COMMISSION STAFF WORKING DOCUMENT Analytical Report Accompanying the document Communication from the Commission to the European Parliament and the Council Commission Opinion on Bosnia and Herzegovina’s application for membership of the European Union
Date: 2019-05-29
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Bosnia and Herzegovina, European Union membership, accession criteria

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 29.5.2019  SWD(2019) 222 final  COMMISSION STAFF WORKING DOCUMENT Analytical Report Accompanying the document Communication from the Commission to the European Parliament and the Council Commission Opinion on Bosnia and Herzegovina’s application for membership of the European Union {COM(2019) 261 final}  
 
 
Table of Contents 

INTRODUCTION 

APPLICATION FOR MEMBERSHIP 

RELATIONS BETWEEN THE EU AND BOSNIA AND HERZEGOVINA 

CONTENTS OF THE ANALYTICAL REPORT 

CRITERIA FOR MEMBERSHIP 

POLITICAL CRITERIA AND RULE OF LAW ISSUES 

A. 

1. 

2. 

3. 

B 

1. 

1.1. 

Functioning of democratic institutions and Public Administration Reform 

1.1.1  Democracy 

1.1.2 

Public administration reform 

1.2. 

Rule of law and fundamental rights 

1.2.1.  Chapter 23: Judiciary and fundamental rights 

1.2.2.  Chapter 24: Justice, freedom and security 

2. 

2.1. 

2.2. 

2.3. 

C. 

FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT AND 
COMPETITIVENESS 

Introduction 

Assessment in terms of the Copenhagen Criteria 

General evaluation 

OBLIGATIONS STEMMING FROM THE STABILISATION AND 
ASSOCIATION PROCESS - GOOD NEIGHBOURLY RELATIONS AND 
REGIONAL COOPERATION 

D. 

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

Chapter 1: Free movement of goods 

Chapter 2: Freedom of movement for workers 

Chapter 3: Right of establishment and freedom to provide services 

Chapter 4: Free movement of capital 

Chapter 5: Public procurement 

Chapter 6: Company law 

Chapter 7: Intellectual property law 

Chapter 8: Competition policy 

Chapter 9: Financial services 

Chapter 10: Information society and media 

Chapter 11: Agriculture and rural development 

Chapter 12: Food safety, veterinary and phytosanitary policy 

Chapter 13: Fisheries 

1 

3 

3 

5 

8 

9 

9 

9 

9 

23 

28 

28 

56 

70 

70 

71 

81 

82 

84 

84 

87 

90 

92 

94 

96 

98 

100 

102 

106 

109 

113 

116 

 
 
 
Chapter 14: Transport policy 

Chapter 15: Energy 

Chapter 16: Taxation 

Chapter 17: Economic and monetary policy 

Chapter 18: Statistics 

Chapter 19: Social policy and employment 

Chapter 20: Enterprise and industrial policy 

Chapter 21: Trans-European Networks 

Chapter 22: Regional policy and coordination of structural instruments 

Chapter 25: Science and research 

Chapter 26: Education and culture 

Chapter 27: Environment 

Chapter 28: Consumer and health protection 

Chapter 29: Customs union 

Chapter 30: External relations 

Chapter 31: Foreign, security and defence Policy 

Chapter 32: Financial Control 

Chapter 33: Financial and budgetary provisions 

ANNEX I – STATISTICAL ANNEX 

117 

122 

128 

129 

132 

136 

141 

144 

147 

150 

151 

154 

160 

163 

164 

167 

170 

174 

177 

2 

 
 
 
 
A. 

1. 

INTRODUCTION 

Application for membership 

Bosnia and Herzegovina presented its application for membership of the European Union on 
15 February 2016. Subsequently, on 20 September 2016, the Council of the European Union 
invited  the  Commission  to  submit  its  opinion  on  this  application.  This  is  in  line  with  the 
procedure laid down in  Article 49 of the Treaty  on European Union, which states that  ‘Any 
European  State  which  respects  the  values  referred  to  in  Article  2  and  is  committed  to 
promoting them may apply to become a member of the Union. The European Parliament and 
national Parliaments shall be notified of this application. The applicant State shall address its 
application to the Council, which shall act unanimously after consulting the Commission and 
after receiving the consent of the European Parliament, which shall act by a majority of its 
component members. The conditions of eligibility agreed upon by the European Council shall 
be taken into account’. Article 2 states that ‘the Union is founded on the values of respect for 
human dignity, freedom, democracy, equality, the rule of  law and respect  for  human rights, 
including  the  rights  of  persons  belonging  to  minorities.  These  values  are  common  to  the 
Member  States  in  a  society  in  which  pluralism,  non-discrimination,  tolerance,  justice, 
solidarity and equality between women and men prevail’.  

This is the legal framework within which the Commission submits this Opinion. 

The  European  Council  in  Feira  in  June  2000  acknowledged  that  Western  Balkan  countries 
participating  in  the  Stabilisation  and  Association  Process  are  ‘potential  candidates’  for  EU 
membership.  The  European  perspective  of  these  countries  was  confirmed  by  the  European 
Council  in  Thessaloniki  in  June  2003  which  endorsed  the  ‘Thessaloniki  Agenda  for  the 
Western Balkans’. This agenda remains the cornerstone of EU policy towards the region. 

The European Council in December 2006 renewed the EU’s commitment  ‘that the future of 
the Western Balkans lies in the European Union’ and reiterated that ‘each country's progress 
towards the European Union depends on its individual efforts to comply with the Copenhagen 
criteria  and  the  conditionality  of  the  Stabilisation  and  Association  Process.  A  country’s  
satisfactory  track  record  in  implementing  its  obligations  under  a  Stabilisation  and 
Association Agreement (SAA), including trade-related provisions, is an essential element for 
the EU to consider any membership application’.  

In  the  February  2018  Western  Balkans  strategy  the  Commission  stated  that  ‘with  sustained 
effort  and  engagement,  Bosnia  and  Herzegovina  could  become  a  candidate  for  accession’.1  
At  the  EU-Western  Balkans  summit  which  took  place  in  Sofia  in  May  2018,  EU  leaders 
reaffirmed  their  unequivocal  support  for  the  European  perspective  of  the  Western  Balkans, 
and the Western Balkan partners recommitted to this perspective as their firm strategic choice. 
The EU leaders agreed on the Sofia Declaration and the Sofia Priority Agenda, outlining new 
measures for enhanced cooperation with the region in key areas such as security, rule of law 
and migration 

In the Opinion, the Commission assesses Bosnia and Herzegovina’s application on the basis 
of the country’s capacity to meet the criteria set by the European Council in Copenhagen in 
1993, as well as  in  Madrid  in  1995, notably  regarding the country’s administrative capacity 
and the conditions of the Stabilisation and Association Process (SAP). The Opinion also takes 

1  European  Commission,  Communication  on  a  credible  enlargement  perspective  for  and  enhanced  EU 
engagement  with 
final, 
6 
https://ec.europa.eu/commission/sites/beta-political/files/communication-credible-enlargement-perspective-
western-balkans_en.pdf. 

the  Western 

COM(2018) 

February 

Balkans, 

2018, 

65 

3 

 
                                                 
into account Bosnia and Herzegovina’s track record in implementing its obligations under the 
SAA, which entered into force on 1 June 2015. 

In June 1993, in Copenhagen, the European Council concluded that: 

‘Accession  will  take  place  as  soon  as  a  country  is  able  to  assume  the  obligations  of 
membership by satisfying the economic and political conditions required.  

Membership requires: 

–  that  the  candidate  country  has  achieved  stability  of  institutions  guaranteeing  democracy, 
the rule of law, human rights and respect for and protection of minorities; 

–  the  existence  of  a  functioning  market  economy,  as  well  as  the  capacity  to  cope  with 
competitive pressure and market forces within the Union; 

–  the  ability  to  take  on  the  obligations  of  membership  including  adherence  to  the  aims  of 
political, economic and monetary union’. 

The Union’s capacity to absorb new members, while maintaining the momentum of European 
integration, is also an important consideration in the general interest of both the Union and the 
candidate countries. 

In  December  1995,  in  Madrid,  the  European  Council  referred  to  the  need  ‘to  create  the 
conditions for the gradual, harmonious integration of [the applicant] countries, particularly 
through  the  development  of  the  market  economy,  the  adjustment  of  their  administrative 
structures and the creation of a stable economic and monetary environment’. 

In  December  2006,  the  European  Council  agreed  that  ‘the  enlargement  strategy  based  on 
consolidation,  conditionality  and  communication,  combined  with  the  EU’s  capacity  to 
integrate new members, forms the basis for a renewed consensus on enlargement’. 

For the Western Balkans, the Council defined on 31 May 1999 the specific conditions under 
the SAP.  These include  cooperation  with  the  International  Criminal  Tribunal  for the former 
Yugoslavia  (ICTY)  and  regional  cooperation.  These  conditions  are  integrated  as  a 
fundamental element into the SAA. 

The  Opinion  has  been  prepared  following  a  methodology  similar  to  that  used  in  previous 
Opinions.  The  Commission  delivered  a  total  of  3  897  questions  covering  all  EU  policies  to 
Bosnia and Herzegovina. It took the country 14 months to answer the initial 3 242 questions 
and  8  months  to  reply  to  the  655  follow-up  questions.  Despite  the  establishment  of  a 
coordination mechanism on EU matters, the authorities could not agree to submit answers to 
22 questions: 1 on the political criteria, 4 on regional policy, and 17 on education policies. 

The  Commission  organised  a  number  of  expert  missions  to  Bosnia  and  Herzegovina  with  a 
special  focus  on  the  areas  covered  by  the  political  criteria.  The  Commission  also  took  into 
account the contributions received from the consultations held with stakeholders such as civil 
society  organisations,  international  organisations  and  EU  Member  States.  This  approach 
allowed  the  Commission  to  assess  the  administrative  capacity  of  Bosnia  and  Herzegovina 
institutions and the way legislation is implemented. It also helped to better identify remaining 
challenges and priorities for future action. The Commission has analysed the current situation 
and has provided guidance to address issues in the short term as well as in the longer term.  

In  line  with  the  renewed  consensus  on  enlargement,  this  analytical  report  provides  initial 
estimates of the impact of the future accession of Bosnia and Herzegovina in some key policy 
areas. The Commission will provide more detailed impact assessments for these policy areas 
at later stages of the pre-accession process. In addition, an EU accession treaty for Bosnia and 

4 

 
Herzegovina  would  involve  technical  adaptation  of  the  EU  institutions  in  the  light  of  the 
Treaty on European Union.  

2. 

Relations between the EU and Bosnia and Herzegovina   

Relations  between  the  EU  and  Bosnia  and  Herzegovina  have  developed  since  the 
independence of the country in 1992 and the signature of the General Framework Agreement 
for Peace (GFAP) at Dayton/Paris in 1995.  

Bosnia and Herzegovina is participating in the Stabilisation and Association Process (SAP). 
The Stabilisation and Association Agreement between Bosnia and Herzegovina and the EU 
was signed on 16 June 2008 in Luxembourg, along with an Interim Agreement, which as of 
1 July 2008 regulates trade and trade-related matters. While ratified by all EU Member States 
by February 2011, the SAA could not enter in force, since Bosnia and Herzegovina had not 
fulfilled the condition that was set on the compliance with the 2009 decision of the European 
Court of Human Rights (ECtHR) in the Sejdić-Finci case. Such ruling requires the country to 
amend the Constitution to remove discriminatory provisions from  the electoral  rules for the 
Presidency and the state-level House of Peoples. 

In  December  2014,  the  Council  agreed  on  a  renewed  approach  to  Bosnia  and  Herzegovina, 
without changing the EU accession conditions, including the implementation of the decision 
of  the  ECtHR  in  the  Sejdić-Finci  case,  and  invited  the  Vice  President/High  Representative 
Mogherini  and  Commissioner  Hahn  to  engage  with  the  political  leaders  to  secure  their 
irrevocable  commitment  to  undertake  reforms  towards  EU  accession.2  Following  the 
agreement  upon  a  written  commitment  by  the  Presidency  of  Bosnia  and  Herzegovina  in 
January 2015, its signature by the leaders of the 14 parliamentary parties and its endorsement 
by the Parliamentary Assembly, in March 2015 the Council agreed to the entry into force of 
the  SAA,  which  started  on  1  June  2015.  With  the  entry  into  force  of  the  SAA,  Bosnia  and 
Herzegovina opened a new chapter in its relations with the EU and confirmed its commitment 
to  pursue  EU  accession.  By  establishing  contractual  relations  among  the  parties,  the  SAA 
provides  a  framework  of  mutual  commitments  on  a  wide  range  of  political,  trade  and 
economic issues as well as the legal basis for formalised policy dialogue. 

