mediation, need to be improved in line with European standards and best practices.  

The 2018 budget for the judiciary is EUR 130.5 million, which is more than the 2017 budget 
(EUR 122.2 million accounting for 0.8 % of GDP). In 2018, EUR 99.2 million was allocated 
to courts (2017: EUR 93.2 million) and EUR 28.7 million to prosecutors’ offices (2017: 26.5 
million).  Given  that  the  largest  part  of  the  budget  is  spent  on  salaries,  the  funds  allocated 

11 

 
 
remain  insufficient,  in  particular  to  cover  investment  needs  and  to  improve  the  judicial 
infrastructure.  

Efficiency 

The  length  of  court  proceedings  in  2017  decreased  by  very  little  (474  days)  compared  to 
2016 (476 days) and so did the clearance rate at 105 % (109 % in 2016) 

The  overall  backlog  for  pending  court  cases  by  the  end  of  2017  amounted  to  2.1  million 
cases. The bulk of the backlog was made up of 1.7 million of unpaid utility cases, without any 
significant  reduction  since  the  last  reporting  period.  The  specific  backlog  for  pending 
non-utility  cases  was  reduced  by  5.2  %  compared  to  end  of  2016  with  a  total  of  339 385 
pending  cases.  The  average  duration  of  pending  non-utility-related  civil  cases  before  first 
instance  courts in  Bosnia and Herzegovina  in 2017 was 494 days,  compared to  502 days in 
2016.  

No legislative initiative has yet been taken to reduce the backlog of unpaid utility bill cases 
and  small  financial  claims  by  improving  enforcement  procedures.  The  authorities  need  to 
endorse  an  action  plan  aiming  at  finding  the  most  appropriate  model  for  transferring  these 
cases from courts to other public entities or private entities.   

Domestic handling of war crimes cases 

The backlog of war crimes cases was further tackled. The number of indictments decreased, 
with 40 indictments filed against 69 suspects in 2017 compared to 72 indictments filed against 
154 suspects  in  2016. In 2017, courts in  Bosnia and Herzegovina  confirmed  46 indictments 
against  95  suspects,  and  concluded  47  cases  at  first  instance  against  75  suspects,  46  being 
convicted and 29 acquitted.  

There  was  a  continued  positive  trend  in  the  successful  prosecution  of  war  crimes  cases 
involving sexual violence. Final convictions amounted to 13 cases involving 20 defendants.  

The in-court victim and witness support was further improved with the courts' police being 
formally authorised to ensure protection in both entities. However, its long-term sustainability 
remains linked to the continued guarantee of domestic financing.  

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.  

Draft  amendments  to  the  national  war  crimes  strategy  need  to  be  adopted  to  have  a  more 
efficient distribution of cases between levels of governance and ensure that new criteria and 
timelines for processing the most complex cases are established. The role of the Supervisory 
Body  overseeing  the  implementation  of  the  strategy  needs  to  be  reinforced  to  ensure  the 
effective monitoring of the strategy. 

Fight against corruption 

Bosnia and Herzegovina has some level of preparation in the fight against corruption. Some 
progress was made on addressing the previous report's recommendations with the adoption of 
strategies  and  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.  There  remains  a  gap  between  the  declared  political  will 
and the lack of concrete results. 

12 

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

 adopt consistent and credible action plans (where they are still missing), underpinned by a 
realistic budget and ensuring the implementation and monitoring of anti-corruption strategies; 

  establish  prevention bodies,  where  not  yet  set  up,  and  ensure  that  they  cooperate  among 
themselves  and  with  the  Agency  for  prevention  of  corruption  and  coordination  of  the  fight 
against corruption; 

 amend legislation to ensure effective management of conflicts of interest, notably at state, 
Federation entity and Brčko District levels, improve legislation governing asset declarations, 
and  adopt legislation  for  the  effective  protection  of  whistle-blowers  in  the  Federation  entity 
and Brčko District;  

  significantly  improve  the  track  records  in  the  areas  of  repression  and  prevention  of 
corruption, including by imposing effective and deterrent sanctions. 

Track record 

In  2017,  there  were  a  total  of  193  investigations  of  the  State  Investigation  and  Protection 
Agency  into  financial  crimes  and  corruption,  out  of  which  125  were  finalised.  26  reports 
against 107 persons (97 natural and 10 legal entities) and 11 supplementary reports against 68 
persons (52 natural and 16 legal entities) were sent to the competent prosecutor’s offices.  

There  were  a  total  of  232  indictments  countrywide,  with  an  increase  of  18  %  compared  to 
2016  while  the  number  of  convictions  was  156  (151  in  2016),  a  majority  of  which  were 
suspended sentences. There was no final conviction in high-profile cases. Proceeds of crime 
for the amount of EUR 837 000 were confiscated. Most of the convictions were for abuse of 
office or authority.  

to  fight  corruption.  Financial 

Audit  reports  and  tax  administration  reports  continue  not  to  be  used  in  a  systematic  and 
proactive  way 
launched 
systematically  in  corruption  cases  and  the  concept  needs  further  alignment  with  Financial 
Action Task Force (FATF) standards. The political authorities should respect the operational 
independence of law enforcement bodies and ensure that these bodies are fully empowered to 
act effectively and impartially when investigating corruption allegations.  

investigations  are  still  not 

There  is  still  no  track  record  of  effectively  checking  political  party  and  electoral  campaign 
financing.  

Asset  declarations  remained  governed  by  separate  and  uncoordinated  pieces  of  legislation, 
making their implementation  ineffective, including  the penalties imposed.  In  2017,  96 %  of 
the  522  state  level  public  officials  submitted  income  and  asset  declarations.  The  Central 
Electoral  Commission  refused  to  publish  the  asset  declarations  of  the  officials  running  in 
elections, in line with the interpretation given by the Agency for Protection of Personal Data, 
contrary to the election law. 

The  state  level  Commission  for  deciding  on  conflict  of  interest  became  operation  in 
mid-2016. Since then it has checked the asset declarations submitted by public officials and 
civil  servants.  Decisions  imposing  sanctions  have  been  issued  in  10  cases.  Fines  collected 
amounted to a total value of EUR 1 750. Implementation of conflict of interest rules on other 
levels of governance remained uneven.  

There  is  no  legislation  in  place  governing  lobbying  and  there  remains  a  weak  inspection 
capacity in public procurement. The country should introduce a full e-procurement system 

13 

 
 
so  as  to  foster  transparency  and  to  reduce  opportunities  for  abuses.  There  is  no  dedicated 
policy in place.  

Institutional framework 

Prevention of corruption 

The state level Anti-Corruption Agency has an appropriate budget but 20 % of its 41 positions 
are vacant, including in key areas. Premises are not adequate. Dedicated corruption prevention 
bodies were set up in both entities, in the Brčko District and in almost all cantons, with the 
exception  of  West  Herzegovina.  The  Anti-Corruption  Agency  has  concluded  in  total  30 
Memoranda  of  Understanding  with  dedicated  preventive  bodies  on  the  other  level  of 
governance  as  well  with  HJPC,  governmental  agencies  and  non-governmental  organisations 
and a number of institutions for higher education.  The Agency does not have direct access to 
the  databases  of  other  bodies  (e.g.  Ministry  of  the  Interior,  Real  Estate  Agency,  tax 
authorities, land register, registry of vehicles, Central Depositary Agency) which would allow 
for  instance  cross-checking  of  data  in  real-time  and  automatic  detection  of  potential 
incompatibilities of functions. 

Law enforcement 

A Special Prosecution Office was established at the state  level and in the  Republika Srpska 
entity.  In the Federation entity, specialised departments at the Federation prosecutor's office 
and at the Supreme Court have not yet been established in spite of the adoption of the relevant 
legislation.  The  capacity  to  investigate  economic,  financial  and  public  procurement-related 
crimes  remained  weak  and  should  be  substantially  improved  in  terms  of  numbers,  level  of 
specialisation and equipment. Greater specialisation is needed within the police and judiciary. 

Legal framework 

Some  of 
the  GRECO  (Council  of  Europe  Group  of  states  against  corruption) 
recommendations still need to be addressed, notably on political party financing and conflict 
of interests.  

A new Bosnia and Herzegovina Conflict of Interest Law in line with international standards 
has not yet been adopted. This would contribute significantly to stepping up anti-corruption 
efforts.  The  Federation  entity  and  Brčko  District  need  to  adopt  legislation  on  conflict  of 
interest as well as on the effective protection of whistle-blowers. 

The Law on protection of whistle-blowers in Republika Srpska entity entered into the force in 
July 2017.It defines procedure of reporting corruption as well as obligation and competencies 
of bodies responsible to provide protection.    

There is still no effective criminal justice policy, including for penalties, which do not act as a 
deterrent.  Frequent  conflicts  of  jurisdiction,  leading  to  transfers  of  cases  between  levels  of 
governance,  result  in  slowness  and  inefficiency  of  proceedings,  thus  impacting  on  the 
credibility of the system. Lack of pro-activeness of the police in investigating corruption cases 
remains a concern.  

Rules  are  in  place  on  the  immunity  of  members  of  parliaments  in  criminal  procedure  and 
procedures governing the lifting of immunity.  

There  is  no  legal  framework  in  place  to  effectively  prevent  and  address  corruption  in  the 
private  sector.  The  country  should  conduct  a  detailed  analysis  of  its  anti-corruption 

14 

 
 
legislation,  identifying  and  addressing  gaps  and  weaknesses  in  a  coherent  legal  roadmap 
towards complying with international and European standards. 

Strategic framework 

The Anti-Corruption Strategy and action plan at state level adopted in May 2015 continue 
to be implemented. An Anti-Corruption Strategy is missing in the Brčko District. All cantons 
have their strategies for prevention of corruption except Sarajevo Canton and Bosnia-Podrinje 
Canton  while  Sarajevo Canton  has  opted to  have just an  action  plan. Action plans have  not 
been adopted in the Bosnia-Podrinje and the West Herzegovina Canton. 

In December 2017, a software application became operational in order to improve proactive 
monitoring  of  the  policy  documents.  The  fragmentation  of  strategies  and  the  action  plans 
makes their implementation less effective. 

According  to  corruption  risk  assessments,  some  sectors  like  employment,  health  and 
education remain particularly prone to corruption. More risk assessment has to be conducted 
in other vulnerable areas. 

Human rights and the protection of minorities 

in  addressing  previous 
Some  progress  was  achieved  over 
recommendations  on  human  rights  and  the  protection  of  minorities.  The  strategic,  legal, 
institutional  and  policy  frameworks  should  be  fully  implemented  and  further  improved. 
Non-discrimination among citizens in electoral matters (the Sejdić-Finci case law) and in the 
education system remains to be tackled. The provision on the death penalty in the constitution 
of the Republika Srpska entity still needs to be repealed. 

the  reporting  period 

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

→  adopt a countrywide strategy for human rights and take additional measures to combat all 
forms  of  discrimination,  notably  by  adopting  an  anti-discrimination  programme  and 
advancing implementation of anti-discrimination measures stipulated by law; 

→  complete the legal and institutional framework with a view to establishing a harmonised, 
consistent,  effective  and 
the  country  and  ensure 
non-discriminatory access to justice; 

legal  aid  system  across 

free 

→  allocate funding, apply and monitor the implementation of the strategies and action plans 
for  the  social  inclusion  of  vulnerable  and  marginalised  groups,  including  persons  with 
disabilities and national minorities, especially of the Roma population. 

Bosnia  and  Herzegovina  has  ratified  all  major  European  and  international  human  rights 
instruments. Bosnia and Herzegovina signed the Optional Protocol to the Convention on the 
Rights of the Child in July 2017. 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. 

Since  September  2016,  the  European  Court  of  Human  Rights  (ECtHR)  has  found 
violations  of  the  European  Convention  on  Human  Rights  (ECHR)  in  10  cases  (out  of  11) 
relating mainly to the right to a fair trial.  During the reporting period, 1 588 new applications 
were registered by the Court. On 1 February 2018, the total number of applications pending 

15 

 
 
before the Court was 859. 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,  Pilav  and  Zornić  cases. 
There are currently 6 cases against Bosnia and Herzegovina under the enhanced supervisory 
procedure.   

There  is  still  no  overarching  policy  on  antidiscrimination  and  on  the  promotion  and 
enforcement  of  human  rights.  The  Ombudsman  institution  has  yet  to  be  reformed  in  line 
with the Paris principles and the recommendations issued by the Global Alliance of National 
Human  Rights  Institutions  during  the  re-accreditation  process  in  late  2017,  in  order  to 
improve  its  independence  and  effectiveness  and  allow  it  to  function  as  national  preventive 
mechanism  against  torture  and  ill-treatment.  Draft  amendments  to  the  Ombudsman  Law 
should be adopted  as soon as  possible so as to ensure compliance with the Paris Principles. 
Adequate resources also need to be allocated to ensure its proper functioning.  

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

The  establishment  of  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 is substantially overdue. 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.  In  its  November  2017  review,  the  UN  Committee  against 
Torture made recommendations to address shortcomings in this area.  

Legislation  on  the  prison  system  is  neither  sufficiently  harmonised  throughout  the  country 
nor  aligned  with  European  standards.  The  condition  of  certain  facilities  does  not  allow  for 
decent  detention  conditions.  Healthcare  services  in  prisons  also  remain  deficient  due  to 
insufficient  resources  and  medical  staff.  Police  holding  facilities  are  in  extremely  poor 
condition  and  often  lack  natural  light,  inadequate  ventilation  and  have  deplorable  hygienic 
conditions.  Bosnia  and  Herzegovina  should  strengthen  its  efforts  to  enhance  conditions  in 
prisons  and  police  holding  facilities  and  ensure  that  they  are  in  conformity  with  the  United 
Nations Standard Minimum Rules for the Treatment of Prisoners. The psychiatric institution 
in  Sokolac,  intended  to  provide  mandatory  psychiatric  treatment  requested  during  criminal 
proceedings, is not yet operational. Execution of criminal sentences was hampered by the lack 
of  coordination  and  harmonisation  of  procedures  across  the  country.  There  is  no  further 
backlog  in  the  execution  of  criminal  penalties  in  the  Federation  entity.  No  reintegration 
programmes are foreseen after inmates have served their sentences. 

On  the  protection  of  personal  data,  Bosnia  and  Herzegovina  has  ratified  the  Council  of 
Europe Convention for the Protection of Individuals with regard to Automatic Processing of 
Personal  Data,  and  its  additional  protocol.  In  2016,  the  Personal  Data  Protection  Agency 
received 113 complaints against data controllers in the public and private sector, and carried 
out  93  inspections.  In  2017,  the  Agency  received  96  complaints,  and  carried  out  83 
inspections.  The  Agency  needs  adequate  resources  to  perform  its  tasks  effectively.  Further 
efforts  need  to  be  undertaken  to  align  the  legislation  with  the  General  Data  Protection 
Regulation 2016/679 and Directive 2016/680.  

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 

16 

 
 
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  neither  fully  nor  sustainably 
addressed.  Political  pressure  and  intimidation  towards  journalists,  including  physical  and 
verbal  attacks,  continued  during the  reporting  period  without  a  systemic  institutional  follow 
up. Authorities made no attempt to address the lack of transparency of media ownership. 

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  involving  intimidation  and 
threats  to  journalists  (including  those  reporting  on  the  ICTY  decision  on  Prlić  and  others), 
verbal and physical attacks, hacking of websites, political, institutional and economic pressure 
and defamation continued to be reported. Authorities do not collect data on threats and attacks 
against  journalists  and  media  workers,  and  swift  investigations  and  prosecution  of 
perpetrators is not always ensured. The authorities are expected to act swiftly and demonstrate 
zero tolerance for threats or attacks against media, and should refrain from making statements 
that may create an environment not conducive to freedom of expression. 

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.  

Implementation of legislation/institutions 

The political and institutional independence of the Communications Regulatory Agency was 
strenghtened by legislative amendments. Its financial independence continues to be an issue 
of  concern.  The  Agency's  political  neutrality,  independence  and  its  public  perception  as  a 
neutral body have yet to be ensured.  

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.  

Public service broadcaster 

The  independence  of  the  three  public  service  broadcasters  within  the  country’s  public 
broadcasting  system  has  yet  to  be  ensured.  The  public  broadcasters  in  the  two  entities 

17 

 
 
continued  to  be  exposed  to  political  influence,  particularly  via  their  politically-controlled 
steering boards;  worrying cases  of self-censorship  have  been reported also  in  the state-level 
public service broadcaster. Entity-level legislation on public service broadcasters remains to 
be harmonised with the state-level law on Public Broadcasting Service.  

The  financing  of  the  state-level  public  service  broadcaster  remains  unsustainable.  Due  to 
political  obstruction,  the  steering  board  failed  to  establish  a  functional  Public  Broadcasting 
Service corporation, as provided by the law.  

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.  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 the 
broadcasters’  independence  and  ability  to  operate.  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 and 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 freedom of assembly and association is enshrined in the constitutions and legislation at 
different  levels  of  government  in  the  country.  Although  these  rights  were  generally  upheld, 
the legislation across Bosnia and Herzegovina still needs to be harmonised with international 
standards.  Some  incidents  have  also  raised  concerns.  A  protest  march  by  LGBTI 
organisations  in  Sarajevo  on  17  May  2017  had  to  be  cancelled  due  to  delays  of  the 
administrative authorities in issuing due permits. An environmental demonstration was broken 
by  riot  police  in  August  2017  near  Vitez.  Cases  of  attacks  and  intimidation  against  human 
rights activists continued to be reported. 

On  property  rights,  land  registration  is  dealt  with  at  entity  level.  Updated  and  mutually 
linked cadastre and land register databases are yet to be established. Entity-level legislation on 
expropriation prescribes compensation at market value. Legalisation of properties is variously 
managed  at  entity  and  cantonal  level.  There  is  no  legislative  framework  on  handling 
restitution  claims.  Few  pending  cases  related  to  repossession  remain.The  Commission  for 
Real Property Claims of Displaced Persons and Refugees has not yet resumed operation. 

Concerning  non-discrimination  policies,  countrywide  human  rights  and  anti-discrimination 
strategies  have  yet  to  be  adopted.  Some  initial  steps  were  undertaken  in  developing  a 
Mid-term Anti-discrimination Programme. The Sejdić and Finci ruling of the European Court 
of Human Rights has still not been implemented, meaning that Bosnian citizens not declaring 
themselves  as  Bosniaks,  Croats  or  Serbs  are  still  not  allowed  to  stand  for  office  in  the 
state-level  House  of  Peoples  and  Presidency.  No  progress  was  achieved  in  eliminating  the 
"two schools under one roof" phenomenon, which is in breach of a ruling of the Federation 
entity Supreme Court from 2014. Disputes over education in mother tongue, national groups 
of  subjects  and  curricula  continue,  whilst  systemic  solutions  for  ensuring  inclusive  and 

18 

 
 
non-discriminatory  education  are  not  in  place.  The  common  core  curriculum  is  not  yet 
completed  nor  applied  throughout  the  country,  and  the  availability  of  National  Group  of 
Subjects  teachings  remains  limited.  The  lack  of  recognition  of  the  name  of  the  Bosnian 
language in the Republika Srpska entity leads to periodic school boycotts, often by families of 
returnees.  

Criminal provisions on hate crimes at all levels are harmonised, while the legislation on hate 
speech  remain  to  be  harmonised  across  the  country.  A  mechanism  to  collect  data  on  hate 
crimes and discrimination cases has still not been established. Failure to identify acts as hate 
crimes  as  well  as  the  high  burden  of  proof  placed  on  the  intent  lead  to  low  numbers  of 
indictments and convictions. Two cases out of 54 in the reporting period led to a conviction. 

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. 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  aligned  with  the 
Istanbul  Convention  on  preventing  and  combating  violence  against  women  and  domestic 
violence.  A  harmonised  system  for  monitoring  and  data  collection  on  cases  of  violence 
against women is still lacking. 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,  which  is  in  breach  of  existing 
legislation. 

On the rights of the child, lack of resources and of coordination among authorities hampered 
the  implementation  of  the  2015-2018  action  plan  for  children.  Concerns  persist  on  the 
inadequate standards of care provided to children placed in institutional care, 70 % of whom 
have some form of disability. During the reporting period the Federation entity adopted a law 
on  foster  care,  whose  implementation  should  allow  for  an  improved  protection  of 
approximately  1  500  children  without  parental  care.  The  exploitation  of  children  and  child 
begging  remain  issues  of  concern.  Violence  against  children  continues  to  be  widespread. 
Reporting  of  violence  against  children  remained  insufficient,  resulting  in  few  cases  being 
brought  before  the  courts.  Not  all  children  in  Bosnia  and  Herzegovina  are  covered  by 
compulsory  health  insurance  and  concerns  continued  over  the  exclusion  of  marginalised 
groups. The legal framework on juvenile justice is in place but requires further harmonisation 
across the country. 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.  

Little  progress  has  been  made  on  the  rights  of  persons  with  disabilities,  which  are  not 
effectively protected. The UN Committee on the Rights of Persons with Disabilities reviewed 
Bosnia and Herzegovina in March 2017 and issued a series of recommendations that require 
urgent  follow-up.  During  the  reporting  period,  both  entities  adopted  a  strategy  for  the 
improvement of rights and status of persons with disabilities between 2016 and 2017. Efforts 
are needed to swifly and effectively implement it. As party to the International Convention on 
the  Rights  of  Persons  with  Disabilities,  Bosnia  and  Herzegovina  has  set  up  a  Council  for 
Persons  with  Disabilities  to  monitor  the  Convention's  implementation.  However,  some 

19 

 
 
disability  groups  including  those  representing  deaf  and  hard  of  hearing  individuals,  people 
with  psycho-social  disabilities  or  children  with  disabilities,  have  no  representation  in  the 
Council and thus fewer possibilities to have their voice heard. The Anti-Discrimination Law 
formally offers protection against discrimination but in practice persons with disabilities often 
face discrimination in accessing education, employment, social protection and health. Support 
services for children and their families are generally not available. The failure to implement 
relevant regulations, amongst other causes, mean that children and young people, particularly 
those  with  physical  and  learning  disabilities,  are  excluded  from  the  mainstream  educational 
process.  Most  public  buildings  and  institutions,  as  well  as  public  transport,  are  reported  as 
inaccessible.  