The  EU  provides  guidance  to  the  country  on  reform  priorities  on  the  EU  membership  path. 
Political  and  economic  dialogue  between  the  European  Commission  and  Bosnia  and 
Herzegovina has been taking place since 2009 under the Interim Agreement, and since 2015 
under the SAA.3 Policy dialogue on the rule of law has taken place since 2011 in the context 
of the ‘structured dialogue on justice’, and since 2016 in the framework of the subcommittee 
on  justice,  freedom  and  security.  A  special  group  on  public  administration  reform  has  also 
been meeting since 2017. 

Bosnia  and  Herzegovina  has  developed  appropriate  administrative  capacities  to  ensure  the 
implementation of the SAA provisions, in particular concerning the smooth operation of the 
Stabilisation and Association Council, Committee and sectoral sub-committees. The protocol 
adapting  the  SAA  to  take  into  account  the  accession  of  Croatia  to  the  European  Union  has 
been provisionally applied since 1 February 2017 and entered into force on 1 October 2017.  

2 Council of the European Union, Press release of the 3361st Council  meeting, 15 December 2014, 16928/14, 
https://www.consilium.europa.eu/media/24768/146293.pdf.  
3  Policy  dialogue  between  the  European  Commission  and  Bosnia  and  Herzegovina  takes  place  within  the 
framework  of  sectoral  sub-committees  on:  trade,  industry,  customs  and  taxation;  agriculture  and  fisheries; 
internal  market  and  competition;  economic  and  financial  issues  and  statistics;  innovation,  information  society 
and social policy; transport, environment, energy and regional development; justice, freedom and security. 

5 

 
 
                                                 
However,  concerns  remain.  To  meet  its  legal  obligations  under  the  Agreement,  Bosnia  and 
Herzegovina  needs,  among  other  things,  to  ensure  the  functioning  of  the  parliamentary 
dimension  of  the  Agreement,  and  adopt  a  national  programme  for  the  adoption  of  the  EU 
acquis.  

The  parliamentary  dimension  of  the  SAA  is  not  properly  functioning.  The  Stabilisation  and 
Association Parliamentary Committee was established in November 2015 as part of the SAA 
bodies,  but  it  failed  to  adopt  its  rules  of  procedure  due  to  the  insistence  of  some  delegates 
from  Bosnia  and  Herzegovina  on  the  inclusion  of  ethnic  voting  provisions  not  in  line  with 
European standards. In spite of this, the European Parliament regularly discusses and adopts 
resolutions on the situation and developments in view of Bosnia and Herzegovina’s EU path. 

Bosnia and Herzegovina participates in an economic dialogue with the Commission and the 
EU  Member  States.  The  country  submits  every  year  to  the  Commission  a  medium-term 
Economic Reform Programme (ERP) setting out  plans to  strengthen macro-fiscal  stability 
and tackle structural obstacles to growth. On the basis of the ERP, Bosnia and Herzegovina 
meets  every  year  with  the  Commission,  EU  Member  States  and  all  other  enlargement 
countries at the Economic and Financial Dialogue. This dialogue on economic governance is 
meant to prepare the country for its future participation in EU economic policy coordination, 
including  the  European  Semester  process.  However,  largely  as  a  result  of  insufficient 
cooperation among key ministries and bodies at various levels within the country, the quality 
of  the  programme  is  low  and  the  implementation  of  the  jointly  adopted  policy  guidance, 
which is a central part of the process, is limited.   

Between 2015 and 2018 Bosnia and Herzegovina embarked on an ambitious ‘reform agenda’ 
to bring back economic growth and jobs opportunities. Its implementation allowed economic 
indicators  and  the  macroeconomic  situation  to  improve,  including  balanced  public  finances 
and  steady  economic  growth.  A  new  set  of  socio-economic  reform  measures  needs  to  be 
agreed and implemented by the governments at all levels in the country, in full alignment with 
the ERP and the jointly agreed policy guidance. 

Bosnia  and  Herzegovina  started  negotiations  for  visa  liberalisation  in  2008.  Following  a 
decision of the Council in consultation with the European Parliament, citizens of Bosnia and 
Herzegovina enjoy visa-free travel to the Schengen area as of November 2010. This decision 
was based on substantial progress in the areas of justice, freedom and security and fulfilment 
of  the  174  specific  conditions  set  out  in  the  roadmap  for  visa  liberalisation,  such  as  the 
introduction of biometric passports. The Commission monitored and reported regularly on its 
implementation.  The  Commission  presented  its  second  report  under  the  visa  suspension 
mechanism in December 2018.4 Overall, Bosnia and Herzegovina continues to fulfil the visa 
liberalisation  benchmarks.  An  agreement  on  readmission  has  been  in  force  since  January 
2008.  

Bosnia  and  Herzegovina  ratified  the  Energy  Community  Treaty  in  September  2006,  the 
European  Common  Aviation  Area  Agreement  in  July  2007,  and  the  Transport  Community 
Treaty in April 2018.  

The  SAA  and  its  Interim  Agreement,  applied  since  2008,  have  allowed  progressive  trade 
liberalisation  and  mutual  duty-free  access  for  most  goods.  Since  2000  Bosnia  and 
Herzegovina  has  also  been  benefiting  from  the  ‘autonomous  trade  measures’.  Bosnia  and 
Herzegovina  joined  the  Central  European  Free  Trade  Agreement  (CEFTA)  in  2007.  The 
negotiations for its accession to the World Trade Organisation are in the final stage. The EU is 

4 European Commission, Second report under the visa suspension mechanism, 19 December 2018, COM(2018) 
856 
https://ec.europa.eu/home-affairs/sites/homeaffairs/files/what-we-do/policies/european-agenda-
migration/20181219_com-2018-856-report_en.pdf.  

final, 

6 

 
                                                 
the  main  trading  partner  of  Bosnia  and  Herzegovina,  followed  by  CEFTA  countries.  Trade 
integration with the EU is high. In 2017, 61% of the country imports worth EUR 5.6 billion 
originated  from  the  EU  (12%  from  CEFTA).  Of  the  country  exports,  71%  went  to  the  EU 
(15%  to  CEFTA).  The  country’s  trade  deficit  with  the  EU  amounted  to  EUR  1.7  billion  in 
2017. 

The  EU  deploys  considerable  resources  in  Bosnia  and  Herzegovina  under  the  common 
foreign  and  security  policy  and  the  common  security  and  defence  policy.  The  enhanced 
presence  ensured  since  2011  by  the  combined  Office  of  the  EU  Special  Representative  and 
EU Delegation in Bosnia and Herzegovina is instrumental in communicating EU priorities to 
the citizens of the country and in implementing the objectives of the EU agenda in key areas. 
Since  December  2004  the  EU  has  deployed  the  EUFOR  Althea  military  operation  in  the 
country,  helping  to  build  capacities  and  train  the  armed  forces  of  Bosnia  and  Herzegovina. 
This  is  in  line  with  the  strategic  intent  expressed  by  the  Ministry  of  Defence  to  develop 
operational capabilities of dual use in support of civil authorities for the removal of  physical 
remnants of war or disaster relief and deployment in peace support operations overseas. At the 
same time, EUFOR Althea has deterrence capacity to support a safe and secure environment. 
In  November  2018,  the  UN  Security  Council  extended  for  the  fourteenth  time  EUFOR 
Althea’s yearly mandate until November 2019. A framework agreement on the participation 
of  Bosnia  and  Herzegovina  in  EU  crisis  management  operations  has  been  in  place  since 
September 2015. 

The EU provides significant financial assistance to Bosnia and Herzegovina, which over the 
years allowed the country to recover from wartime destruction and to re-establish itself as a 
catching-up  economy.  From  1996  to  2000  Bosnia  and  Herzegovina  benefited  from  EU 
financial  assistance  under  the  PHARE  and  OBNOVA  programmes.  From  2000  to  2007  the 
CARDS  regulation  foresaw  financial  support  tailored  to  SAP  priorities.  Since  2007  Bosnia 
and Herzegovina benefits from EU assistance mainly under the Instrument for pre-accession 
assistance (IPA). Over the 2007-18 period, Bosnia and Herzegovina received EUR 1.5 billion 
from the EU, of which an estimated EUR 433 million from regional programmes. Since 2000 
the European Investment Bank awarded EUR 2.4 billion in loans to support projects in Bosnia 
and  Herzegovina.  The  EU  Delegation  to  Bosnia  and  Herzegovina  is  responsible  for 
implementing  EU  financial  assistance  via  direct  management  as  well  as  for  ensuring  the 
coordination of assistance with EU Member States. Implementation of the IPA I and  IPA II 
programmes is  ongoing. The indicative strategy  paper  for Bosnia and  Herzegovina 2014-17 
was  revised  in  2018  to  include  several  additional  sectors  and  extend  it  until  2020.  Sector 
strategies are in place for environment, energy, transport and rural development, enabling IPA 
support  in  those sectors. The adoption of countrywide strategies such as on public financial 
management and on employment remains a key requirement for Bosnia and Herzegovina to 
benefit fully from IPA funding in 2018-20.  

Bosnia  and  Herzegovina  has  progressively  extended  its  participation  to  EU  programmes, 
which  has  been  partly  co-financed  via  IPA  funds.  Bosnia  and  Herzegovina  currently  takes 
part  in  COSME,  Creative  Europe,  Customs  2020,  Europe  for  Citizens,  Erasmus+,  Fiscalis 
2020, Horizon 2020, and the Third Programme for the Union’s action in the field of health. 
Bosnia and Herzegovina also takes part in the INTERREG programme.  

7 

 
 
 
3. 

Contents of the analytical report 

The  analytical  report  takes  into  account  the  conclusions  of  the  European  Council  in 
Copenhagen in 1993 and subsequent European Council conclusions.  

The report:  

-  describes the relations between Bosnia and Herzegovina and the Union;   
- 

analyses  the  compliance  of  Bosnia  and  Herzegovina  with  the  political  conditions 
established by the European Council (democracy, rule of law, human rights, protection of 
minorities; regional issues and international obligations);   
assesses  the  country’s  situation  and  prospects  in  respect  of  the  economic  conditions 
established by the European Council (functioning market economy, capacity to cope with 
competitive pressure);   
addresses the country’s overall capacity to uphold the obligations of membership, i.e. the 
full  body  of  EU  law  as  expressed  in  the  Treaty,  the  secondary  legislation,  and  also  the 
policies of the Union (acquis of the European Union);  

- 

- 

-  provides,  in  line  with  the  December  2006  European  Council  conclusions,  initial  impact 
estimates  in  the  fields  of  freedom  of  movement  for  workers  (chapter  2),  agriculture  and 
rural development (chapter 11), regional policy and coordination of structural instruments 
(chapter  22),  and  financial  and  budgetary  provisions  (chapter  33).  These  have  been 
identified  as  the  main  policy  areas  likely  to  require  particular  attention  in  the  case  of 
Bosnia and Herzegovina accession.  

In assessing Bosnia and Herzegovina’s situation with regard to the economic criteria and its 
capacity  to  assume  the  obligations  of  the  acquis,  the  Commission  has  also  estimated  the 
progress  which  could  reasonably  be  expected  in  the  years  ahead,  before  possible  accession, 
taking account of the fact that the acquis itself will continue to develop.  

As for previous Opinions, the Commission has drawn on a number of sources of information, 
starting with the answers provided by Bosnia and Herzegovina to a detailed questionnaire and 
additional follow-up questions. The Commission also took into consideration:  

reports of expert missions;  
reports by the Member States’ embassies in Sarajevo;  
reports by the European Parliament;  

- 
- 
- 
-  assessments by international organisations (including Council of Europe, Organisation for 
Economic  Cooperation  and  Development,  Organisation  for  Security  and  Cooperation  in 
Europe, International Monetary Fund, World Bank);  

-  assessments by local and international non-governmental organisations; 
- 

information submitted to the Commission by citizens of Bosnia and Herzegovina.  

The Commission organised a large number of expert missions and peer reviews in Bosnia and 
Herzegovina with EU Member States’ experts focusing on rule of law and fundamental rights 
matters  as  part  of  the  political  criteria.  This  methodology  also  allowed  the  Commission  to 
prepare a sound assessment of the administrative capacities of the country institutions and of 
the  implementation  of  legislation,  in  order  to  identify  the  key  challenges  and  priorities  for 
future  action.  The  Commission  has  analysed  the  current  situation  and  provided  in  this 
analytical report a comprehensive number of short-term priorities as well as structural issues 
which Bosnia and Herzegovina must address on its path towards EU accession.  