On  the  rights  of  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons, 
criminal codes were harmonised to include hate crimes on grounds of sexual orientation and 
gender  identity.  In  addition,  by  adopting  the  amendments  to  its  Anti-Discrimination  Law  in 
2016,  Bosnia  and  Herzegovina  improved  its  legal  framework,  with  sexual  orientation  and 
gender identity becoming prohibited grounds for discrimination. Training programmes for law 
enforcement and judiciary members continued during the reporting period. In terms of public 
awareness,  visible  events  take  place  regularly  and  the  annual  Merlinka  Queer  Film  Festival 
took place in 2016 and 2017 with adequate support and protection from the police. Failure of 
the authorities to grant a permit on time meant that an LGBTI march against violence planned 
for the International Day against Homophobia, Biphobia and Transphobia had to be cancelled. 
Regarding  violence  against  LGBTI  persons,  the  prosecution  of  hate  crimes  as  well  as  hate 
speech remains insufficient. Moreover, past violent attacks on LGBTI persons have not led to 
indictments.  Same-sex  couples  are  continuously  discriminated  against,  as  the  legal  system 
fails  to  recognise  their  social  and  economic  rights.  By  introducing  sex  characteristics  as  a 
ground for discrimination in the Anti-Discrimination Law, intersex persons are now explicitly 
protected;  more  remains  to  be  done  to  promote  their  social  inclusion.  Transgender  persons 
continue to be marginalised and discriminated against. 

The  procedural  rights  of  suspects,  accused  persons  and  victims  are  generally  in  line  with 
European  standards.  However,  the  lack  of  harmonisation  of  the  legal  framework  leads  to 
differences  in  the  scope  of  protection  of  such  rights  across  the  country  and  to  inequality  in 
access to justice for all type of proceedings. Vulnerable groups such as victims and witnesses 
in  war  crimes  cases  continue  to  face  particular  obstacles.  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. 
Legislation  on  free  legal  aid  is  yet  to  be  adopted  at  the  Federation  entity  level  and  in  one 
canton.  A  comprehensive  transitional  justice  strategy  as  well  as  a  solid  mechanism  for 
compensation  of  wartime  gross  human  rights  violations  across  the  country,  including  for 
victims of war related sexual violence, have yet to be introduced. 

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.  No 
progress was achieved to implement existing laws due to the continued lack of coordination 
between  the  state  and  the  entities.  Members  of  national  minorities  continued  to  have  a  low 
presence  and  participation  in  political  and  public  debates  and  in  the  media.  Bosnia  and 
Herzegovina still lacks a countrywide strategic document on national minorities.  

The  Roma  remain  the  country’s  most  vulnerable  and  disadvantaged  minority.  A  more 
comprehensive and integrated approach is required to foster their social inclusion. A revised 

20 

 
 
2017-2020  Roma  action  plan  on  housing,  employment  and  healthcare  was  adopted  in  late 
2017,  but  remains  in  need  of  appropriate  funds  for  implementation.  The  action  plan  on 
education  is  not  part  of  the  general  one  and  lack  funds  for  its  implementation.  A  Roma 
Committee within the Bosnia and Herzegovina Council of Ministers is active but has only a 
consultative role. Progress continued on housing with the support of international donors; the 
legalisation of settlements and access to sanitation should also be addressed. Enrolment rates 
in compulsory education increased, but  the number of school drop-outs remained very high, 
with  Bosnia and  Herzegovina being one of the  countries of the region with  low completion 
rate  of  compulsory  education.  The  Roma  community  continued  to  experience  major 
difficulties in accessing healthcare services and the labour market, with an unemployment rate 
among the highest in the region. The civil registration process has improved but the attention 
on this question should remain.  

On refugees and internally displaced persons, some progress was made on the Annex VII 
of  the  Dayton  Peace  Agreement  strategy,  in  the  areas  of  repossession  of  property  and 
occupancy rights, reconstruction of houses and infrastructure. 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.  The  official  data  on  the  internally  displaced  persons  remain  to  be  consolidated. 
Cases of attacks against properties of returnees show the need to ensure safety and security in 
order to achieve sustainable returns to pre-war residence areas.  

2.2.2. Justice, freedom and security   

Bosnia  and  Herzegovina  has  some  level  of  preparation  to  implement  the  acquis  and 
European  standards  in  this  area.  Some  progress  was  achieved  with  the  adoption  of  the 
strategy  on  fighting  organised  crime  and  with  implementing  the  action  plan  on  anti-money 
laundering  and  on  financing  of  terrorism  as  well  as  the  integrated  border  management 
strategy.  

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

→   develop  at all levels  a strategic approach towards  financial investigations, including  by 
adopting the FATF concept on financial investigations; conduct financial investigations as a 
standard  from  the  very start  of  the criminal  investigation  when  gathering  evidence on  with 
organised  crime,  terrorism,  money  laundering  and  serious  corruption  cases;  and  apply  a 
multidisciplinary and proactive approach to financial investigations; 

→  further  improve  its  capacity  for  countering  terrorism  through  better  cooperation  and 
coordination,  exchange  of  criminal 
radicalisation  and 
de-radicalisation programmes; 

intelligence,  prevention  of 

→  continue  to  work  on  enhancing  cooperation  with  neighbouring  countries  on  border 
management  issues;  further  improve  the  implementation  of  Integrated  Border  Management 
policy,  especially  by  strengthening  the  Joint  Risk  Analysis  Centre,  border  control  capacity 
and migration management capacity, particularly in dealing with vulnerable groups. 

Fight against organised crime 

Bosnia and Herzegovina has some level of preparation on the fight against organised crime. 
Some  progress  was  made,  notably  by  adopting  a  new  strategy  on  fighting  organised  crime 
and  implementing  the  action  plan  on  anti-money  laundering  and  financing  of  terrorism  in 

21 

 
 
order  to  comply  with  the  FATF  recommendations.  However,  financial  investigations 
remained underused. In the coming year Bosnia and Herzegovina should in particular: 

 step up efforts to establish a track record of investigations, prosecutions, final convictions, 
seizures and confiscations of proceeds of crime in organised crime cases, with particular focus 
on  money-laundering,  notably  by  amending  the  provisions  of  Bosnia  and  Herzegovina 
criminal procedure code on special investigative measures in order to align with international 
standards;  

 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; 

  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. 

Institutional set-up and legal alignment 

The total number of police officers is approximately 16 000. There are 453 police officers per 
100 000 inhabitants, compared to the EU average of 211 in 2015. 

Specialised  anti-terrorism,  human  trafficking,  drugs,  cybercrime  and  financial  investigations 
units are broadly in place at state and entity level, though with insufficient capacity.  

The  legal  framework  to  fight  organised  crime  is  only  partially  aligned  with  the  EU 
acquisEuropean  standards.  There  is  an  urgent  need  to  amend  the  provisions  of  Bosnia  and 
Herzegovina  criminal  procedure  code  on  special  investigative  measures  in  order  to  comply 
with Bosnia and Herzegovina Constitutional Court decision of June 2017. These amendments 
need to be in line with international standards on fighting serious crimes, in particular the UN 
Convention on Transnational Organised Crime, that Bosnia and Herzegovina has ratified. The 
legislation  on  the  confiscation  of  criminal  assets  is  partially  aligned  with  the  acquis. 
Provisions  on  minimum  standards  governing  asset  seizure  have  yet  to  be  consistently 
incorporated into the legislation across the country. The absence of progress at the state level 
is  of  particular  concern.  All  levels  of  government  have  launched  procedures  to  harmonise 
laws on the civil possession of weapons on the basis of joint minimum standards agreed in 
2015,  with  a  view  to  aligning  with  EU  legislation.  So  far,  all  levels  of  governance  but  two 
cantons have completed this task. Further alignment with deactivating standards is needed. 

In  October  2017,  the  Bosnia  and  Herzegovina  Council  of  Ministers  adopted  the  2017-2020 
Strategy  for  Combating  Organised  Crime.  Relevant  institutions  are  expected  to  draw  their 
action plans for the implementation of the Strategy. The findings of the serious and organised 
crime threat assessment have not yet been translated into a coherent national security policy 
based on clear priorities.  

Bosnia and Herzegovina lacks a strategic framework to address the issue of cybercrime and 
cyber security threats.  

The action plan to address Bosnia and Herzegovina strategic deficiencies in the Anti-Money 
Laundering  system  in  line  with  the  recommendations  of  the  Financial  Action  Task  Force 
(FATF) has been implemented. The NGO database to ensure transparency of registration and 
financial reporting has become operational. Further to an FATF on-site visit that took place in 
January 2018, in February Bosnia and Herzegovina was removed from the FATF list of "high 

22 

 
 
risk  third  countries  with  structural  deficiencies  in  anti-money  laundering  /  counter-terrorist 
financing".  The  EU  will  assess  the  position  of  Bosnia  and  Herzegovina  as  a  priority  when 
reviewing  the  EU  delegated  act  listing  high  risk  third  countries  according  to  its  new 
methodology. 

Implementation and enforcement capacity 

In 2017 in the fight against organised crime there were 53 investigations with 335 suspects, 
17  indictments  with  131  accused  and  13  sentences  with  44  convicted.  Investigations  in 
cybercrime, including on-line child sexual abuse, remain very rare. 

The possibility to effectively dismantle criminal organisations is seriously hampered by a lack 
of  harmonisation  of  criminal  legislation  in  the  country,  exacerbated  by  weak  institutional 
cooperation and coordination mechanism between entities. As a result there is a systemic lack 
of  operational  cooperation  and  a  very  limited  exchange  of  intelligence,  thus  creating  many 
opportunities for criminal organisations operating in the country and the region. Institutional 
capacity  to  effectively  address  various  forms  of  organised  crime  needs  substantial 
improvement.  

There is no overall policy for carrying out financial investigations on a systematic basis and 
where  those  were  conducted,  results  have  so  far  been  insignificant.  The  value  of  assets' 
confiscations in 2017 amounted to EUR 837 000. But the majority of confiscations target the 
instrumentalities  and  not  the  proceeds  of  the  crime.  Confiscation  of  criminal  assets  should 
become  a  strategic  priority  in  the  fight  against  organised  crime,  terrorism  and  high  level 
corruption.  Criminal  groups  engage  in  an  increasingly  wide  range  of  profitable  illegal 
activities,  and  reinvest  substantial  profits  in  the  economy.  The  current  tools  for  freezing, 
managing and confiscating criminal assets are not effective enough. Bosnia and Herzegovina 
should therefore develop and implement a more comprehensive and coherent legal framework 
for the confiscation of proceeds of crime. In line with the EU  acquis, it should in particular 
focus  on  adopting  implementing  rules  on  the  confiscation  of  assets.  Such  assets  are  not 
exclusively  those  directly  linked  to  a  specific  crime,  but  which  clearly  result  from  similar 
criminal  activities  committed  by  the  convicted  person  (extended  confiscation).  The  same 
applies to adopting rules on confiscating criminal assets that were purposefully  transferred by 
the  suspect  to  a  third  party  (third-party  confiscation),  as  well  as  rules  providing  for  the 
confiscation  of  criminal  assets  where  a  criminal  conviction  is  not  possible,  in  particular 
because  the  suspect  is  deceased,  permanently  ill  or  has  fled  (non-conviction  based 
confiscation), ensure that competent authorities more systematically temporarily freeze assets 
that  risk  disappearing  if  no  action  is  taken,  subject  to  confirmation  by  a  court  as  soon  as 
possible  (precautionary  freezing).  In  addition,  it  is  crucial  that  financial  investigations  on  a 
person's assets are allowed to continue for years after a criminal conviction in order to fully 
execute  a  previously  issued  confiscation  order  (effective  execution).  As  regards  asset 
management, Bosnia and Herzegovina should urgently step up its capacity to manage frozen 
or confiscated assets so that they do not lose economic value (asset management). 