8 

 
 
B 

1. 

CRITERIA FOR MEMBERSHIP 

POLITICAL CRITERIA AND RULE OF LAW ISSUES 

Functioning of democratic institutions and Public Administration Reform 

1.1. 
1.1.1  Democracy 

Constitution 

The  Constitution  of  Bosnia  and  Herzegovina  is  an  integral  part  of  the  General  Framework 
Agreement  for  Peace  (GFAP)  (Annex  IV),  and  establishes  Bosnia  and  Herzegovina  as  a 
parliamentary democracy in which the executive powers are exercised by the Presidency and 
the  Council  of  Ministers,  and  the  legislative  powers  by  the  Parliamentary  Assembly.  The 
Constitution sets out the internal structure of the country as a state consisting of two entities, 
the  Federation  of  Bosnia  and  Herzegovina  and  Republika  Srpska  as  well  as  the  Brčko 
District.5  

The Constitution guarantees the fundamental principles of a democratic state, including the 
rule of law, free elections and the protection of human rights.  It emphasises full freedom of 
movement of persons, goods, services, and capital throughout Bosnia and Herzegovina. The 
Constitution commits Bosnia and Herzegovina to ensuring the highest level of internationally 
recognised  human  rights  and  fundamental  freedoms  and  stipulates  that  the  rights  and 
freedoms  set  out  in  the  European  Convention  for  the  Protection  of  Human  Rights  and 
Fundamental  Freedoms  (ECHR)  and  its  Protocols  are  directly  applicable  and  have  priority 
over all other law. In its decisions U-5/04 and U-13/05 the Constitutional Court clarified that 
the ECHR does not have priority over the Constitution. The Constitution also commits Bosnia 
and  Herzegovina  to  non-discrimination  in  the  enjoyment  of  rights  and  freedoms,  and 
establishes the  right of  all refugees and displaced persons to return freely to  their homes of 
origin, including property restoration or compensation. 

The  Preamble  to  the  Constitution  lists  ‘Bosniacs,  Croats,  and  Serbs,  as  constituent  peoples 
(along with Others), and citizens of Bosnia and Herzegovina’ as determining the Constitution. 
In its decision U-5/98 the Constitutional Court held that the Preamble contains a constitutional 
principle of equality of ‘constituent peoples’, which prohibits any privilege or domination of 
any group over the others in any parts of the country, establishing Bosnia and Herzegovina as 
a  democratic  multi-ethnic  state.  Entity  constitutions  and  laws  have  been  amended  to  be 
brought  in  line  with  the  Constitution,  to  ensure  equality  and  non-discrimination  among 
members of constituent peoples across the whole country. 

The Constitution enumerates the competences expressly assigned to the State, and attributes 
all  other  powers  to  the  entities.  As  provided  for  by  the  Constitution  and  where  relevant 
confirmed by the Constitutional Court, state-level competences also include powers that have 
been  gradually  attributed  to  or  assumed  by  the  State  on  the  basis  of  transfer  agreements 
concluded between the entities; of Annexes V through VIII to the peace agreements; and of 
implied  powers  when  necessary  to  preserve  the  sovereignty,  territorial  integrity,  political 
independence,  and  international  legal  personality  of  Bosnia  and  Herzegovina.  The 
Constitution provides that additional institutions may be established as necessary to carry out 
such responsibilities.  

5 Following the final award of international arbitration, the Brčko District was established in 1999 as a unit of 
local self-government  under the direct sovereignty of Bosnia and Herzegovina’s state  institutions. Since 2006, 
entity  laws  do  not  apply  in  the  Brčko  District  anymore.  The  Constitution  of  Bosnia  and  Herzegovina  was 
amended for the first time in 2009 to reflect the Brčko final award. The Constitution of the Federation entity also 
establishes 10 cantons as federal units of the entity, with extensive legislative competences. 

9 

 
                                                 
Frequent disputes on the distribution of competences between the State and the entities affect 
their  effective  exercise  and  therefore  the  alignment  of  legislation  with  the  acquis  and  its 
implementation in a large number of chapters. To prevent such systematic disputes and ensure 
effective  implementation  of  the  acquis,  Bosnia  and  Herzegovina  needs  to  ensure  legal 
certainty on the distribution of competences among the levels of government. 

There  is  also  no  procedure  in  the  Constitution  providing  for  the  state  level  to  prevent  and 
remedy  breaches  of  EU  law  by  other  levels  of  government.  While  the  acquis  may  be 
implemented by other levels of government, according to the case-law of the European Court 
of Justice the liability for breaches of EU law rests with the State as a whole. To ensure the 
full compliance with EU membership obligations, a substitution clause should be introduced 
to  allow  the  State  upon  accession  to  temporarily  exercise  competences  of  other  levels  of 
government  to  prevent  and  remedy  breaches  of  EU  law  for  which  Bosnia  and  Herzegovina 
would be held liable as a whole. 

The  entities,  cantons  and  Brčko  District  are  obliged  to  fully  comply  with  the  Constitution, 
which  has  primacy  over  entity  constitutions  and  laws.  They  must  also  comply  with  all 
decisions  of  the  state-level  institutions.  The  Constitution  requires  the  entities  to  provide  all 
necessary  assistance  to  the  government  of  Bosnia  and  Herzegovina  in  order  to  enable  it  to 
honour the country’s international obligations. 

The  Constitution  provides  for  the  separation  of  legislative  and  executive  powers.  It 
guarantees  specific  collective  rights  for  the  members  of  the  constituent  peoples  in  the 
composition and decision-making procedures of the legislative and executive bodies.  

The  Parliamentary  Assembly  is  composed  of  a  directly  elected  lower  house,  the  House  of 
Representatives,  and  of  an  indirectly  elected  upper  house,  the  House  of  Peoples,  which 
comprises  five  members  for  each  constituent  people,  elected  among  the  members  of  the 
entity-level upper houses. Both chambers need to approve all legislation with at least one third 
of  members  elected  from  each  entity  voting  in  favour  (‘entity  voting’).  In  the  House  of 
Peoples,  a  majority  of  members  from  each  constituent  people  may  declare  a  decision  to  be 
‘destructive’ of their vital interest (‘vital national interest’ veto). Such ethnic-based veto rights 
affect the work of the Parliamentary Assembly, risking to delay the legislative process. 

The Constitution may be amended by a decision of the Parliamentary Assembly, which must 
be taken by a two-thirds majority of those present and voting in the House of Representatives 
and  a  qualified  majority  of  the  House  of  Peoples.  The  protection  of  human  rights  and 
fundamental freedoms established in the Constitution cannot be derogated.  

The  Constitution  establishes  a  collective  head  of  state  of  Bosnia  and  Herzegovina,  the 
Presidency, composed of one Bosniak and one Croat member, each directly elected from the 
territory of the Federation entity, and one Serb member directly elected from the territory of 
the Republika Srpska  entity. The Presidency is  in  charge of foreign policy and international 
representation of the country, and has civilian command authority over the armed forces.  

Citizens who do not declare themselves as Bosniaks, Croats or Serbs, as well as Serbs living 
in the Federation entity and Croats and Bosniaks living in the Republika Srpska entity, cannot 
stand  for  election  to  the  Presidency  or  to  the  state-level  House  of  Peoples.  Since  2009  the 
European Court of Human Rights (ECtHR) has established in the Sejdić-Finci, Zornić, Pilav 
and  Šlaku  decisions  that  these  restrictions  are  in  violation  of  the  ECHR  and  its  Protocols.6 

6  European  Court  of  Human  Rights,  decisions  in  the  cases  of  Dervo  Sejdić  and  Jakob  Finci  v.  Bosnia  and 
Herzegovina (27996/06 and 34836/06 of 22 December 2009); Azra Zornić v. Bosnia and Herzegovina (3681/06 
of 15 July 2014); Ilijaz Pilav v. Bosnia and Herzegovina (41939/07 of 9 June 2016); and Samir Šlaku v. Bosnia 
and Herzegovina (56666/12 of 26 May 2016). 

10 

 
                                                 
Significant reforms are needed to ensure that all citizens can effectively exercise their political 
rights, irrespective of their ethnicity and residence. 

As  for  the  executive,  the  Constitution  establishes  a  Council  of  Ministers  as  government  of 
Bosnia  and  Herzegovina,  whose  Chair  is  nominated  by  the  Presidency  and  assumes  office 
upon approval of the whole Council of Ministers by the House of Representatives. Two thirds 
of ministers are appointed from the Federation entity and one third from the Republika Srpska 
entity.  The  Chair  and  its  two  deputies  must  declare  themselves  as  members  of  one  of  the 
constituent peoples each, and at least one position should also be allocated to a member of the 
‘Others’ within the Council of Ministers or as its Secretary-General.  

Save for the Constitutional Court, the judiciary is not explicitly mentioned in the Constitution 
but is regulated in the entity constitutions and in the Brčko District Statute. The judiciary in 
Bosnia  and  Herzegovina  is  organised  into  four  systems  (State,  entities  and  Brčko  District), 
each of them having its own jurisdiction and internal institutional structures.  

The  self-regulatory  body  of  the  judiciary,  the  High  Judicial  and  Prosecutorial  Council  of 
Bosnia  and  Herzegovina  (HJPC),  is  tasked  with  guaranteeing  its  independence.  The  HJPC 
was established in 2004, replacing entity-level judicial and prosecutorial councils, on the basis 
of a transfer agreement from the entities, confirmed by the Constitutional Court. The Court of 
Bosnia  and  Herzegovina  and  the  Prosecutor’s  Office  have  been  established  in  the  period 
2000-04  to  fulfil  the  constitutional  obligations  of  the  State.  The  Constitutional  Court 
confirmed  their  compliance  with  the  Constitution  in  2001.  A  separate  state-level  court  of 
appeal is missing.  The independence of the judiciary is not sufficiently guaranteed to shield it 
from all forms of politicisation and pressures. The Constitution needs to explicitly guarantee 
the  independence  of  the  judiciary  and  provide  an  explicit  constitutional  basis  for  the  HJPC 
and the state-level court system.  

The Constitution does not provide for a supreme court. The consistency of case-law across the 
four  legal  orders  is  promoted  by  voluntary  harmonisation  panels  among  the  highest  court 
instances,  which  issue  guidelines.  To  safeguard  the  principle  of  independence  of  all  judges, 
the  consistency  of  case-law  should  rather  be  ensured  through  decisions  of  higher  courts. 
Ultimately, Bosnia and Herzegovina needs to establish a judicial body to ensure the consistent 
interpretation of the law and the harmonisation of case-law, while fully ensuring the principle 
of independence of all judges. 

The Constitutional Court is the final authority as regards interpretation of the Constitution. 
The  Court  possesses  exclusive  jurisdiction  to  decide  on  disputes  arising  between  entities  or 
between the state level and the entities or between institutions, including on compliance of the 
entities’  constitutions  or  laws  with  the  Constitution.  Through  its  appellate  jurisdiction  over 
constitutional issues arising out of a judgment or pursuant to the request  of any other court, 
the Constitutional Court is competent to decide whether a judgement or law complies with the 
Constitution, the ECHR, the legislation and the general rules of public international law. The 
Constitutional  Court  also  takes  final  decisions  on  motions  for  the  protection  of  the  ‘vital 
national interest’ of constituent peoples brought by the Parliamentary Assembly.  

The Constitutional Court is composed of nine judges, of which six are elected by the entity 
assemblies  (four  by  the  House  of  Representatives  of  the  Federation  entity,  and  two  by  the 
Republika  Srpska  National  Assembly),  and  three  are  international  judges  appointed  by  the 
ECtHR President after consulting the Presidency. They remain in office until the age of 70. 
There are no specific criteria for their appointment, such as age or judicial experience, save 
for  the  eligibility  requirement  of  being  recognised  as  ‘distinguished  jurists  of  high  moral 
standing’.  Entity  constitutions  provide  that  judges  are  appointed  by  simple  majority  of  the 
entity  assemblies,  which  risks  leading  to  politicised  and  ethnic-based  appointments.  The 

11 

 
professionalism  and  independence  of  Constitutional  Court  judges  need  to  be  strengthened, 
starting  with  improving  their  eligibility  criteria  and  appointment  procedures.  The  issue  of 
international  judges  in  the  Constitutional  Court  needs  to  be  addressed.  The  Constitution 
provides that the Parliamentary Assembly may decide by law a different method of selection 
of the three judges selected by the ECtHR President. Enacting this provision might ensure a 
stronger domestic participation in their selection process.  