As  regards  money-laundering,  in  2017  there  were  6  reports,  4  indictments  confirmed,  6 
convictions of imprisonment and 2 convictions of conditional sentences. 

Proactive investigations that start with  intelligence-led policing remain rare as compared to 
those launched on the basis of signals received. The police should act more on own-initiative. 
Arrangements for practical cooperation between prosecutors’ offices and the police require 
structural improvements to guarantee a more effective judicial follow-up. There is a lack of 

23 

 
 
mutual  access  to  databases  and  the  exchange  of  information  between  law  enforcement 
agencies  and  prosecutors’  offices.  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 needs to be significantly 
upgraded.  

The Agreement on operational and strategic  cooperation with Europol entered into force in 
March 2017. The National Contact Point in line with provisions stipulated in the Operational 
Agreement  has  not  yet  been  established.  A  political  agreement  reached  on  11  April  2018 
between the Minister of Security and the Entities' Ministers of Interior paves the way for the 
establishment  of  the  Contact  Point  and  should  now  be  swiftly  implemented.  The  current 
arrangement  for  exchange  of  data  is  administered  through  the  Directorate  for  Police 
Coordination which also was the responsible authority for the exchange of data and requests 
with  Europol  on  the  basis  of  the  Strategic  Agreement  in  the  past.  Bosnia  and  Herzegovina 
also has not yet appointed its Liaison Officer to Europol. 

Bosnia  and  Herzegovina  is  signatory  to  the  Convention  on  Police  Cooperation  in  Southeast 
Europe. 

Activities  to  implement  the  country’s  2016-2020  strategy  for  controlling  small  arms  and 
light weapons  (SALW)  continued. In  2017 a total  of 10 801 different pieces of small  arms 
and  light  weapons  were  destroyed.  Existing  capacity  to  combat  cybercrime  (including 
addressing  on-line  child  sexual  abuse  material)  and  to  effectively  respond  to  cyber  security 
threats need to be strengthened.  

Bosnia and Herzegovina remains a country of origin, transit and destination for trafficking in 
human  beings  for  labour  exploitation,  sexual  exploitation,  begging  and  forced  marriages. 
Implementation  of  the  2016-2019  action  plan  on  fighting  trafficking  in  human  beings  is 
ongoing.  However,  a  comprehensive,  multidisciplinary  and  victim-oriented  approach  to 
trafficking  in  human  beings  still  needs  to  be  developed  and  identification  and  protection  of 
victims needs to be improved. The number of potential victims of trafficking in human beings 
detected in 2017 was 55, compared to 47 potential victims detected in 2016. More than a half 
of the detected potential victims were minors, and almost three quarters of them were women. 
The  trafficking  was  mainly  aimed  at  forced  begging,  labour  exploitation,  forced  marriages, 
and sexual exploitation. 

The  capacity  of  prosecutors  and  law  enforcement  officers  need  to  be  further  improved. 
Evidentiary  proceedings  in  court  trials  need  to  be  strengthened.  On  the  prevention  side, 
greater efforts are needed to prevent child trafficking, including through a more proactive role 
of social services. Also the re-integration in their families requires careful monitoring, so as to 
prevent  re-victimisation.  The  identification  of  victims,  their  adequate  protection  and 
subsequent reintegration are areas where further improvements are needed.   

Fighting  organised  crime  remains  fundamental  to  countering  criminal  infiltration  of  the 
political, legal and economic system of the country.  

Fight against terrorism 

Institutional set-up and legal alignment  

Bosnia and Herzegovina's legal framework is largely in line with the acquis and international 
instruments  on  anti-terrorism.  However,  the  actual  implementation  of  legislation,  as  well  as 
cooperation between relevant authorities require significant improvement. 

24 

 
 
The framework action plan accompanying the 2015-2020 strategy on the prevention and fight 
against terrorism is in place.  

Implementation and enforcement capacity 

According to official data, 181 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 asdiaspora between  December 2012 and December 2015.  Bosnia and Herzegovina 
authorities' efforts have contributed to stop departures of Bosnia and Herzegovina citizens to 
foreign battlefields since 2015. Cells of radicalisation have been identified in certain locations 
in the country, in particular in the Wahhabi communities.  

The body to oversee the implementation of the strategy for the prevention of and fight against 
terrorism  for  the  period  2015-2020  strategy  is  in  place.  It  focuses  on  developing  a  referral 
mechanism for prevention of radicalisation and an assistance mechanism for re-socialisation 
and dis-engagement of foreign terrorist fighters. It also increasingly takes on different internal 
coordination  tasks  as  well  as  the  role  as  point  of  contact  for  external  partners.  A  Counter 
Terrorism Task  Force is in  place.  After  a period of only  partial  attendance  from the side of 
Bosnia  and  Herzegovina  authorities,  its  operational  group  commenced  to  hold  regular  joint 
meetings again since the beginning of 2018. The counter-terrorism capacity of the Bosnia and 
Herzegovina’s Prosecutor’s Office is adequate. In total, 23 returned foreign terrorist fighters 
were  indicted  and  subsequently  convicted  for  terrorism-related  offences.  Sentences  were 
however often lenient and frequently based on plea bargains.  

An EU Senior Mission on counter terrorism and prevention of violent extremism took place in 
April  2017  and  issued  several  recommendations,  notably  on  the  implementation  of  the 
strategic  framework  and  internal  coordination,  in  particular  in  the  area  of  prevention  of 
violent  extremism,  appropriate  sentencing  for  foreign  terrorist  fighters  and  their  subsequent 
social  re-integration,  arm  trafficking,  border  control,  terrorism  financing,  and  regional  and 
international  cooperation,  in  particular  with  Eurojust  and  Europol.  Bosnia  Herzegovina  has 
started addressing these recommendations, but more sustained efforts are needed. 

Legal and irregular migration 

Institutional set-up and legal alignment 

The 2015 Bosnia and Herzegovina law on foreigners is broadly in line with the acquis at the 
time  of  its  adoption.  Most  of  the  implementing  rules  related  to  migration  are  in  force  and 
implemented.  The  legal  framework  need  to  be  further  aligned.  The  strategy  and  its  action 
plan on migration and asylum for the 2016-2020 period are in place and implemented. 

Implementation and enforcement capacity 

The  Immigration  Department  of  the  Bosnia  and  Herzegovina  Ministry  of  Security  has  a 
limited  administrative  capacity  of  19  staff  which  is  insufficient.  The  staff  receives  regular 
training.  The  Immigration  Centre  has  a  capacity  to  accommodate  120  individuals.  The 
capacity  has  been  increased  through  cooperation  with  NGOs  which  particularly  host 
vulnerable groups in safe houses. It is still adequate for the current influx of migrants, unless 
the recent trend of increasing migratory pressure in the country continues.  

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, the capacity was increased through cooperation with NGOs over hosting 

25 

 
 
vulnerable  groups  in  safe  houses.  The  centres  also  have  measures  in  place  to  prevent 
infiltration by migrant smugglers.  

Current  legislation  and  cooperation  agreements  with  foreign  donors  enable  effective 
voluntary  and  forced  return  of  irregular  migrants  to  countries  of  origin.  Implementation 
remains  to  be  fully  ensured.  Bosnia  and  Herzegovina  needs  to  put  in  place  a  return 
mechanism for irregular migrants in line with EU standards and policies.  

Bosnia  and  Herzegovina  has  concluded  readmission  agreements  with  the  EU  and  with  all 
Western Balkan countries, and with Turkey, as well as implementation protocols with 16 EU 
Member  States.  The  implementation  of  these  agreements  is  overall  smooth.  In  2016  EU 
Member States issued 5 000 return decisions to Bosnia and Herzegovina citizens; the return 
rate  was  75  %.  Cooperation  needs  to  be  improved  on  identification  and  return  procedures. 
Regional  cooperation  on  the  return  of  extra-regional  irregular  migrants  to  their  countries  of 
origin should be further strengthened.  

Mechanisms  for  collecting,  sharing  and  analysing  data  on  migration  need  to  be  improved. 
Statistics  show  an  increasing  trend  of  people  coming  to  Bosnia  and  Herzegovina  from  the 
migration-prone countries of origin. In 2017 the number of people intercepted while illegally 
crossing the border was 767 compared to 218 in 2016.   

The  number  of  third-country  nationals  returned  to  Bosnia  and  Herzegovina  in  2017  under 
various readmission agreements almost tripled compared to 2016. In parallel, the number of 
foreign  nationals  that  were  either  deported  or  left  Bosnia  and  Herzegovina  on  a  voluntary 
basis  greatly  increased,  also  thanks  to  readmission  agreements  between  Bosnia  and 
Herzegovina  and  third  countries  (particularly  Montenegro  and  Serbia).  The  Immigration 
Centre hosted 860 foreigners in 2017, compared to 311 in 2016. 

Asylum 

Institutional set-up and legal alignment 

The 2016 law on asylum is broadly in line with international standards and the EU law. Most 
of the implementation rules are in force and implemented.  

Implementation and enforcement capacity 

The  Asylum  Department  of  the  Bosnia  and  Herzegovina  Ministry  of  Security  handles  the 
first instance decisions. Currently, the Asylum Department still has limited human resource 
capacities.  This  is  not  least  due  to  an  employment  moratorium  in  the  public  sector. 
Interpretation  services  are  mainly  based  on  outsourcing  agreements.  The  services  of 
interpreters  are  used  mainly  through  outsourcing  with  translation  agencies.  More  training 
should  be  undertaken  in  order  that  international  standards  and  procedural  safeguards  are 
respected.  Training  should  focus  on  access  to  the  procedure  for  international  protection, 
including  interviewing  techniques  to  identify  asylum  seekers,  respect  for  the  principle  of 
non-refoulement  and  non-penalisation  of  asylum  seekers  for  illegal  entry/stay,  as  well  as 
ensuring  all  procedural  safeguards  –  information  on  the  right  to  seek  asylum,  interpretation 
services, free legal aid.  

The  implementation  of  asylum  process  needs  to  be  improved,  in  particular  to  ensure  the 
systematic  respect  of  procedural  guarantees  for  asylum-seekers.  Identification  of  asylum 
applicants  includes  taking  and  storing  biometric  data  in  a  database  at  the  Asylum 
Department.  No  case  of  refoulement  has  been  reported  so  far.  380  people  applied  for 
international protection in 2017, out of which 8 people were granted the status of subsidiary 

26 

 
 
protection, 15 applications by 15 individuals were rejected on merit, and 143 applications by 
167 individuals were closed as the applicants left or attempted to leave the country or failed to 
show  up  for  an  interview.  However,  there  have  been  no  refugee  status  recognitions  since 
2014. The Asylum Centre has a capacity of 154 beds which 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. 
Currently,  the  accommodation  capacity  is  used  to  the  maximum  extent  and  can  become 
inadequate  if  the  current  inflow  of  asylum  applicants  continues.  The  authorities  have 
developed legal and institutional  means to  manage possible sudden influxes,  but the current 
resources  remain  below  what  is  required  to  fulfil  the  task.  Alternatives  to  detention  for 
children  should  be  further  explored:  both  accompanied  and  unaccompanied  children  were 
detained  in  2017.  Unaccompanied  children  lacked  adequate  access  to  guardians,  and  the 
best-interest  determination  procedures  were  often  delayed,  if  conducted  at  all.  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  2017,  aims  at  strengthening 
reception capacities in the country and increasing regional and international cooperation. 

Visa policy 

The list of third countries that Bosnia and Herzegovina maintains visa-free regimes is mostly 
in  line  with  the  EU  list  except  for  Azerbaijan, Bahrain,  Kuwait,  Oman,  Qatar,  Turkey,  and 
Russia.  Negotiations  with  China  on  visa-free  regime  for  holders  of  regular  passports  are 
ongoing. 

The visa-free regime with the EU continued to be implemented without major obstacles. 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 per the Commission’s recommendations.  In 2017, a 
reduction was registered in the number of unfounded asylum applications filed by the citizens 
of  Bosnia  and  Herzegovina  in  the  EU  Member  States  and  Schengen  associated  countries. 
Obstacles  to  lasting  return  and  to  local  integration  of  the  country's  nationals  include: 
difficulties with economic reintegration; access to healthcare, social protection and pensions, 
and  the  employment  of  minority  returnees.  The  authorities  need  to  continue  the  effective 
implementation of the EU-Bosnia and Herzegovina Readmission Agreement, if necessary by 
concluding  implementing  protocols  with  remaining  EU  Member  States;  further  attention 
needs  to  be  given  to  respecting  deadlines  and  improving  identification  processes.  Border 
controls need to be strengthened in a manner that fully respects travellers’ fundamental rights. 
The  authorities  need  also  to  organise  a  high-profile  information  campaign  on  the  rights  and 
obligations of visa-free travel targeting areas particularly affected by irregular migration. 

Schengen and external borders 

Institutional set-up and legal alignment 

The  legal  framework  for  border  control  is  largely  harmonised  with  the  EU  acquis  and  is 
implemented  smoothly.  The  integrated  border  management  (IBM)  strategy,  which  is 
largely  in  line  with  the  2006  EU  IBM  concept,  and  the  2015-2018  framework  action  plan 
entered into force in January 2016. The IBM strategy should be further brought in line with 
the EU policy on IBM.  

Implementation and enforcement capacity 

27 

 
 
The border police remained understaffed. In December 2017 there were 564 (21.3 %) 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  on  a  satisfactory  level.  The  Joint  Risk  Analysis 
Centre has improved its limited human resources. Its coordination capacity needs additional 
improvement  through  an  enhanced  information  exchange  process  with  Local  Risk  Analysis 
Centres. Further improvements are needed on the training system on risk analysis as well as 
on infrastructure and equipment at border crossing points. Budget limitations have resulted 
in a lack of specialised equipment for more effective 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  of  the  border  police  has  police  executive  powers  applicable 
throughout  the  country.  The  Office’s  operational  capacity  is  limited  due  to  a  lack  of 
equipment and staff. It has adequate expertise for detecting forged documents and access to 
relevant 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  2016  border  agreement  with  Montenegro  is  smoothly 
implemented.  The  border  police  cooperate  with  the  European  Border  and  Coast  Guard 
Agency  and  Interpol.  Preparations  for  starting  negotiations  with  the  European  Border  and 
Coast Guard Agency on a status agreement are advancing.  

As part of the fight against corruption, the border police implement its Rulebook on internal 
reporting, corruption and protection of whistle-blowers.  

Judicial cooperation in civil and criminal matters 

There has been no development in this area. Bosnia and Herzegovina has not yet acceded to 
several  instruments  developed  within  the  framework  of  the  Hague  conference  on  private 
international  law.  A  cooperation  agreement  with  Eurojust  has  yet  to  be  concluded  but  a 
contact point is in place. Seven Eurojust cases concerned Bosnia and Herzegovina in 2017 (8 
in 2016).  

The international judicial cooperation legislative framework is in place and functional but 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,  remains  understaffed.  Moreover,  there  is  a  lack  of  harmonised  case  law 
throughout  the  country  and 
interpretation  and 
therefore,  a  consequent 
implementation  of  international  standards.  Legislation  on  international  legal  assistance  and 
bilateral  regional  cooperation  agreements  need  to  be  amended  to  introduce  direct 
court-to-court cooperation. 

inconsistent 

28 

 
 
 
 
Cooperation in the fight against drugs 

Bosnia and Herzegovina remained a country of drugs transit and storage. Domestic demand 
for drugs increased slightly, especially for polydrugs. In January 2018 a National Strategy on 
Supervision over Narcotic Drugs, Prevention and Suppression of the Abuse of Narcotic Drugs 
for the period 2018-2023 was adopted by Bosnia and Herzegovina Council of Ministers and 
needs  to  be  endorsed  by  the  Parliament.  Legislation  to  prevent  and  suppress  the  abuse  of 
narcotic  drugs  and  establish  a  focal  point  for  drug  issues  at  the  national  level  has  yet  to  be 
adopted. The Bosnia and Herzegovina Commission for the Suppression of Abuse of Narcotic 
Drugs  has  starting  functioning.  The  Commission  for  Drugs  Destruction  is  in  place  but 
destruction of drugs has not taken place in the reporting period.  The safe storage of seized 
drugs remains an issue. 

Operational activities continued to be coordinated on a case-by-case basis. Cooperation with 
the  European  Monitoring  Centre  for  Drugs  and  Drugs  Addiction  (EMCDDA)  continued. 
Bosnia  and  Herzegovina  authorities  decided  to  use  the  EMCDDA  standard  data  collection 
tool  for  drugs  seizures,  from  1  July  2017  onwards.  In  2017  the  number  of  reported  crimes 
related to drug abuse amounted to 881 compared to 553 in 2016, indicted confirmed were 229 
(445 in 2016), convictions of imprisonment were 228 (151 in 2016).  

Customs cooperation  

Customs  legislation,  adopted  and  published  in  2015  but  still  not  implemented,  is  to  some 
extent  aligned  with  the  EU  law.    Bilateral  agreements  exist  with  four  EU  Member  States. 
Concerning the implementation and enforcement capacity, risk analysis needs to be further 
developed.  Interagency  cooperation  improved  to  a  limited  extent.  Investigations  of  illicit 
trafficking  and  fraud  and  fight  against  customs-related  corruption  led  to  increased 
disciplinary measures.  

3.  

FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT & COMPETITIVENESS  

Key economic figures 

2015 

2016 

2017Q3 

Gross  domestic  product  per  capita  ( %  of 
EU-28 in PPS) 

GDP growth ( %) 

31 

3.1 

32 

3.1 

n.a. 

3.0* 

Unemployment rate (female; male) ( %) 

30.9; 25.9 

30.2; 22.6 

23.1; 18.9 

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

Current account balance ( % of GDP) 

Foreign  direct  investment  (FDI)  ( %  of 
GDP) 

Source: Eurostat 

* End-September 2017, 4-quarter moving average 

59.2 

-5.7 

1.7 

58.8 

-5.1 

1.6 

n.a. 

-4.7* 

2.2* 

29 

 
 
 
In line with the conclusions of the June 1993 European Council in Copenhagen, 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, the Western Balkans and Turkey at ministerial level in 
May each year. 

3.1.   The existence of a functioning market economy 

Bosnia  and  Herzegovina  has  made  some  progress,  but  is  still  at  an  early  stage  of 
establishing a functioning market economy. Some improvements of the business environment 
have been achieved and the financial sector has been strengthened. Key remaining issues are a 
weak  rule  of  law,  a  still  poor  business  environment,  a  fragmented  and  inefficient  public 
administration and major labour market imbalances, related to a poor education system, weak 
institutional capacities, and an unsupportive investment climate.  

In order to support long-term growth, Bosnia and Herzegovina should pay particular attention 
to: 

→   strengthen  the  political  ownership  of  reforms  and  the  cooperation  and  coordination 
among different levels of government;  

→   improve  the  quality  of  public  finances  by  strengthening  its  growth-friendliness  and 
improving the targeting of social spending; 

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

Economic governance   

15

35

30

25

20

3,5

3,0

2,5

2,0

1,5

f
o
%

P
D
G

Figure 1 Bosnia and Herzegovina GDP growth 

The  consensus  on  economic  policy 
essentials  has  been 
impeded  by 
frequent  political  stalemates  and  a 
lack  of  political  ownership.  Despite 
general  acceptance  of 
the  main 
a  marked-based 
of 
principles 
short-term 
frequent 
economy, 
oriented  political  disputes  have 
resulted in delays and interruptions of 
agreed  and 
long  overdue  reform 
projects.  2017  has  been  particularly 
affected  in  this  respect.  Following 
progress  up  to  early  2017,  a  major 
reform  package,  the  Reform  Agenda 
experienced  a  substantial  slowdown 
during  most  of  2017.  Also, 
the 
3-year 
implementation 
arrangement agreed with the IMF in September 2016 faced significant delays during the year. 

Source: Eurostat, national sources 

GDP per capita in PPS (EU28=100) (lhs)

GDP growth (rhs)

of 

2013

2014

2015

2012

2016

2017

-1,5

-1,0

-0,5

a 

0,0

0,5

1,0

10

0

5

30 

 
 
 
 
 
 
However, in late 2017 and early 2018 the country adopted measures, such as amendments to a 
set of excise laws, which allowed the completion of the first review of the IMF programme in 
early 2018. There was only limited implementation of the policy guidance jointly adopted in 
May  2017.  The  submission  of  the  2018  ERP  was  delayed  and  the  document  points  to 
significant weaknesses in administrative coordination and cooperation and policy formulation. 

Macroeconomic stability 

Economic  growth  remained  stable,  but  below  the  country’s  potential.  Economic  output 
growth  remained  resilient,  expanding  by  some  2.5  %  on  average  annually  over  the  last  5 
years. The main growth driver has been domestic demand, in particular private consumption, 
largely  thanks  to  a  stable  inflow  of  workers  remittances  and  low  inflation,  supporting  real 
disposable  income.  In  2017,  external  demand  provided  an  additional  boost.  Domestic  and 
foreign investment have remained subdued, reflecting a poor business environment and high 
political  uncertainties.  Per  capita  GDP3  stood  at  some  32 %  of  the  EU-28  average  in  2016, 
only slightly up from 31 % in 2012. 