The decisions of the Constitutional Court are final and binding for all competent authorities, 
legal  persons  and  individuals.  The  criminal  code  qualifies  their  non-implementation  as  a 
criminal offence. As of May 2019, eight decisions remain not implemented, without leading 
to  prosecutions  or  convictions.  Once  the  deadline  for  implementation  expires,  the 
Constitutional  Court  adopts  a  ruling  on  non-enforcement  which  repeals  the  unconstitutional 
legal provision. This practice risks creating a legal vacuum if the parliament does not adopt a 
compliant provision in due time.  

The Constitutional Court has a key role in interpreting the Constitution and solving conflicts 
of competence between different levels of government which hamper legislative activity and 
the alignment with the acquis. The Court needs to be able to take a proactive and independent 
role, and its judges must act with full impartiality. 

Annex  VI  to  the  GFAP  provided  for  an  internationalised  Human  Rights  Commission, 
including  the  Ombudsman  for  Human  Rights  and  the  Human  Rights  Chamber.  The  Human 
Rights  Chamber  was  later  transformed  into  the  Human  Rights  Commission  within  the 
Constitutional  Court  and  discontinued  by  mid-2007.  Since  2001  domestic  institutions  have 
assumed responsibility over the Institution of the Ombudsman for Human Rights, which is 
currently  the  national  human  rights  institution,  equality  body,  and  supervisory  body  on 
freedom of access to information.  

The  Constitution  establishes  the  Central  Bank  of  Bosnia  and  Herzegovina  as  the  sole 
authority for currency and monetary policy. Its governing board is composed of five persons 
and is appointed by the Presidency for a six-year term. The board chooses the Governor from 
among  its  members.  Its  goals  and  tasks,  including  monetary  stability  and  managing  the 
currency board between the euro and the Bosnian Mark, are laid down in the 1997 Law on the 
Central  Bank.  The  Central  Bank  also  coordinates  the  activities  of  the  entities’  banking 
agencies which are in charge of bank licensing and supervision.  (Also see chapter 17)  

The Supreme Audit Office is responsible for external audit at the state level. The two entities 
and  the  Brčko  District  also  have  their  audit  institutions.  The  functional,  operational  and 
financial  independence  of  the  supreme  audit  institutions  needs  to  be  guaranteed.  (Also  see 
chapter 32) 

Annex  X  to  the  Dayton  Peace  Agreement  established  the  Office  of  the  international  High 
Representative (OHR) as the final authority on the interpretation of the civilian aspects of the 
implementation  of  the  peace  agreement.  Based  on  the  1997  conclusions  of  the  Peace 
Implementation  Council  in  Bonn,  the  OHR  has  been  granted  extensive  powers  to  decree 
legislation  in  the  place  of  domestic  institutions  and  to  remove  from  office  those  public 
officials who did not fulfil their duty to implement the peace agreement, including as regards 
cooperation  with  the  ICTY.  The  OHR  ‘Bonn  powers’  were  last  used  in  2011.  In  its  2005 
opinion on the constitutional situation in Bosnia and Herzegovina and the powers of the High 
Representative,7 the Council of Europe’s European Commission for Democracy through Law 
(Venice  Commission),  although  recognising  the  use  of  the  Bonn  powers  as  beneficial  for 

7  European  Commission  for  Democracy  through  Law  (Venice  Commission),  Opinion  on  the  constitutional 
situation  in  Bosnia  and  Herzegovina  and  the  powers  of  the  High  Representative,  11  March  2005,  CDL-
AD(2005)004, https://www.venice.coe.int/webforms/documents/default.aspx?pdffile=CDL-AD(2005)004-e. 

12 

 
                                                 
post-war  Bosnia  and  Herzegovina,  noted  that  ‘such  an  arrangement  is  fundamentally 
incompatible  with  the  democratic  character  of  the  state  and  the  sovereignty’  of  Bosnia  and 
Herzegovina,  in  particular  since  these  powers  may  be  exercised  without  due  process  and 
judicial control. Such extensive international supervision is in principle incompatible with the 
sovereignty  of  Bosnia  and  Herzegovina  and  therefore  with  EU  membership.  A  process 
towards closing the OHR has been underway since 2008; its outcome depends on an agenda 
of five objectives and two conditions8. 

The  constitutions  of  the  two  entities  and  the  statute  of  the  Brčko  District  provide  for  the 
internal  organisation  and  separation  of  powers  at  their  level  of  government.  While  the 
Republika  Srpska  entity  is  a  single  administrative  unit,  the  Federation  entity  consists  of  10 
cantons, entrusted with shared and exclusive legislative competences. The entity and cantonal 
constitutions, as well as the Brčko District statute, have been amended multiple times either 
by  their  respective  legislatures  or  by  decisions  of  the  OHR.  Each  entity  has  its  own 
constitutional  court  that  ensures  that  legislation  complies  with  the  entity  constitution,  and 
which is the final instance on motions of vital national interest of constituent peoples brought 
by  the  respective  entity  or  cantonal  legislature.  The  constitutional  court  of  the  Federation 
entity is also competent to decide on disputes of competence between entity and cantons.  

Overall, the Constitution of Bosnia and Herzegovina enshrines the basic principles necessary 
for  a  parliamentary  democracy  based  on  the  rule  of  law,  protection  of  human  rights  and 
division of powers. However, the Constitution needs to be amended to be brought in line with 
EU  membership  requirements.  The  complex  constitutional  architecture  and  the  frequent 
disputes  on  the  distribution  of  competences  between  levels  of  government    affect  the 
alignment of legislation with the acquis and its implementation in a large number of chapters. 
Bosnia  and  Herzegovina  needs  to  ensure  legal  certainty  on  the  distribution  of  competences 
across  levels  of  government,  and  introduce  a  substitution  clause  to  allow  the  state  to 
temporarily exercise competences of other levels of government to prevent serious breaches 
of EU law for which the country would be held liable as a whole. All administrative bodies 
entrusted  with  implementing  the  acquis  need  to  be  based  only  upon  professionalism  and 
ethnic-based veto rights in their decision-making need to be removed. 

The Constitution contains ethnic and residence-based provisions that are not in line with the 
ECHR  and  its  Protocols.  These  concern  the  appointment,  composition  and  decision-making 
procedures of the head of state and the  executive and legislative bodies,  as  certain  electoral 
rights  are  reserved  for  citizens  who  affiliate  to  the  ‘constituent  peoples’  –  Bosniaks,  Croats 
and  Serbs.  Significant  incremental  reforms  are  needed  to  ensure  that  all  citizens  can 
effectively exercise their political rights, in compliance with the Sejdić-Finci case-law of the 
ECtHR.  Ethnic-based  veto  rights  also  adversely  affect  the  work  of  the  Parliamentary 
Assembly and of entity legislatures.  

The Constitution needs to explicitly guarantee the independence of the judiciary, including the 
Court  of  Bosnia  and  Herzegovina,  the  Prosecutor’s  Office  and  the  High  Judicial  and 
Prosecutorial Council as the self-governance institution of the judiciary.  

Bosnia  and  Herzegovina  needs  to  strengthen  the  professionalism  and  impartiality  of 
constitutional judges and the independence of the Constitutional Court, and ensure sustained 
compliance with its decisions at all levels of authority. The issue of international judges in the 
Constitutional Court needs to be addressed. The executive powers of the Office of the High 
Representative  needs  to  be  phased  out,  as  such  an  extensive  international  supervision  is  in 
principle incompatible with EU membership.  

8 Office of the High Representative, Agenda 5+2, http://www.ohr.int/?page_id=1318. 

13 

 
                                                 
Parliament 

Elections  in  Bosnia  and  Herzegovina  are  overall  organised  in  an  orderly  manner  and 
genuinely  competitive,  but  are  characterised  by  segmentation  along  ethnic  lines.  The  legal 
framework is generally conducive to holding democratic elections, but the effective exercise 
of the voting rights of all citizens is not fully ensured.  

The right to stand for election to the Presidency and the House of Peoples is restricted on the 
basis of ethnicity and residence, which is in breach of European standards, as the ECtHR has 
held  since  2009  in  its  Sejdić-Finci  case-law.  Residents  of  the  city  of  Mostar  have  not  been 
able to vote in local elections since 2008, as the Parliamentary Assembly has not been able to 
replace  the  electoral  provisions  repealed  in  2010  by  the  Constitutional  Court.  The 
Parliamentary Assembly also failed to revise the Electoral  Law in line  with the 2016 Ljubić 
decision  of  the  Constitutional  Court  on  the  Federation  entity  House  of  Peoples,  leading  to 
further legal uncertainty. The results of the October 2018 general elections were implemented 
following an ad hoc decision by the Central Electoral Commission.  

The  electoral  legislation  was  last  amended  in  May  and  June  2016  to  address  some  of  the 
shortcomings  identified  by  the  OSCE/ODIHR  and  Council  of  Europe’s  Group  of  States 
against Corruption (GRECO) on campaign financing, the deregistration process of parties and 
independent candidates, the threshold for distribution of mandates on candidate lists, and fines 
for violating the election process. However, there is no strategy to address other outstanding 
recommendations,  including  the  need  for  several  levels  of  authority  to  regularly  review 
constituency boundaries.  

The  country  needs  to  conduct  a  comprehensive  review  of  the  election  legislation  to  ensure 
compliance  with  ECtHR  and  Constitutional  Court  decisions  and  to  ensure  the  transparency 
and  legitimacy  of  the  election  process  and  outcomes.  Persistent  shortcomings  include  in 
particular  those  identified  by  the  Office  for  Democratic  Institutions  and  Human  Rights 
(ODIHR)  of  the  Organisation  for  Security  and  Cooperation  in  Europe  (OSCE)  in  the  final 
report of its 2018 election observation mission. 

The  lack  of  transparency  of  media  ownership  and  the  influence  of  political  and  business 
interests  over  editorial  policies  raise  concerns  about  the  ability  of  most  media  to  provide 
unbiased political  coverage. Public broadcasters  generally provide electoral  contestants with 
free airtime during the official campaign period; however, some provide significant coverage 
to only one party or candidate.  

The  total  number  of  registered  voters  in  2018  was  3 352 933.  There  are  no  women  party 
leaders.  At  the  2018  elections,  among  the  7 497  candidates,  4 378  were  men  and  3 119 
women (41%).  

The  Parliamentary  Assembly  of  Bosnia  and  Herzegovina  is  a  bicameral  legislature.  The 
lower house, the House of Representatives, is directly elected and consists of 42 members of 
which 33 men and 9 women (21%) in 2018. The upper house, the House of Peoples, consist 
of 15 members, 5 for each constituent people, indirectly elected from among the members of 
entity assemblies, of which 12 men and 3 women (20%) in 2018.  

Each chamber requires as quorum the presence of at least 22 members out of 42 in the House 
of Representatives and of 9 members (3 for each constituent people) in the House of Peoples. 

Both chambers need to approve all legislation with at least one third of members elected from 
each entity voting in favour (‘entity voting’). In the House of Peoples, a majority of members 
from each constituent people may declare a decision to be ‘destructive’ of their vital interest 
(‘vital  national  interest’  veto).  This  term  is  not  clearly  defined  and  can  therefore  be  very 

14 

 
broadly  interpreted.  The  veto  procedure  also  often  requires  the  involvement  of  the 
Constitutional Court, thus risking to lead to delays in adopting legislation. The mere existence 
of a veto right is a deterrent to tabling legislative initiatives, including in the EU integration 
process,  and  should  be  clearly  delimited  at  all  levels.  Such  ethnic-based  veto  procedures 
adversely  affects  the  work  of  the  Parliamentary  Assembly,  risking  to  delay  the  legislative 
process. 

An urgent procedure which includes only one reading but no amendments nor public debates 
is  used  for  legislative  proposals  with  a  high  degree  of  urgency  or  formulated  in  such  a 
simplified way that they can be adopted or rejected in their entirety. Urgent procedures for the 
adoption of legislation have been used 36 times in the Parliamentary Assembly over the past 
five years.  

The  right  of  legislative  proposal  is  granted  to  each  Member  of  Parliament,  as  well  as  to 
committees, the Council of Ministers and the Presidency. Citizens may also submit legislative 
initiatives to the authorised proponents for consideration. 

Parliament’s oversight and control over the executive is primarily exercised through the right 
of  its  members  to  hold  hearings,  initiate  reports,  ask  questions,  submit  initiatives  and  table 
interpellations,  as  well  as  establish  thematic  committees  of  inquiry.  The  parliamentary 
committees may decide to put a legislative proposal or a specific issue to a public debate.  

Members of Parliament can table a vote of no-confidence on the Council of Ministers or its 
members.  The  motion  requires  at  least  three  delegates  from  the  House  of  Peoples  or  eight 
members  from  the  House  of  Representatives  in  order  to  be  valid.  In  the  2014-2018 
parliamentary term, the no-confidence mechanism was triggered several  times to initiate the 
removal  of  individual  ministers.  The  House  of  Representatives  is  also  entitled  to  put  the 
candidate ministers and Chair through a hearing process. There is no mechanism in place to 
ensure a comprehensive impact assessment of the proposed legislation at all levels, with the 
exception of a fiscal assessment of the budgets. 

All  administrative  authorities  and  publicly-funded  institutions  are  required  to  present  their 
work plans and annual work reports to the legislative assemblies. The Parliaments may decide 
on their budget or take other appropriate corrective actions. The Parliamentary Assembly or 
its committees may at any moment ask the Audit Office to conduct a special audit.  

The Joint Commission for Defence and Security supervises the Armed Forces, Border Police, 
State  Investigation  and  Protection  Agency,  and  the  Directorate  for  Coordination  of  Police 
Forces. A dedicated joint commission oversees the activities of the Intelligence and Security 
Agency.  The  Parliamentary  Assembly  is  particularly  active  in  exercising  parliamentary 
oversight in the supervision of financial and budget spending, human rights related issues, and 
intelligence, defence and security issues.  

Members of Parliaments at all levels enjoy functional immunity, which excludes criminal and 
civil  liability  for  acts  they  carry  out  within  the  official  scope  of  duty.  This  is  defined  as 
actions stemming from responsibilities of individual office holders as prescribed in respective 
constitutions. Immunity may be lifted by a decision of the respective institution or a judicial 
organ, though no such instances have been recorded.  

The rules of procedure of the Parliamentary Assembly require respect for gender balance in 
the appointment of members of the collegiums, as well as of the members of delegations to 
international organisations, although this is largely ignored. In the 2014-18 term, there were 
33  women  out  of  156  members  and  2  women  out  of  16  chairpersons  in  standing  and  joint 
parliamentary committees; 11 women out of 45 members and 2 women out of 9 chairpersons 
in  inter-parliamentary  delegations;  and  1  woman  was  chairperson  in  the  Collegium  of  both 

15 

 
houses  out  of  six.  Parliamentary  committees  have  not  yet  been  established  following  the 
October 2018 elections.  

The  eligibility  requirements  for  standing  for  election  to  the  parliamentary  assemblies  are 
defined by the election law. Any citizen, upon turning eighteen, has the right to vote and to be 
elected. However, citizens who do not declare themselves as Bosniaks, Croats or Serbs cannot 
be  appointed  to  the  state-level  House  of  Peoples.  The  ECtHR  has  held  since  2009  in  its 
Sejdić-Finci case-law that these restrictions are in breach of the ECHR and its Protocols.  

Any  person  serving  a  sentence  imposed  by  the  ICTY  or  by  a  domestic  court,  or  serving  a 
sentence for serious violations of humanitarian law imposed by a foreign court, is not eligible 
for political office. Ineligibility ends with the end of the sentence. 

The  replacement  of  members  of  Parliament  during  their  mandate  is  allocated  to  the  next 
candidate from the list of the same political party from the same electoral unit. 

The Parliament of the Federation entity and the National Assembly of the  Republika Srpska 
entity  are  also  bicameral  legislatures.  The  members  of  their  indirectly  elected  upper  houses 
have to declare themselves as Bosniaks, Serbs and Croats or ‘Others’. The 10 cantons of the 
Federation  entity  and  the  Brčko  District  elect  a  unicameral  legislative  assembly.  All 
legislative assemblies in Bosnia and Herzegovina have a four-year mandate and are elected on 
the same date. No early elections are possible. Mandates start on the day election results are 
published in the Official Gazette. 

In  the  Federation  entity,  the  Federation  Parliament  adopts  legislation  and  the  budget,  and 
oversees  the  executive.  For  the  2018-22  term,  its  House  of  Representatives  consists  of  98 
members,  of  which  70  men  (71%)  and  28  women  (29%).  Its  House  of  Peoples  includes  58 
members (17 for each of the constituent people and 7 for the ‘Others’), indirectly elected from 
among  the  members  of  the  cantonal  assemblies,  of  which  13  women  (22%)  in  the  2018-22 
term.  In  the  2014-18  term,  23  laws  out  of  94  were  adopted  in  urgent  procedure,  or  24%. 
Parliamentary oversight is performed through the joint committee responsible for auditing. If 
a House decides to start an investigation, the Committee on human rights and freedoms and 
the  Committee  on  security  of  the  House  of  Peoples  may  oversee  the  investigation.  The 
Parliament may dismiss the Government after a no-confidence vote; this procedure was used 
successfully in 2012, and unsuccessfully in 2015 and 2017.  Gender equality committees are 
tasked  with  reviewing  legislative  proposals  to  ensure  their  compliance  with  domestic  and 
international obligations on gender equality and non-discrimination.  

In  the  Republika  Srpska  entity,  the  National  Assembly  and  its  Council  of  Peoples  adopt 
legislation  and  the  budget  and  oversees  the  executive.  For  the  2018-22  term,  the  National 
Assembly consists of 83 deputies, of which 63 men (76%) and 20 women (24%). The Council 
of Peoples includes 28 members (8 for each constituent people and 4 for the ‘Others’) elected 
among  the  members  of  the  National  Assembly  which  may  raise  the  ‘vital  national  interest’ 
veto. Laws may be proposed by the President of the entity, the Government, each member or 
at least 3 000 voters. In principle, fast-track procedures are reserved to exceptional cases. Yet, 
in  the 2014-18 term,  88 laws out  of 200 were adopted in  fast-track procedure (44%). There 
are no specific standing committees on oversight and control of the  Republika Srpska entity 
government.  At  least  one  third  of  members  may  table  a  motion  of  no-confidence  in  the 
government,  which  must  be  approved  by  an  absolute  majority  of  MPs.  The  no-confidence 
vote was last used in 2006. The assembly has an equal opportunities committee. 

The  Brčko  District  Assembly,  which  adopt  legislation  and  the  budget  and  oversees  the 
executive, has 31 seats, of which 2 reserved to members of national minorities. In the 2016-20 
term two councillors are women (6%). Urgent procedures are used relatively frequently, with 

16 

 
14 laws out of 78 adopted in urgent procedure since January 2013 (18%). The mechanism of 
interpellation has been used on a number of occasions. The assembly may dismiss appointees 
and express a vote of no-confidence. It cast a vote to dismiss the Mayor in 2011. Its gender 
equality commission has a limited impact on the quality of legislation.  

Each  of  the  ten  cantons  of  the  Federation  entity  has  an  assembly  in  charge  of  adopting 
legislation and the budget and overseeing the cantonal government. Out of the 289 members 
of cantonal assemblies elected in 2018, 236 are men (82%) and 53 are women (18%). In the 
last five years, the urgent procedure was used for the adoption of 2 laws in Livno canton, 9 
laws  in  Zenica-Dobo  canton,  13  laws  in  Herzegovina-Neretva  canton,  9  laws  in  West 
Herzegovina  canton,  21  laws  in  Sarajevo  canton,  4  laws  in  Una-Sana  canton,  6  laws  in 
Posavina canton; in Tuzla canton 26 laws were passed in urgent procedure in 2010-2016 and 
13 in the last two years. Cantonal assemblies do not generally have a standing committee for 
oversight  and  control  of  the  executive.  They  may  express  no-confidence  in  the  cantonal 
government. This happened in Sarajevo canton once in 2012, in Bosnia-Podrinje canton twice 
in  2012,  in  Tuzla  canton  once  in  2018,  in  Livno  canton  twice  in  2013  and  2017,  while  the 
Central  Bosnia  and  Posavina  cantons  have  not  used  the  vote  of  no-confidence  in  the  last 
several terms. Western-Herzegovina, Herzegovina-Neretva and Una-Sana cantons have used 
no-confidence  vote  in  the  last  5  years.  Three  cantonal  assemblies  have  not  established  a 
gender equality committee.  

A  joint  concept  of  cooperation  on  EU  matters  provides  for  some  cooperation  between 
legislative  assemblies  at  all  levels.  A  parliamentary  forum  on  European  integration  holds 
quarterly meetings on EU issues. Members of sectoral committees of the four parliaments are 
also  active  in  joint  activities  about  the  EU integration  process  of  the  country.  However,  the 
parliaments and assemblies have little capacity to review and assess draft legislation for EU 
compliance  leaving  this  task  to  the  executive.  This  results  in  misunderstandings  and 
controversies  about  what  is  requested  to  comply  with  the  EU  acquis.  Such  a  lack  of  legal 
capacities to assume the obligations resulting from EU integration is even more significant at 
the  level  of  cantons,  as  cantonal  assemblies  have  weak  or  no  capacities  to  assess  legal 
compliance with EU acquis. All legislative assemblies, including at  cantonal level, needs to 
significantly  improve  their  cooperation,  in  particular  to  ensure  a  harmonised  countrywide 
alignment process on the basis of a national programme for the adoption of the acquis. 

Due to the insistence of some delegates from Bosnia and Herzegovina on including an ethnic 
voting  provision  not  in  line  with  European  standards,  the  Stabilisation  and  Association 
Parliamentary Committee could not adopt its rules of procedure and meet regularly since. The 
Parliamentary Assembly needs to address this issue in order to meet the country’s obligations 
regarding parliamentary cooperation with the EU under the SAA.  

The Parliament and other legislative assemblies in Bosnia and Herzegovina are generally in a 
position to adopt legislation and exercise democratic control and oversight on the executives. 
Significant reforms are needed to ensure that all citizens can effectively exercise their right to 
vote and stand for election. Ethnic-based restrictions for election to legislative bodies need to 
be  removed  to  comply  with  the  ECtHR  Sejdić-Finci  case-law.  Local  elections  in  Mostar, 
which  have  not  been  held  since  2008,  need  to  be  organised.  Outstanding  OSCE/ODIHR 
recommendations need to be addressed without delay to improve the integrity of the electoral 
process. Ethnic-based veto procedures also adversely affect the work of the Parliament and of 
the entity legislative assemblies, and should be reconsidered. 

Legislative assemblies at state and entities level display a tendency to use urgent procedures 
to  pass  legislation  related  to  the  acquis,  adversely  affecting  the  quality  of  the  legislative 
alignment.  The  assemblies  should,  in  particular,  ensure  that  adopted  legislation  includes 

17 

 
impact  assessments  and  step  up  the  oversight  of  the  governments,  including  monitoring  the 
implementation of legislation. The cooperation among legislative assemblies as well as their 
capacities to address challenges stemming from the process of alignment with the acquis are 
weak and should be significantly enhanced, if necessary by pooling resources countrywide.   

Bosnia  and  Herzegovina  needs  to  ensure  the  proper  functioning  of  the  Stabilisation  and 
Association Parliamentary Committee.  

Governance 

The  Constitution  establishes  a  collective  head  of  state  of  Bosnia  and  Herzegovina,  the 
Presidency, which is in charge of matters such as conducting foreign policy and representing 
the country in international organisations, and has civilian command authority over the armed 
forces. The Presidency is composed of three members:  one Bosniak member and one Croat 
member,  both  directly  elected  from  the  territory  of  the  Federation  entity,  and  one  Serb 
member directly elected from the territory of the Republika Srpska entity. Citizens of Bosnia 
and  Herzegovina  who  do  not  declare  themselves  as  Bosniaks,  Croats  or  Serbs,  as  well  as 
Serbs living in the Federation entity, and Croats and Bosniaks living in the Republika Srpska 
entity, cannot stand for election to the Presidency nor be appointed to the state-level House of 
Peoples. The ECtHR has held since 2009 in its Sejdić-Finci case-law that these restrictions are 
in breach of ECHR and its Protocols.  

The Presidency adopts its decisions by consensus or by two members out of three, when all 
efforts to reach consensus have failed.  In such a case, the dissenting member may declare a 
decision  to  be  ‘destructive’  of  a  ‘vital  interest’  of  the  entity  and  the  entity  legislature 
(Republika Srpska  National  Assembly, Bosniak  or Croat  caucus of the  Federation House of 
Peoples) may stop the decision by two-thirds majority.  

The Presidency has set EU integration as the key strategic goal of Bosnia and Herzegovina as 
witnessed  with  the  country’s  application  for  EU  membership  in  February  2016  and  the 
Presidency  declaration  of  December  2018  recalling  the  institution’s  commitment  for  the 
country to join the European Union. However, the functioning of the Presidency is affected by 
the divergent positions of its members on foreign policy decisions or the future of Bosnia and 
Herzegovina as a sovereign country within its existing borders.  