External  imbalances  have  declined  further, benefiting  from  stronger  external  demand. 
The current account deficit narrowed sligthly from 5.1 % of GDP in 2016 and to 4.7 % in the 
four quarters to September 2017, benefiting from rapidly strengthening exports, lower import 
prices  and  stronger  tourism.  However,  higher  consumption-driven  imports  kept  the  trade 
deficit at 23.6 % of GDP in the four quarters to September 2017. The substantial trade deficit 
has still been largely financed by inflows of transfers, such as remittances. Net foreign direct 
investments increased slightly, reaching 2.2 % in the four quarters to September of 2017. Net 
foreign exchange reserves rose to about 32 % of GDP.  

The monetary policy regime has supported stability. The currency board arrangement with 
the euro as the anchor currency was maintained. 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, in particular responsible fiscal policy, necessitating the 
building-up of sufficient fiscal buffers and a stronger emphasis on medium-term stability, and 
structural reforms to improve the functioning of markets.  

The overall level of consumer price started to increase during 2017, increasing by 1.2 % 
on  average  for  the  full  year.  In  the  two  previous  years,  consumer  prices  had  been  slightly 
declining (-1.1 % and -1.0, respectively), mainly as a result of falling import prices and low 
domestic  price  pressures.  The  main  driving  factors  behind  the  acceleration  in  headline 
inflation have been higher prices for food and non-alcoholic beverages.  

3 Expressed in purchasing power standards. 

31 

 
 
                                                            
 
 
 
 
 
 
 
 
 
 
1

0

-1

50

45

40

35

30

25

20

15

0,5

-0,5

f
o
%

P
D
G

fiscal 

reflecting 

Figure  2  Bosnia  and  Herzegovina 
developments 

The  general  government  accounts 
registered  slight  surpluses,  while  the 
quality  of  fiscal  governance  has 
remained  low.  During  2017,  public 
finances  benefited  from  solid  recorded 
revenue  growth, 
stable 
output  growth  but  also  measures  to 
improve  tax  collection.  At  the  same 
time, spending has remained contained, 
particularly in the area of public sector 
wages.  The  level  of  public  investment 
remained very low, as planned external 
financing  often  could  not  be  secured. 
Despite  some  progress  on  improving 
Source: Eurostat, national sources 
the financing of the pension system the 
overall  quality  of  public  sector  governance  remained  very  low,  with  substantial  spending 
inefficiencies,  particularly  in  the  health  sector,  and  a  poor  targeting  of  social  transfers. 
Planned  reforms  to  improve  the  quality  of  public  spending  have  been  frequently  delayed. 
Public debt declined slightly in 2017, dropping to 38 % of GDP by end-June, partly reflecting 
difficulties in accessing foreign capital markets.  

2013
Public debt (LHS)

Budget balance (RHS)

2014

2015

2016

2012

2017

-3,5

-2,5

-1,5

10

-3

-2

0

5

Overall,  the  country’s  macroeconomic  policy  mix  suffers  from  an  insufficient  speed  in 
implementing  overdue  reforms  and  a  lack  of  medium-term  orientation.  While 
macroeconomic stability has been preserved overall, the speed of reform implementation has 
been clearly too slow to achieve progress that is more noticeable to the country’s citizen. The 
policy mix also lacks medium-term orientation. 

Functioning of product markets 

Business environment  

Market  entry  and  exit  regulation  has  slightly  improved,  while  existing  barriers  to 
entering and leaving product markets remain high. Efforts continued to facilitate business 
registration.  Some  steps  have  been  taken  to  strengthen  the  support  for  foreign  investors. 
According  to  international  rankings,  the  business  environment  has  slightly  improved, 
although the overall level is still very low. Compared with other countries, BiH’s ranking has 
slightly deteriorated, reflecting the slow speed in implementing reforms. Overall, the required 
procedures  for  entering  or  leaving  the  product  market  are  still  numerous  and  lengthy, 
hampering the country's attractiveness for doing business. 

The rule of law and the functioning of the judiciary continue to be a crucial weakness. 
Improvements  in  this  area  have  remained  very  limited.  Among  other  things,  there  are  still 
issues  with  contract  enforcement,  difficulties  in  settling  commercial  disputes,  a  substantial 
backlog in court cases, and issues with establishing property rights, for example illustrated by 
a  low  degree  of  real  estate  registration  in  some  areas.  The  resource  endowment  and 
independence of numerous regulatory and supervisory institutions is still insufficient.  

The informal economy is still significant,  playing a major role in providing (unregistered) 
employment and income but also in distorting competition and eroding the base for taxation 
and  social  security  contributions.  Despite  some  limited  progress  in  addressing  the  informal 
economy,  such  as  improving  the  degree  of  registration  in  the  labour  market,  the  informal 
sector may still account for some 25 % of GDP. This high level of informal economy requires 

32 

 
 
 
 
 
 
rates  for  taxes  and  social  security  contributions  to  be  higher  than  would  be  otherwise 
necessary.  This  also  adds  to  a  significant  fiscal  burden  on  labour,  which  in  turn  impedes 
formal  employment  from  being  created  and  negatively  affects  BiH’s 
international 
competitiveness.  

State influence on product markets 

Direct state influence on the economy has remained high. Despite efforts to reduce state 
influence, public spending still accounts 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. State-
owned  companies  as  well  as  state  subsidies  and  guarantees,  which  lead  to  substantial 
contingent liabilities, are a heavy burden on public finances and thus the country’s tax payers.  

Privatisation and restructuring 

The privatisation process is still not complete. Attempts to sell earmarked public companies 
have been largely unsuccessful. Some steps have been taken, such as the initiation of the due 
diligence  procedures  for  two  local  telecommunication  companies  which  could  lead  to 
privatisation  later  on.  Strategic  sectors  such  as  transport,  energy  (and  telecom  in  the 
Federation)  are  still  dominated  by  poorly  managed  and  often  inefficient  state-owned 
companies. Proceeding with privatisation could stimulate competition, improve the quality of 
the provided services and relieve public finances from a recurring burden. 

Functioning of financial markets 

Financial stability 

The financial sector’s stability has slightly improved, but banking sector supervision is 
still  hampered  by  fragmented  competences.  Credit  risk  indicators  for  the  banking  system 
have  improved  slightly:  the  ratio  of  non-performing  loans  (NPLs)  dropped  from  11.8 % 
end-September 2016 to 10 % by end-September 2017, which, however, is still relatively high. 
The  sector’s  overall  capital  adequacy  ratio  remained  largely  unchanged  at  15.6 %  by 
end-September 2017, well above the country’s regulatory minimum of 12 %. However, there 
are still some banks with insufficient capital endowment. Newly adopted banking laws should 
simplify loan restructuring and thus have a positive effect on the financial sector’s stability. 
Banking  sector  profitability  has  been  low,  but  improved  during  2017.  However,  the  central 
bank’s  analytical  capacities  are  still  limited  and  financial  sector  supervision  suffers  from 
insufficient inter-entity cooperation.  

Access to finance  

Bank  lending  to  the  private  sector  has  gathered  pace.  Credit  growth  accelerated  from 
about 2 % year-on-year in 2016 to 5.3 % in 2017, reaching about 57 % of GDP. The number 
of  banks  is  high  in  relation  to  the  market  size,  although  it  has  fallen  to  23  after  two  small, 
local banks went bankrupt in 2017. Interest rate spreads have markedly declined for consumer 
loans, dropping from above 6 percentage points to around 4 percentage points. This probably 
reflects increased competition and efficiency in the consumer loan sector. However, spreads 
are still relatively high, suggesting either still high risk-premia and/or a lack of competition. 

Functioning of the labour market 

The employment situation has slightly improved, although labour market participation 
is low in general. During 2017, the labour market benefited from stable output growth, active 
labour  market  measures  and  steps  to  reduce  the  informal  economy.  Registered  employment 

33 

 
 
was on average 3.1 % higher in 2017 than a year before, compared to an increase by 2.1 % in 
2016. The number of registered unemployed has dropped by 6.9 %, compared to a decline by 
3.9 % the year before. This implies a decline in the labour force, but also a reduction in the 
registered  unemployment  rate  to  38.7 %.  Significant  differences  between  registered  and 
survey-based  figures  signal  substantial  weaknesses  in  labour  market  statistics.  Furthermore, 
available  data  points  to  demographic  issues,  as  well  as  weaknesses  in  the  allocation 
mechanism, alongside shortcomings in education and training. 

Figure  2  Unemployment  in  Bosnia  and 
Herzegovina (% of Active population) 

Figure  3  Participation  rates  in  Bosnia  and 
Herzegovina (% of Labour Force) 

70,0

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

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Unemployment rate

Youth unemployment rate

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Women

Men

Source: Eurostat, national sources 

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

Bosnia  and  Herzegovina  has  made  some  progress  but  remained  at  an  early  stage  in 
achieving the capacity to cope with competitive pressure and market forces within the Union. 
The  overall  level  of  education  and  spending  on  R&D  has  remained  low.  The  quality  of  the 
physical  capital  suffers  from  underinvestment.  Transport  and  energy  infrastructure  is 
insufficiently developed. The speed of structural adjustment has been slow, although there has 
been some diversification in the country’s regional trade structure. 

In order to support long-term growth, Bosnia and Herzegovina should pay particular attention 
to: 

→ improve the quality of education and training; 

→ create a single economic space in view of fostering investment; 

→ increase the size and efficiency of public investment, especially in infrastructure.  

Education and innovation  

The  overall  quality  of  education  remained  low,  as  is  spending  on  education  and  R&D. 
The country’s education system is very complex and highly fragmented. This results in a lack 
of  common  standards  for  various  levels  of  education,  as  well  as  in  teacher  training  and 
performance  evaluation.  Teaching  curricula  are  outdated  and  not  aligned  with  the  country’s 
needs  leading  to  wide  skills  mismatches,  a  major  impediment  preventing  graduates  from 
entering  the  labour  market.  Public  sector  spending  on  education  appears  to  stand  at  some 

34 

 
 
 
 
 
3.5% of GDP. However, the resulting output is one of the weakest in the region. For example, 
the country’s illiteracy rate of about 2.8 % is one of the highest in the region. 

Physical capital and quality of infrastructure 

The country’s physical capital stock suffers from decades of underinvestment. Public and 
private spending on improving the country’s capital stock remained very low in recent years. 
Despite  political  commitments  to  raise  investment,  public  investment  has  suffered  from  a 
prioritisation of consumption and transfer payments while private investment is impeded by 
slow  progress  in  improving  the  business  environment.  This  hinders  improving  the  growth 
potential  and  labour  productivity,  impeding  efforts  to  improve  income  levels  and  living 
standards. The country's digitalisation is still at a very low level. 

Transport  and  energy  infrastructure  remains  insufficiently  developed.  Necessary 
investment is delayed by a lack of coordination and cooperation between government levels, 
by financial constraints due to delays in securing agreed external financing and by the absence 
of a single or harmonised legal and regulatory framework. The markets for electricity and gas 
remain  fragmented  and  dominated  by  key  incumbent  companies.  The  natural  gas  sector  is 
regulated  at  entity  level  which  impedes  the  development  of  adequate  regulation  and  a 
common market. 