As for the executive, the Constitution establishes a  Council of Ministers as  government  of 
Bosnia  and  Herzegovina.  The  Presidency  nominates  the  Chair  of  the  Council  of  Ministers, 
who then appoints the ministers and their deputies. Two thirds of ministers are appointed from 
the territory of the Federation entity and one third from the territory of the Republika Srpska 
entity.  The  Chair  and  its  two  deputies  must  declare  themselves  as  members  of  one  of  the 
constituent  peoples  each.  At  least  one  position  should  also  be  allocated  to  a  member  of  the 
‘Others’  as  within  the  Council  of  Ministers  or  as  its  Secretary-General.  The  Chair  and  the 
Council  of  Ministers  assume  office  upon  approval  of  the  House  of  Representatives  and  are 
accountable to the Parliamentary Assembly. In the 2014-2018 term, the Council of Ministers 
included  2  women  among  the  9  ministers  (22%)  with  responsibility  over  defence  and  over 
human rights and refugees.  

At  entity  level,  the  Federation  Government  comprises  a  Prime  Minister  and  16  ministers, 
including two deputy prime ministers. Ethnic quotas require that eight ministers be Bosniaks, 
five Croats and three Serbs; one minister coming from among the ‘Others’ may be appointed 
from the Bosniak quota. The Prime Minister and its two deputies, selected from amongst the 
ministers, must declare themselves as members of one of the constituent peoples each. In the 
2014-18 term, it included two women as ministers (12.5%).  

18 

 
The  Republika  Srpska  Government  comprises  a  President  of  the  Government  and  16 
ministers. Ethnic quotas require that eight ministers be Serbs, five Bosniaks and three Croats; 
one minister coming from among the ‘Others’ may also be appointed. In the 2014-18 term, it 
included three women ministers (18.5%) and a woman prime minister.   

Each entity also has its own President and two vice-presidents, which must not be affiliated 
with the same ethnic groups of the Bosniaks, Croats and Serbs. The Constitutional Court has 
found  this  restrictions  discriminatory  in  its  decision  U-14/12.  In  the  absence  of  broader 
institutional  reforms,  such  decision  has  not  been  implemented.  Since  2018,  a  woman  is 
President of the Republika Srpska entity.  

In  the  Brčko  District,  the  executive  authority  is  the  Mayor,  who  is  elected  by  the  District 
Assembly  and  presides  the  District  government.  Each  of  the  ten  cantons  has  a  cantonal 
government  with  a  prime  minister  and  cantonal  ministers.  Cantonal  governments  must  be 
confirmed by majority vote in seven of the cantonal assemblies, and by a two-thirds majority 
in Central Bosnia, Herzegovina Neretva and Canton 10.  

The participation of women in the executives across the country stands at around 20%, with 
Tuzla canton scoring highest at 25%, and Herzegovina Neretva canton lowest with no woman.  

The  constitutional  and  legislative  framework  providing  for  coordination  on  EU  matters  in 
Bosnia  and  Herzegovina  is  broadly  in  place.  The  Chair  of  the  Council  of  Ministers  ensures 
cooperation between the Council of Ministers, the entities and other levels of government in 
the  country.  A  Directorate  for  European  Integration  has  been  established  in  2003  as  the 
standing body of the Council of Ministers in charge of coordinating activities and supervising 
the implementation of decisions relevant for European integration. The Directorate’s activities 
include  coordinating  EU  affairs  and  legal  approximation  with  the  acquis,  assessing 
compliance with the acquis, and coordinating EU assistance. The Directorate’s coordination 
role, which is particularly important in view of the increasing workload resulting from the EU 
integration process, needs to be strengthened. The Directorate needs to be provided with the 
necessary political support to perform its mandated tasks.  

In August 2016 Bosnia and Herzegovina established a system of coordination in the process 
of European integration. This ‘coordination mechanism’ aims at providing the country with a 
consistent position on all  EU matters, including for the purpose of participation  in the SAA 
bodies.  The  coordination  mechanism  involves  over  1 400  civil  servants  from  the  14 
executives  at  all  levels;  the  Directorate  for  European  Integration  acts  as  its  secretariat.  It 
includes  36  working  groups  covering  all  chapters  of  the  acquis,  as  well as  the  political  and 
economic criteria. A Commission for EU integration discusses and agrees on issues that could 
not be addressed at the level of the working groups. At the highest political level, a Collegium 
for  European  integration  (comprising  the  heads  of  government  of  the  State,  the  two  entities 
and the Brčko District) discusses and agrees on issues which could not be addressed at other 
levels.  Decisions  taken  under  the  coordination  mechanism  are  not  legally  binding.  Once  an 
agreement is reached through the coordination mechanism, the 14 executives need to formally 
validate  the  decisions.  The  coordination  mechanism  was  used  in  2017/18  to  deliver  the 
answers  to  the  Commission’s  questionnaire  for  the  preparation  of  the  Opinion,  which  were 
handed over in February 2018 as well as the answers to the follow-up questions in February 
2019. The functioning of the mechanism needs to be improved in the light of lessons learned 
from  the  preparation  of  the  answers  to  the  Commission’s  questionnaire.  Such  process  has 
highlighted the need to make full use of all the bodies of the coordination mechanism. A clear 
distribution of competences and enhanced cooperation between different levels of government 
will be essential for the successful management of the next stages of EU integration.  

19 

 
Bosnia and Herzegovina does not have a national programme for the adoption of the acquis 
(NPAA) or a similar strategic document as required under the SAA and needs to develop it as 
a priority. The NPAA needs to reflect the role of the different levels of government based on 
their  respective  legislative  competences.  In  the  absence  of  such  a  programme,  Bosnia  and 
Herzegovina cannot sufficiently ensure the approximation of legislation at all levels with the 
acquis  as  the  distribution  of  competences  is  unclear.  The  annual  work  programmes  of  the 
governments at all levels are not sufficiently correlated with the implementation of the SAA 
in 
and  other  relevant  EU  obligations;  cooperation  between  different  governments 
approximation with the acquis and enforcement of the law is not ensured. The cantons have 
limited  institutional  capacity  to  deal  with  EU  law  approximation,  implementation  and 
enforcement.  

In the two entities, different bodies are in charge of coordinating EU matters.  Each cantonal 
government also has its own EU coordinator. While the Directorate for European Integration 
is  responsible  for  assessing  whether  legislation  adopted  at  state  level  complies  with  the 
acquis,  the  governments  of  the  two  entities  and  of  the  Brčko  District  conduct  their  own 
compliance  assessment.  This  highly  fragmented  system  may  lead  to  discrepancies  between 
the  various  levels  of  government  and  it  is  likely  to  prevent  the  country  from  adequately 
meeting  its  EU  membership  obligations,  thus  risking  to  significantly  slow  down  the  EU 
integration process of Bosnia and Herzegovina. The country should ensure that approximation 
with  the  EU  acquis  is  done  in  a  systematic  and  coherent  manner  in  order  to  guarantee 
consistent application and enforcement of EU law. 

The  legislation  provides  for  consultations  with  stakeholders  in  the  preparation  of  legislative 
initiatives,  including  public  consultations;  this  possibility  is  not  efficiently  used.  Entity 
institutions  may  be  involved  in  the  legislative  process  at  state  level  by  participating  in  the 
related working groups, or by submitting written comments on a proposal. In the Federation 
entity, the legal framework provides for the possibility of close coordination and consultations 
between the  Federation  and cantons in  preparing legislation in  areas of shared competences 
but  its  implementation  needs  to  be  enhanced.  At  the  same  time,  cantons  do  not  consult  the 
Federation entity on legislative initiatives, which may result in legislative divergences. In the 
Republika Srpska entity, the public may be consulted and participate on legislative initiatives. 
The  transparency  of  the  work  of  the  government  needs  to  be  improved,  in  particular  as 
regards  restrictions  to  access  to  information.  In  the  Brčko  District,  the  Statute  provides  that 
local legislation be harmonised with state-level laws, but there is no institutionally established 
procedure for consultations with state-level authorities.   

Local  self-governance  is  regulated  differently  in  the  two  entities,  while  most  cantons  also 
have their own laws on local self-governance. The basic form of local self-government is the 
municipality.  Local  self-government  units  have  autonomy  in  performing  their  tasks.  The 
Republika Srpska entity has a 2017-2021 strategy on development of local self-government, 
while  there  is  no  strategy  on  decentralisation  at  the  state  level  or  in  the  Federation  entity. 
Municipalities in the Republika Srpska entity are tasked with the provision of services in the 
areas of education, social assistance, communal police and local roads, including the related 
financial responsibilities. In the Federation entity, most of such services are delivered by the 
cantons.  The  responsibilities  of  cantonal  authorities  may  be  delegated  by  law  to  cities  and 
municipalities, taking into consideration the principle of subsidiarity, the capacity of the local 
authorities to efficiently carry out such activities, and the necessary financial allocations. Only 
2 women have been elected mayor among the 79 mayors in the Federation entity and 5 among 
the 64 mayors in the Republika Srpska entity.   

20 

 
Bosnia  and  Herzegovina  has  a  complex  system  of  executive  power,  which  is  broadly 
functioning. While Bosnia and Herzegovina has expressed its intention to join the EU and to 
undertake the necessary reforms, the complexity of its institutions leads to significant issues 
related to coordination and harmonisation of the country’s policy stances, notably with respect 
to the alignment with and implementation of legislation stemming from the EU acquis. With 
14  executives  across  the  country  exercising  competences  relevant  for  implementing  the  EU 
acquis, either considerable efforts and significant strengthening of the country’s capacities at 
all levels or some pooling of resources and capacities are needed for Bosnia and Herzegovina 
to  cope  with  the  obligations  of  EU  membership.  This  is  notably  the  case  at  cantonal  level 
where capacities to deliver on EU membership obligations are insufficient.  

The governments have taken some steps to improve coordination on EU integration matters, 
including  by  establishing  the  Directorate  for  European  Integration  and  a  coordination 
mechanism  on  EU  matters,  which  is  yet  to  become  fully  operational.  These  bodies  must  be 
strengthened and fully used at all levels.  

The  governments’  capacities  for  policy  planning  and  coordination  across  all  levels  of 
government  are  still  insufficient.  A  national  programme  for  the  adoption  of  the  EU  acquis 
needs  to  be  adopted  as  a  matter  of  priority.  The  programme  is  a  legal  obligation  under  the 
SAA  and  is  essential  for  planning  and  streamlining  the  EU  legal  approximation  process 
throughout the country.  

Civil society 

An empowered civil society is a crucial component of any democratic system and should be 
recognised and treated as such by the institutions. In Bosnia and Herzegovina, the legislative 
framework  on  public  consultations  differs  across  levels  of  government  and  there  is  no 
strategic  framework  for  cooperation  with  civil  society.  An  institutional  mechanism  for 
consultations,  the  e-consultation  web  platform,  was  launched  in  2016  for  the  state-level 
institutions  only. There  has been no significant  follow-up to  the signature of the Charter on 
Cooperation  between  the  Council  of  Ministers  and  civil  society  organisations  in  November 
2017.  The  Council  of  Ministers  needs  to  operationalise  the  Charter  provisions  including  by 
developing  regular  cooperation  and  consultations  with  civil  society  organisations.  Not  all 
institutions  at  all  levels  of  government  have  designated  specific  bodies  or  contact  points  in 
charge  of  dialogue  and  cooperation  with  civil  society  organisations.  Sector-specific 
consultations  are  organised  occasionally  through  dedicated  working  groups.  More  than  700 
civil  society  organisations  took  part  in  providing  alternative  replies  to  the  European 
Commission’s Questionnaire which were annexed to the official replies from the authorities. 

Only  some  municipalities  have  a  legal  framework  for  transparent  funding  of  civil  society 
organisations on the basis of clearly defined criteria and monitoring and evaluation tools. The 
distribution  of  public  funds  to  civil  society  organisations  is  not  fully  transparent  and 
systematic.  Public  funding  calls  and,  in  some  cases,  the  results  of  selections,  have  been 
publicly  available,  but  certain  mechanisms  for  distribution  of  funds  are  not  legally  binding 
and  were  not  fully  implemented.  Overall,  Bosnia  and  Herzegovina  needs  to  ensure  a 
framework for the transparent funding of civil society organisations.  

Civilian oversight of the security and intelligence sector 

Bosnia and Herzegovina’s security forces comprise three main categories: the armed forces, 
the law enforcement agencies and the intelligence service.  