Sectoral and enterprise structures 

The country's economic structure has changed very little. During the last five years, 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.  The 
company structure is dominated by small and micro businesses, with companies of less than 
50  employees  accounting  for  93  %  of  all  companies.  Their  access  to  bank  lending  remains 
difficult. Support schemes are in place for small and medium-sized enterprises, but they are 
very cumbersome to implement.  

Economic integration with the EU and price competitiveness 

Figure  5  Bosnia  and  Herzegovina 
integration with the EU 

trade 

80,0

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

180

160

140

120

100

80

60

40

20

0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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

Source: Eurostat, national sources 

35 

countries, 

Trade  with  neighbouring  countries 
increased  markedly,  while  trade 
integration  with  the  EU  remained 
high.  The 
trading  structure  has 
become  more  diverse,  with  an 
trade  with 
increasing 
share  of 
neighbouring 
as 
such 
Croatia  and  Slovenia  and  Serbia  as 
well  as  with  Turkey.  Exports  to  the 
EU-28  accounted  for  71.8  %  of  total 
exports 
in  2017.  The  country’s 
openness to trade is relatively low for 
the  country’s  limited  economic  size, 
with  exports  and  imports  accounting 
for some 90 % of GDP. The range of 
export  commodities 
is  not  very 
sophisticated.  While  limited  progress 
has  been  achieved  in addressing non-

 
 
 
tariff  barriers  to  trade  with  the  EU,  such  as  required  sanitary  standards,  overall  compliance 
with these requirements remains a problem. 

Nearly  63 %  of  the  country’s  stock  in  FDI  is  originating  from  EU  countries.  Annual  FDI 
inflows largely show a similar pattern.  

The development of a Regional Economic Area based on EU rules and standards, to which all 
Western Balkan economies have committed, has the potential to generate untapped growth. 

4. 

BILATERAL RELATIONS WITH NEIGHBOURING COUNTRIES 

Relations  with  Albania  remained  friendly.  An  honorary  consulate  was  opened  in  Sarajevo 
during the official visit of the Albanian Foreign Minister in October 2016. The Prime Minister 
of the Federation of BiH visited Tirana in March 2017. During the reporting period, a set of 
agreements was signed on movement of citizens with ID cards and on maritime commercial 
transport.  
There are no official relations with  Kosovo*, as Bosnia and Herzegovina does not recognise 
Kosovo as an independent state and maintains a strict visa regime. The Ministry of Foreign 
Affairs  continued  issuing  individual  short-term  visas  to  citizens  of  Kosovo  who  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 is still pending. 

Concerning the former Yugoslav Republic of Macedonia, relations remain good and several 
bilateral  agreements  were  signed,  including  the Agreement  on  mutual  recognition  and 
replacement  of  driving  license  and  on  cooperation  in  the  EU  accession  process.  The 
Presidency approved the conclusion of the protocol on cooperation in the field of education in 
November  2017.  In  July  and  November  2017,  Prime  Minister  Zoran  Zaev  paid  and  official 
visits to Bosnia and Herzegovina.  

As regards Montenegro, an agreement on cooperation in the process of accession to the EU 
was  ratified  in  August  2017.  In  March,  President  Filip  Vujanovic  paid  an  official  visit  to 
Bosnia  and  Herzegovina.  An  agreement  on  shared  location  of  diplomatic  and  consular 
representations was signed in July. 

Relations with Turkey continued to remain good and several bilateral ministerial level visits 
took  place  throughout  2017.  In  January  2018,  a  trilateral  meeting  took  place  in  Istanbul 
between  a  Bosnia  and  Herzegovina  Presidency  member,  the  Serbian  President  and  the 
President  of  Turkey  to  discuss  economic  cooperation  between  the  three  countries,  regional 
relations and infrastructure projects.  

Bilateral  relations  with  Serbia  remained  relatively  stable,  despite  internal  tensions  triggered 
by the initiative, in early 2017, by a member of the Presidency and SDA leader to appeal the 
2007  International  Court  of  Justice  genocide  case  against  Serbia.  The  Serbian  President 
visited Bosnia and Herzegovina in September 2017 with the declared intent to resolve open 
bilateral issues including the common border, encourage regional development, and convey a 
clear  message  in  support  of  the  country's  territorial  integrity.  In  December  2017,  the 

* This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ 
Opinion on the Kosovo declaration of independence. 

36 

 
 
 
                                                            
Presidency  paid  an  official  visit  to  Serbia.  A  bilateral  Protocol  on  removal  of  non-tariff 
barriers  in  trade  was  signed.  In  January  2018,  an  Agreement  on  cooperation  in  the  EU 
accession  process  was  also  signed.  An  agreement  on  outstanding  border  demarcation  issues 
between the two countries remains to be reached. 

37 

 
 
 
 
ANNEX I – RELATIONS BETWEEN THE EU AND BOSNIA AND HERZEGOVINA 

The EU continued to provide 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  Herzegovina  in  the  framework  of  the  SAA  structures  which  continued  to 
operate  smoothly:    Stabilisation  and  Association  Council,  SAA  Committee  and  various 
sectoral  sub-committees.  At  the  same  time,  while  the  Stabilisation  and  Association 
Parliamentary  Committee  (SAPC)  was  established  in  November  2015  as  part  of  the 
Stabilisation and Association Agreement bodies, it failed to adopt its Rules of Procedure due 
to  insistence  of  some  delegates  from  Bosnia  and  Herzegovina  on  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 2017. A Reform Agenda, adopted by the country authorities in July 2015 and aimed at 
tackling 
judicial  and  public 
administration reforms, as well as further advancing the country on its EU membership path 
continued to be implemented at a slower pace in 2017.  

the  difficult  socio-economic  situation,  advancing 

the 

The  EU  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  remained  deployed  in  the  country,  assisting  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 
extended EUFOR’s mandate until November 2018. 

Bosnia  and  Herzegovina  aligned  itself,  when  invited,  with  39  out  of  64  relevant  EU 
declarations and Council decisions (61 % alignment) during the reporting period. 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. 

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 
indirect management of EU funds through beneficiary country's authorities is not applied yet. 
Implementation  of  IPA  I  and  IPA  II  programmes  continued.  The  Indicative  Strategy  Paper 
(ISP)  for  Bosnia  and  Herzegovina  2014-2017  was  revised  in  2017  to  include  the  transport 
sector. The mid-term review of the ISP is under way in view of extending it until 2020. Sector 
strategies for environment and for rural development were adopted in May 2017 and February 
2018,  respectively,  thus  enabling  IPA  support  in  those  sectors.  The  draft  strategy  for  the 
energy  sector  has  not  been  adopted.  The  adoption  of  countrywide  strategies  such  as  public 
financial  management  and  on  employment  remains  a  key  requirement  for  Bosnia  and 
Herzegovina to benefit fully from IPA funding in the period 2018-2020.  

38 

 
 
Bosnia  and  Herzegovina  participates  in  the  following  EU  programmes:  Horizon  2020, 
Creative  Europe,  Fiscalis  2020,  Customs  2020,  Europe  for  Citizens,  Erasmus  +,  Third 
Programme for the Union's action in the field of health and the COSME programme. 

39 

 
 
 
 
ANNEX II – STATISTICAL ANNEX 

STATISTICAL DATA (as of 16.02.2018) 

Bosnia and Herzegovina 

Basic data 

Population (thousand) 

Note 

2005 

2012 

2013 

2014 

2015 

2016 

3 843 

3 839p 

3 836p 

3 831p 

3 825 

3 516bp 

Total area of the country (km²) 

1) 

51 209 

51 209 

51 209 

51 209 

51 209 

51 209 

National accounts 

Note 

2005 

2012 

2013 

2014 

2015 

2016 

Gross domestic product (GDP) (million 
national currency) 

Gross domestic product (GDP) (million 
euro) 

GDP (euro per capita) 

GDP per capita (in purchasing power 
standards (PPS)) 

GDP per capita (in PPS), 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 
(in volume) 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 (2010 = 100) 

Labour productivity per person employed: 
GDP (in PPS) per person employed relative 
to EU average (EU-28 = 100) 

Gross value added by main sectors 

Agriculture, forestry and fisheries (%) 

Industry (%) 

Construction (%) 

Services (%) 

Final consumption expenditure, as a share of 
GDP (%) 

Gross fixed capital formation, as a share of 
GDP (%) 

Changes in inventories, as a share of GDP 

17 650 

26 223 

26 779 

27 359 

28 586 

29 899 

9 025 

13 408 

13 692 

13 988 

14 616 

15 287 

2 548 

5 900 

3 976 

8 300 

4 109 

8 600 

4 113 

8 600 

4 312 

9 100 

4 494 

9 300 

25 

31 

32 

2.2 

31 

1.3 

31 

3.1 

32 

3.3 

-0.8 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

7.3 

20.9 

4.6 

67.2 

8.0 

21.6 

4.5 

65.9 

7.0 

21.3 

4.7 

67.0 

7.3 

21.9 

4.6 

66.2 

109.1 

108.2 

107.1 

103.8 

100.5 

18.6 

18.0 

19.5 

17.8 

17.4 

0.6 

0.2 

-0.4 

0.8 

2.3 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

9.8 

20.2 

5.1 

64.9 

: 

: 

: 

40 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(%) 

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 
(%) 

: 

: 

: 

32.3 

33.7 

34.0 

34.6 

35.4 

55.8 

54.1 

56.6 

53.2 

52.3 

: 

: 

: 

: 

: 

Business 

Industrial production volume index (2010 = 
100) 

Note 

2005 

76.7 

2012 

99.0 

2013 

104.1 

2014 

104.3 

2015 

107.4 

2016 

112.0 

Number of active enterprises (number) 

2) 

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) 

2) 

2) 

2) 

: 

: 

: 

: 

: 

: 

25 092 

23 869 

64 963b 

65 800 

67 168p 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

66.4 

66.0 

71.4b 

71.5 

72.2p 

3 715 

3 513 

4 406b 

4 701 

5 066p 

6 023 

5 847 

6 738b 

7 168 

7 592p 

Inflation rate and house prices 

Note 

2005 

2012 

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

**Annual change in the deflated house price 
index (2010 = 100) 

: 

: 

2.1 

: 

2013 

-0.1 

2014 

-0.9 

2015 

-1.0 

2016 

-1.1 

: 

: 

: 

: 

Balance of payments 

Note 

2005 

2012 

-1 500 

-1 159 

2013 

-728 

2014 

-1 033 

2015 

-826 

2016 

-776 

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 
balance for primary income (million euro) 

Balance of payments current account: net 
balance for secondary income (million euro) 

3) 

3) 

3) 

3) 

3) 

-3 962 

-3 977 

-3 630 

-4 026 

-3 677 

-3 600 

446 

834 

830 

852 

932 

979 

377 

105 

182 

111 

93 

19 

1 639 

1 880 

1 889 

2 029 

1 825 

1 826 

41 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net balance for primary and secondary 
income: 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 balance (inward - outward) of foreign 
direct investment (FDI) (million euro) 