The  Armed  Forces  of  Bosnia  and  Herzegovina  (AFBiH)  are  governed  by  a  civilian-led 
command-and-control  structure,  with  the  Presidency  having  the  supreme  command  and 
control and a single Ministry of Defence at the state level. The Parliamentary Assembly is in 

21 

 
charge  of  their  democratic  parliamentary  control  and  oversight.  The  armed  forces,  totalling 
9,200  professional  staff,  are  responsible  for  national  defence,  and  provide  support  to  the 
civilian authorities in case of emergencies. They also contribute to international peace-support 
operations. Recruitment in the armed forces is based on ethnic quotas. 

The law enforcement agencies in Bosnia and Herzegovina include 16 different bodies: three at 
the  state  level,  –  the  State  Investigation  and  Protection  Agency,  the  Border  Police  and  the 
Directorate for the Coordination of Police Bodies – and one for each of the two entities, the 
Brčko District, and the 10 cantons. There are 16 845 members of police forces in the country. 
The independent board, the board for complaints of police officials and the public complaints 
board perform civilian oversight at state level. Similar structures are in place at other levels of 
government.  The  Directorate  for  Coordination  of  Police  Bodies  is  competent  to  co-ordinate 
the  state-level  agencies.  The  exchange  of  information  between  the  Ministry  of  Security  and 
the  police  agencies  across  the  country  takes  place  only  on  a  voluntary  basis.  As  a  result  of 
such a  fragmentation, the law  enforcement sector in  the  country continues to  be politicised, 
poorly coordinated, and dysfunctional. (see also Chapter 24) 

The  Intelligence-Security  Agency  of  Bosnia  and  Herzegovina  (OSA-OBA)  is  the  civilian 
institution responsible for collecting, analysing and distributing intelligence in order to protect 
the security, including sovereignty, territorial integrity and constitutional order of the country. 
In the conduct of its activities the Agency is legally authorised to collect information from all 
publicly  available  sources  within  the  country  under  the  authority  of  its  Director-General. 
Measures to secretly gather information by intercepting telecommunications and other forms 
of  electronic  devices  must  be  authorised  by  the  President  of  the  Court  of  Bosnia  and 
Herzegovina  or  a  designated  judge  and  must  be  justified  by  a  threat  to  the  security  of  the 
country.  The  Agency  is  accountable  to  the  Chair  of  the  Council  of  Ministers,  who  reports 
annually  to  the  Presidency  on  the  activities  of  the  Agency.  An  Executive  Intelligence 
Committee, including the Minister of Security and the Minister of Foreign Affairs, advises the 
Chair and coordinates intelligence matters. The Agency’s Director-General, Deputy Director-
General and Inspector-General are appointed and dismissed by the Council of Ministers. The 
Inspector-General is responsible for the internal control of the Agency. The legislation on the 
Intelligence  and  Security  Agency  needs  to  be  amended  to  address  a  number  of  procedural 
shortcomings identified by the Constitutional Court in June 2017.  

The  Parliamentary  Assembly  and  its  committees  have  a  key  role  in  the  oversight  of  the 
security  forces.  The  Joint  Committee  on  Defence  and  Security  held  48  sessions  over  the 
2014-18  mandate  and  adopted  four  annual  reports.  The  Joint  Security  and  Intelligence 
Committee  held  17  sessions  over  the  2014-18  mandate  and  adopted  two  annual  reports 
covering  2015  and  2016.  However,  no  meetings  were  held  since  25  July  2017  and  a  new 
Committee  is  not  yet  in  place  following  the  October  2018  elections.  The  Parliamentary 
Military Commissioner oversees the protection of human rights and freedoms of soldiers and 
personnel of the armed forces and of the Ministry of Defence and may conduct investigations 
at  the  request  of  the  Parliamentary  Assembly  and  the  Joint  Committee  for  Defence  and 
Security. The Parliamentary Assembly’s Joint Defence and Security Committee has called on 
the authorities to improve coordination in the work of police agencies within the Ministry of 
Security,  especially  with  regards  to  the  migration  crisis.  It  has  also  pointed  to  the  need  to 
better equip and modernise the armed forces, as well as to strengthen procurement capacities 
as a prerequisite for modernising the defence sector and its functioning.  

At  entity  level,  each  chamber  of  the  Federation  Parliament  as  well  as  the  Republika  Srpska 
National  Assembly  has  its  respective  Committee  for  Security  which  is  responsible  for 
parliamentary  oversight.  The  Assembly  of  the  Brčko  District  has  a  Committee  for  Security 
and Oversight of the Police Forces. 

22 

 
The constitutional and legal framework for the democratic civilian oversight of security and 
intelligence  sector  is  broadly  satisfactory.  The  Joint  Parliamentary  Committee  needs  to  be 
established  following  the  October  2018  elections.  Further  efforts  are  needed  to  enhance  the 
coordination  and  professionalisation  of  the  fragmented  law-enforcement  sector,  in  line  with 
EU standards. Certain provisions of the Law on the Intelligence and Security Agency have to 
be brought in line with the 2017 decision of the Constitutional Court.  

1.1.2  Public administration reform  

The  Commission  defines  public  administration  reform  (PAR)  in  the  enlargement  context 
according  to  six  core  areas,  which  are  further  detailed  by  the  Principles  of  Public 
Administration. A well-functioning public administration requires a professional civil service; 
inclusive and evidence-based policy and legislative development; well-defined accountability 
lines  between  institutions  and  towards  citizens;  capacity  to  deliver  services  to  citizens  and 
businesses; and a sound public financial management system. A strategic framework on PAR 
ensures that reforms in different core areas are sequenced and inter-linked.  

According  to  the  constitutional  framework  in  Bosnia  and  Herzegovina,  each  level  of 
government is competent for the regulation and institutional set-up of public administration in 
the  different  core  areas  of  PAR  –  policy  development  and  coordination,  public  service  and 
human  resources  management,  accountability,  service  delivery  and  public  financial 
management.  This  division  of  competences  has  resulted  in  differences  in  legislation, 
procedures,  practices  and  administrative  capacity  as  well  as  accountability  and  services  to 
citizens  and  businesses.  PAR  efforts  are  coordinated  by  dedicated  institutions,  such  as  the 
Public  Administration  Reform  Coordination  Office  at  state  level,  the  Institute  of  Public 
Administration  in  the  Ministry  of  Justice  in  the  Federation  entity,  the  Ministry  of 
Administration and  Local  Self Government  in  the  Republika Srpska entity  and the office of 
the  Mayor  of  Brčko  District.  Cantonal  ministries  of  justice  and  administration  also  perform 
administrative and professional tasks related to public administration. The current division of 
competences  on  PAR  requires  sound  institutional  coordination  and  cooperation  between  all 
government levels. 

Strategic framework for public administration reform 

The countrywide strategic framework on public administration reform (PAR) for 2018-22 
has  been  adopted  by  the  State,  the  Federation  entity  and  the  Brčko  District,  but  not  by  the 
Republika Srpska entity. Bosnia and Herzegovina needs to adopt a common action plan for all 
levels  of  government.  Public  financial  management  (PFM)  reforms  are  not  addressed  in  a 
single strategic framework but they are addressed through various strategies. The Republika 
Srpska  entity  has  not  adopted  a  dedicated  PFM  strategy.  Due  to  lack  of  a  common  PFM 
strategy, there is currently no countrywide reform direction on PFM. To ensure a harmonised 
approach  across  all  levels  of  government,  Bosnia  and  Herzegovina  needs  to  introduce  a 
coordinated  countrywide  public  administration  reform  framework  with  a  coordinated 
monitoring and reporting system.  

Insufficient political support hinders the coordinated implementation of reforms by all levels 
of government. A decision-making body that guides PAR at the highest political level is not 
yet  in  place.  Due  to  lack  of  political  ownership,  budgetary  resources  for  implementation  of 
reforms  are  insufficient.  Financial  sustainability  is  not  ensured,  and  reforms  are  mostly 
donor-driven.  Reform  efforts  so  far  have  been  supported  mainly  through  the  PAR  Fund,  an 
instrument to pool donor assistance. Bosnia and Herzegovina has yet to demonstrate political 
commitment  to  public  administration  reform  by  establishing  a  functioning  political  body  to 

23 

 
steer  and  coordinate  reforms  across  all  levels  of  government,  strengthen  the  existing 
coordination structures at technical level, and ensure sufficient funding for the reform efforts. 

Policy development and coordination 

Public  administration  institutions  operate  within  a  complex  governance  structure  with 
separate decision-making competences in public policies.  

Reflecting  the  institutional  set-up,  the  policy-making  system  in  Bosnia  and  Herzegovina  is 
fragmented.  Although  there  is  a  legal  framework  for  sectoral  strategies  at  entity  level, 
harmonised legal provisions and guidance for countrywide strategic planning are lacking. The 
regulatory  and  legal  framework  on  medium-term  policy  planning  is  in  place  at  state  and 
entity levels, but not in some cantons and in the Brčko District. Central planning documents 
such  as  the  medium-term  and  annual  government  programme,  framework  budget  document 
and action plan for implementation of priorities from the BiH report, are generally not aligned 
among them and with the sector strategies. There is no body tasked with policy quality review 
function  to  check  the  coherence,  consistency  and  legal  and  financial  scrutiny  of  policy 
proposals.  

A  programme  for  EU  integration,  including  a  consolidated  plan  for  the  adoption  of  the 
acquis,  is  required  under  the  Stabilisation  and  Association  Agreement  and  needs  to  be 
developed and adopted as a matter of urgency.  Bosnia and Herzegovina needs to adopt policy 
planning  guidelines  for  the  NPAA,  to  align  the  government  annual  work  plans  with  the 
NPAA,  to  earmark  costs  and  to  reflect  such  financial  estimates  in  the  annual  and  mid-term 
budgets. 

The  legal  framework  for  inclusive  and  evidence-based  policy  development  is  incomplete 
especially  at  cantonal  level,  and  is  not  consistently  implemented.  Legal  requirements  for 
regulatory  impact  assessment  are  set  at  state  and  entity  level  and  in  some  cantons.  The 
quality  of  analysis  supporting  policy  proposals  needs  to  be  improved,  and  financial 
implications  are  not  systemically  calculated.  Administrative  data  collection  and  its  use  for 
policy-making is not systematically ensured across the administration. The law requires inter-
institutional  consultation  on  legislative  and  policy  proposals;  the  duration  of  the  written 
consultation process is not regulated and there is no dispute settlement mechanism in case of 
diverging opinions among institutions. Public consultations, although generally required, in 
practice  tend  not  to  be  implemented  in  line  with  legal  requirements.  The  legal  framework 
needs to be improved and applied consistently. Enhancing quality and ensuring coherence and 
financial affordability of public policies across the country remains a major challenge in the 
medium  term.  The  existing  legislative  framework  does  not  fully  establish  standards  for 
monitoring  and  reporting  on  key  government  planning  documents  at  each  level  of 
government, thus preventing concrete public scrutiny over government work.  

Public financial management 

Despite the lack of a countrywide strategy, there have been reform efforts in  different  PFM 
areas at various levels of government. These have led to partial alignment with international 
standards in the area of internal control and audit, debt management, treasury operations and 
external audit. PFM systems at all levels of government need to be further brought in line with 
international  standards  in  the  areas  of  budget  formulation  and  execution  procedures, 
monitoring, transparency of budget data  and  forecasting. A budget  management  preparation 
information  system  is  the  system  most  commonly  used  in  the  different  levels  of  the 
administration for both the budget planning process and the medium-term framework budget 
document,  while  the  public  investments  management  information  system  needs  further 
upgrading. 

24 

 
The budget transparency is not sufficient. At state level, the Ministry of Finance publishes 
annual budgets and annual reports on budget implementation. Charts of accounts of the state, 
entities’  and  Brčko  District  are  not  harmonised.  This  hampers  access  to  consolidated  data. 
There is no citizens’ budget at any level of government. For the public to be in a position to 
understand  the  budget  meaningfully,  citizen  participation  in  the  budget  process  should  be 
enhanced.  In-year  reporting  remains  to  be  improved.  Social  contributions  and  pension 
entitlements, which account for a significant portion of public funds, are managed by extra-
budgetary funds that are in most cases integrated neither into the budget planning process nor 
into  the  budget  documentation  such  as  the  medium-term  or  annual  budgetary  outlooks. 
Available  budgetary  information  is  thus  incomplete  and  an  assessment  of  the  overall 
budgetary and fiscal policy is difficult. The institutions at all levels have insufficient internal 
audit  capacity  and  the  lack  of  fully  adequate  internal  controls,  especially  in  public 
procurement, makes the PFM systems in BiH vulnerable to inefficiency and waste. 