Foreign direct investment (FDI) abroad 
(million euro) 

of which FDI of the reporting economy in 
the EU-28 countries (million euro) 

Foreign direct investment (FDI) in the 
reporting economy (million euro) 

of which FDI of the EU-28 countries in the 
reporting economy (million euro) 

**Net international investment position, 
relative to GDP (%) 

Year on year rate of change in gross inflow 
of remittances (in national currency) from 
migrant workers (%) 

Public finance 

***General government deficit / surplus, 
relative to GDP (%) 

***General government gross debt relative 
to GDP (%) 

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

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

3) 

327 

183 

191 

232 

203 

197 

: 

: 

-8.0 

-7.8 

-7.1 

-6.1 

-6.0 

: 

: 

: 

: 

: 

3) 

3) 

3) 

3) 

281.6 

258.8 

174.6 

400.8 

248.9 

240.5 

0.4 

46.4 

64.4 

7.4 

85.3 

6.1 

: 

: 

: 

13.1 

55.7 

37.6 

282.0 

305.2 

239.1 

408.3 

334.3 

246.6 

246.5 

153.3 

122.9 

225.6 

216.2 

228.6 

: 

: 

-55.9 

-56.6 

-56.7 

-54.9 

-51.6 

4.2 

3.8 

6.4 

2.9 

2.5 

Note 

2005 

2.3 

2012 

-2.0 

2013 

-2.2 

2014 

-2.0 

2015 

0.7 

2016 

1.2 

24.9 

36.6 

37.7 

41.6 

41.9 

40.5 

40.3 

43.8 

42.7 

43.8 

43.2 

42.7 

38.0 

45.8 

44.8 

45.8 

42.6 

41.5 

Financial indicators 

Note 

2005 

2012 

Gross external debt of the whole economy, 
relative to GDP (%) 

Gross external 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) 

: 

: 

: 

: 

2013 

72.9 

2014 

76.3 

2015 

72.2 

2016 

71.0 

216.1 

224.6 

208.8 

202.0 

4) 5) 

2 098 

3 141 

3 423 

3 738 

4 183 

4 756 

4) 5) 

4 129 

7 623 

8 229 

8 829 

9 534 

10 327 

: 

: 

: 

: 

: 

: 

42 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total credit by monetary financial 
institutions to residents (consolidated) 
(million euro) 

**Annual change in financial sector 
liabilities (%) 

**Private credit flow, consolidated, relative 
to GDP (%) 

**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, 42 countries (2005 = 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) 

5) 

3 858 

7 947 

8 194 

8 423 

8 624 

8 795 

6) 

7) 

23.5 

1.4b 

9.3 

1.5 

4.8 

1.3 

5.2 

0.9 

4.6 

1.4 

5.5 

1.8 

7) 8) 

43.2 

88.3 

87.2 

87.9 

82.1 

81.1 

: 

: 

: 

: 

: 

: 

9) 

9.60 

7.20 

7.23 

6.32 

5.74 

4.97 

10) 

0.70 

0.14 

0.12 

0.09 

0.09 

0.09 

1.956 

1.956 

1.956 

1.956 

1.956 

1.956 

11) 

100 

104 

104 

106 

105 

106 

11) 

: 

0.7 

2.1 

2.9 

1.2 

1.6 

12) 

2 160 

3 328b 

3 628 

4 015 

4 415 

4 887 

External trade in goods 

Note 

2005 

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) 

13) 

Share of exports to EU-28 countries in value 
of total exports (%) 

Share of imports from EU-28 countries in 
value of total imports (%) 

: 

: 

: 

: 

: 

: 

2012 

7 799 

2013 

7 756 

2014 

8 283 

2015 

8 105 

2016 

8 263 

4 018 

4 285 

4 439 

4 595 

4 815 

-3 781 

-3 472 

-3 844 

-3 510 

-3 448 

97 

98 

100 

103 

104 

72.6 

73.5 

72.1 

71.6 

71.3 

61.4 

60.0 

58.9 

60.8 

61.9 

Demography 

Crude rate of natural change of population 
(natural growth rate): number of births 
minus deaths (per thousand inhabitants) 

Note 

2005 

0.1 

2012 

-0.9p 

2013 

-1.3p 

2014 

-1.5p 

Infant mortality rate deaths of children under 

6.7 

5.4 

: 

: 

2015 

: 

: 

2016 

-1.8p 

: 

43 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
one year of age (per thousand live births) 

Life expectancy at birth: male (years) 

Life expectancy at birth: female (years) 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Labour market 

Note 

2005 

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

*Employment rate for persons aged 20–64: 
proportion of the population aged 20–64 that 
are in employment (%) 

Male employment rate for persons aged 20–
64 (%) 

Female employment rate for persons aged 
20–64 (%) 

Employment rate for persons aged 55–64: 
proportion of the population aged 55–64 that 
are in employment (%) 

Employment by main sectors 

Agriculture, forestry and fisheries (%) 

Industry (%) 

Construction (%) 

Services (%) 

People employed in the public sector as a 
share of total employment, persons aged 20–
64 (%) 

People employed in the private sector as a 
share of total employment, persons aged 20–
64 (%) 

14) 

14) 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

2012 

58.7 

2013 

58.7 

2014 

59.2 

2015 

59.2 

2016 

58.8 

42.5 

42.8 

43.2 

43.2 

44.2 

54.2 

53.3 

54.6 

53.9 

56.4 

31.1 

32.2 

31.9 

32.4 

32.0 

27.2 

27.7 

28.5 

28.2 

29.7 

20.6 

21.5 

8.9 

49.1 

30.0 

18.9 

22.2 

7.7 

51.3 

32.7 

17.1 

22.1 

7.9 

52.9 

31.9 

17.9 

22.0 

7.5 

52.6 

31.2 

18.0 

22.7 

8.6 

50.8 

29.0 

65.3 

62.5 

63.1 

63.2 

65.9 

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 levels 0-2) (%) 

15) 

43.9 

28.2 

27.6 

27.6 

27.9 

25.5 

26.5 

30.8 

63.1 

26.7 

29.1 

59.1 

25.3 

31.2 

62.7 

25.9 

30.9 

62.3 

22.6 

30.2 

54.3 

23.1 

22.9 

23.4 

22.8 

21.7 

26.8 

28.0 

31.6 

27.7 

26.2 

: 

: 

: 

: 

: 

44 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unemployment rate for persons (aged 25–
64) having completed tertiary education 
(ISCED levels 5-8) (%) 

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) (2010 = 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) 

: 

15.5 

15.7 

17.2 

16.4 

18.9 

Note 

2005 

16) 

538 

2012 

826 

2013 

827 

2014 

830 

2015 

830 

2016 

838 

16) 

17) 

: 

: 

: 

: 

100.3e 

101.3e 

102.4e 

102.1e 

103.1e 

: 

: 

: 

: 

: 

: 

7.9 

6.7 

5.8 

31 

: 

5.2 

: 

: 

4.9 

Note 

2005 

: 

2012 

195.9 

2013 

202.3 

2014 

209.1 

2015 

216.7 

2016 

239.8 

414.6e 

873.2e 

910.4e 

920.7 

887.0 

981.1 

: 

: 

: 

: 

: 

: 

301 

362 

404 

154 

180 

188 

Note 

2005 

20.2 

2012 

20.1 

2013 

20.1 

2014 

20.1 

2015 

20.1 

2016 

21.9 

Length of motorways (kilometres) 

11 

48 

50 

128 

128 

: 

Innovation and research 

Note 

2005 

2012 

2013 

2014 

2015 

2016 

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 (%) 

: 

: 

: 

: 

45 

: 

: 

: 

: 

: 

0.27 

0.32 

0.24 

0.22 

0.24 

: 

: 

: 

: 

0.05 

0.05 

0.04 

: 

: 

61.5b 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Environment 

Note 

2005 

2012 

2013 

2014 

2015 

2016 

*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) (%) 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

444.3 

445.0 

470.6 

29.9 

41.5 

36.7 

35.5 

31.8 

: 

: 

: 

: 

: 

Energy 

Note 

2005 

2012 

2013 

Primary production of all energy products 
(thousand TOE) 

Primary production of crude oil (thousand 
TOE) 

Primary production of solid fuels (thousand 
TOE) 

Primary production of gas (thousand TOE) 

Net imports of all energy products (thousand 
TOE) 

Gross inland energy consumption (thousand 
TOE) 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

2014 

4 306 

2015 

4 367 

2016 

4 742 

: 

: 

: 

3 073 

3 165 

3 521 

0 

0 

0 

1 665 

2 065 

2 098 

5 973 

6 165 

6 735 

Gross electricity generation (GWh) 

12 602 

14 082 

17 451 

16 160 

15 629 

: 

Agriculture 

Note 

2005 

2012 

2013 

2014 

2015 

2016 

Agricultural production volume index of 
goods and services (at producer prices) 
(2010 = 100) 

: 

: 

: 

: 

: 

: 

Utilised agricultural area (thousand hectares)  18) 

1 743e 

1 735be 

1 726e 

1 711e 

1 733e 

1 781e 

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) 

Raw milk available on farms (thousand 
tonnes) 

Harvested crop production: cereals 
(including rice) (thousand tonnes) 

460 

446.1 

447 

444 

455e 

455e 

654 

539 

530 

533 

564e 

545e 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

1 091 

: 

19) 

1 350 

906 

1 222 

1 082 

1 138 

1 658 

46 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Harvested crop production: sugar beet 
(thousand tonnes) 

Harvested crop production: vegetables 
(thousand tonnes) 

0 

0 

0 

0 

0 

0 

20) 

242e 

256e 

304e 

229e 

280e 

361e 

: = not available 

b = break in series 

e = estimate 

p = provisional  

* = 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) 

Inland waters estimated at 210 km². 

2)  2012 and 2013: excluding natural persons (entrepreneurs). 

3)  2005: based on IMF balance of payments manual edition 5 (BPM5). 

4)  M1 money supply comprises cash outside banks and transferable deposit in domestic currency of all domestic 

sectors (except central government deposits). 

5)  Based on IMF monetary and financial statistics manual, 2000. 

6)  2012-2016: data for Monetary Financial Institutions. 

7)  Data for Monetary Financial Institutions. 

8)  2005: private sector debt excludes external debt of private sector. 

9)  Short-term lending rates in national currency to non-financial corporations (weighted average). 

10)  Demand deposit rates in national currency of households (weighted average). 

11)  Calculation of effective exchange rate indices is against a group of 21 most important trading partners. 

12)  2005: excluding gold. 

13)  Based on Paasche export and import unit value indices in BAM. 

14)  The analysis of employment between public and private sector does not sum to 100% as some types of 

ownership are excluded. 

15)  2005: not calculated using the ILO methodology; taken from the Bureau for Employment. 

16)  Net earnings. 

17)  Total household consumption expenditure is used for the calculation, instead of Income. 

18)  The utilised agricultural area consists of arable land, kitchen garden, permanent crops and permanent 

grassland as cadastral data (not as UAA). 

19)  2005: excluding triticale and buckwheat. 

20)  2005: including dried pulses. 

47