Public service and human resources management 

According  to  the  constitutional  framework,  the  state,  the  entities,  the  cantons  and  Brčko 
District are competent on regulating and managing their respective civil service, resulting in a 
fragmented legislative framework. The  common policy framework on civil service has been 
adopted only by the State and by the Federation entity, but it is not used effectively to ensure 
a common approach to human resource management and civil service legislation. Ensuring a 
non-politicised, merit-based and professional civil service across the country remains a major 
challenge. 

Even though the Federation and the  cantons have a shared competence on the civil  service, 
seven  cantons  have  adopted  their  own  civil  service  laws.  This  has  contributed  to  further 
fragmentation  of  the  civil  service.  Different  requirements  and  practices  in  recruitment, 
promotion and dismissal hampers their mobility across the country. Political interferences at 
cantonal level  exist particularly regarding the practice of  excluding top-level  positions from 
the  scope  of  civil  service  law.  Political  influence  in  recruitment  and  promotion  procedures 
occurs systemically across government levels, thereby distorting the merit-based principle in 
civil service. 

While  all  civil  service  laws  regulate  merit-based  recruitment,  promotion  and  demotion 
procedures,  the  merit  principle  is  not  fully  enshrined  in  the  laws  and  procedures  and 
safeguarded in practise. The quality of examination and recruitment procedures at all levels is 
low. A competency framework screening for the most competent candidates exists so far only 
for the state-level institutions. The appointment of members of selection committees needs to 
be  more  transparent  and  to  ensure  their  professionalism  and  impartiality.  In  most  cases,  the 
political  heads  of  the  institutions  choose  any  candidate  from  the  shortlist  produced  by  the 
selection  committee.  In  certain  recruitment  procedures  at  cantonal  level,  ethnic  background 
determines the final selection of candidates without consideration of best-ranked candidates; 
the legislation should ensure that ethnic criteria does not prevail over merit-based recruitment. 
Constitutional  provisions  on  the  general  representation  of  the  population  in  the  public 
administration  should  not  be  interpreted  as  strict  ethnic  proportionality  in  civil  service. 
Rather,  stricter  merit-based  civil  service  procedures  need  to  be  introduced  to  ensure  that 
constitutional  provisions  of  ethnic  proportionality  are  not  wrongly  applied  against  the  merit 
principle. All  civil service laws and recruitment  practices  need to  ensure the primacy of the 
merit principle over ethnic-based criteria. Temporary employment is a common practice when 
entering civil service, including at managerial level. Data is generally not available, rendering 
it difficult to assess the use of temporary contracts in practice. The criteria for dismissals and 
disciplinary  procedures,  including  the  possibility  to  appeal,  are  also  enshrined  in  the 

25 

 
legislation,  but  are  insufficiently  used.  Termination  of  service  is  mainly  only  due  to 
retirement.  

Human  resources  management  (HRM)  is  decentralised  across  all  levels.  Expansion  of 
HRM  units  across  public  institutions  and  establishment  of  functional  HRM  information 
systems across the different levels of authority is key in contributing to enhanced planning on 
human resources. The administrative capacities of civil service agencies in the country need 
to be strengthened in order to adequately perform their functions.  

The remuneration system of civil servants is neither coherent nor transparent. It is based on 
different salary legislation and different job classification and pay grades across government 
levels.  Additionally,  salaries  are  much  higher  in  the  public  than  in  the  private  sector.  The 
upgrade in salaries is not linked to appraisal procedures, and this has resulted in a promotion 
system which rewards seniority rather than performance.  

With regard to  professional  development, training and performance appraisal are regulated 
in laws and secondary legislation and training strategies adopted at state, entity and at Brčko 
District  level.  Training  of  civil  servants  is  carried  out  mostly  by  the  different  civil  service 
agencies, with little resources provided for training across the various levels of government. 
Particularly,  data  on  the  number  of  training  courses  provided  are  lacking  at  cantonal  level. 
The performance appraisal system is formally in place, but it is not used effectively to justify 
promotions.  A coherent system for performance appraisal, promotion and training as a right 
of a civil servant needs to be established in the medium term.  

Integrity in public service is regulated through anti-corruption and integrity plans, codes of 
conduct,  rules  on  incompatibility  of  office  and  the  work  of  the  Agency  for  Prevention  of 
Corruption  and  Coordination  of  the  Fight  against  Corruption.  There  are  no  systemic  and 
consolidated data on practice of integrity of civil servants, both in terms of questionnaires on 
self-declarations on civil service integrity and verification of integrity of civil service to assess 
better this area. The public perception of corruption in the civil service is high. 

Accountability of the administration 

The structure and organisation of the administration is regulated at each level of government. 
The legislation does not specify the different functions of administrative bodies subordinated 
to the executive and legislative level or the conditions for establishing, merging or abolishing 
them. This leaves excessive discretion to restructure the administration without consideration 
of  rationale  and  cost-effectiveness  of  the  changes.  Clear  supervision  and  reporting  lines 
between ministries and subordinated institutions are also lacking. The political level does not 
sufficiently delegate decision-making responsibility to senior civil servants and to the middle 
management. (see Chapter 32)   

Although the legal framework has established oversight mechanisms, including Parliaments, 
the  State  Audit  Institution  and  the  Human  Rights  Ombudsman,  their  recommendations  are 
rarely implemented. This compromises the citizens’ right to good administration. The full 
implementation  of  Ombudsman's  recommendations  by  the  respective  authorities  is  low  and 
several  addressed  institutions  do  not  even  respond  to  its  recommendations,  although  legally 
obliged to do so.  (see Chapter 23, Fundamental Rights)   

The  citizens’  right  to  access  public  information  is  regulated  differently  at  the  state  and 
entity  level.  Proactive  disclosure  is  not  provided  for  at  any  level.  Implementation  deficits 
result  primarily  from  administrative  silence,  delays  in  replying,  incomplete  information 
provided  and  insufficient  institutional  responsibilities  in  dealing  with  appeals.  There  are  no 
mechanisms for monitoring whether the laws on free access to information are implemented 
effectively. (see Chapter 23, Fundamental Rights)    

26 

 
The  citizens’  right  to  administrative  justice  is  ensured  by  law.  The  judicial  review  of 
administrative  acts  is  decentralised  and  processed  by  courts.  The  efficiency  of  courts  has 
improved in the recent  years, but remains uneven across the country. There are no effective 
remedies against excessive length of judicial proceedings; though applicants may file a case to 
the  Constitutional  Court,  this  instrument  does  not  enable  acceleration  of  the  pending 
proceedings. (see Chapter 23, Fundamental Rights)   

The  citizens’  right  to  seek  compensation  for  damage  caused  by  unlawful  actions  or 
omissions of the public administration is explicitly ensured by law at State, entity and Brčko 
District level. However, there is no systematic collection of data related to implementation of 
public liability cases, and it is therefore not possible to assess the enforcement of these legal 
guarantees. 

Service delivery to citizens and business 

The  legal  framework  for  a  user-oriented  administration  is  partially  in  place,  but  varies 
substantially  across  levels  of  government.  A  policy  on  service  delivery  is  integrated  in  the 
PAR  strategic  framework  which  has  been  adopted  by  all  levels  of  government  save  for  the 
Republika  Srpska  entity.  This  policy  area  provides  good  reform  directions,  but  its 
implementation has been slow and has not led to tangible results so far. 

Laws  on  general  administrative  procedures  are  in  place  at  all  levels  of  government  and 
currently  new  amendments  to  those  procedures  are  developed  in  state,  entity  and  Brčko 
District  level  and  already  adopted  during  2018  in  the  Republika  Srpska  entity  and  Brčko 
District; such and further amendments to these laws should be well coordinated. Bosnia and 
Herzegovina  has  to  ensure  a  harmonised  approach  to  modernisation,  simplification  and 
digitalisation of services. The legislative framework and infrastructure for interoperability of 
registries  and  e-signature  is  not  complete  and  is  not  harmonised  between  State  and  entity 
levels,  thus  compromising  the  e-signature  system.  The  Office  for  Supervision  and 
Accreditation  has  been  established  since  January  2017.  Interoperability  and  the  automatic 
exchange  of  information  between  public  registries  is  very  limited.  Bosnia  and  Herzegovina 
has  to  create  conditions  for  the  provision  of  electronic  services  within  their  jurisdiction  by 
undertaking  efforts  to  ensure  the  interoperability  of  the  e-signature  system  throughout  a 
country.  (see also Chapter 10) 

Bosnia and Herzegovina should simplify and harmonise business registration procedures and 
ensure  full  mutual  recognition  between  entities,  including  concessions  and  licensing.    No 
one-stop-shop  exists  for  either  citizens  or  business,  except  in  the  Republika  Srpska  entity. 
Systematic monitoring of user satisfaction with service delivery is not carried out at any level. 

Bosnia and Herzegovina is at an early stage with public administration reform. 

The  lack  of  sound  institutional  coordination  and  cooperation  prevents  the  adoption  and 
implementation of policies aimed at ensuring minimum standards of treatment of all citizens 
and  businesses  throughout  the  country.  The  country  should  make  strong  efforts  to  ensure  a 
comprehensive  and  harmonised  approach  to  public  administration  reform,  in  line  with  the 
principles of public administration. In particular, the country needs to ensure political support, 
sufficient  financial  resources  from  all  levels  of  government  and  effective  coordination 
structures to implement and monitor public administration and finance management reforms.  

To  ensure  a  countrywide  approach  to  mid-term  policy  planning,  Bosnia  and  Herzegovina 
should establish, and where necessary harmonise, the regulatory framework and methodology 
on  central  and  sectoral  policy  development,  monitoring  and  budgeting  at  all  levels.  The 
country needs to improve the quality of policies, and regulatory impact assessment and policy 
consultations should become integral part of policy-making.  

27 

 
To  ensure  a  professional  civil  service,  the  legislation  should  be  brought  in  line  with  merit 
principles  on  recruitment,  promotion  and  dismissal;  its  practical  implementation  should  be 
free  from  political  interference.  The  capacities  of  civil  service  agencies  need  to  be 
strengthened,  human  resource  management  should  be  modernised  and  training  programmes 
should  be  upgraded.  The  administration  should  rationalise  its  structures  and  delegate 
responsibilities  to  senior  civil  servants.  Measures  to  improve  the  citizens’  rights  to  good 
administration,  to  access  to  public  information,  to  administrative  justice  and  to  seek 
compensation should be introduced.  

To foster a user-oriented administration, Bosnia and Herzegovina has to ensure a harmonised 
approach to modernisation, simplification and digitalisation of services. Amendments to laws 
on  general  administrative  procedures  need  to  closely  coordinated  across  state,  entity  and 
Brčko  District.  The  interoperability  of  the  e-signature  system  needs  to  be  guaranteed 
throughout the country. 

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

  adopt  countrywide  strategies  and  action  plans  for  public  administration  reform  and  for 
public  finance  management,  establish  a  common  performance-based  monitoring 
framework and ensure financial sustainability;  

  establish a political decision-making body and strengthen technical coordination structures 

to promote countrywide approach in public administration reform; 

  amend  civil  service  laws  by  ensuring  merit  principle  in  all  procedures  of  recruitment, 
promotion  and  dismissal,  and  strengthen  the  capacities  of  civil  service  agencies  to 
improve human resource management and trainings. 

1.2.  Rule of law and fundamental rights 

1.2.1.  Chapter 23: Judiciary and fundamental rights 

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

The  constitutional  and  legislative  framework  on  the  judiciary  is  incomplete  and  its 
independence needs  to  be strengthened. Conflicts of jurisdiction in  criminal  matters need to 
be  addressed  and  consistency  of  case-law  enhanced  across  the  country’s  legal  orders.  The 
legislative framework on preventing and combatting corruption presents significant gaps due 
to  the non-harmonisation  of legislation, strategies and action plans. Enforcement  capacity is 
weak,  notably  due  to  the  fragmentation  of  law  enforcement  agencies.  Corruption  is 
widespread and remains an issue of concern. All levels of government show signs of political 
capture, directly affecting the daily life of citizens, notably in health, education, employment 
and public procurement matters. The legislative and institutional framework for the protection 
of fundamental rights is largely in place; it needs to be fully implemented and substantially 
improved  by  harmonising  legislation  throughout  the  country  and  aligning  it  with  European 
standards,  strengthening  administrative  capacities  and  providing  adequate  resources  for  the 
effective  enforcement  of  fundamental  rights.  Significant  incremental  reforms  are  needed  to 
ensure  the  political  and  legal  equality  of  all  citizens  and  to  ensure  inclusive  and  quality 
education for all, overcoming the practice of ‘two schools under one roof’.  

28 

 
According to the constitutional and legal framework, the competences in the area of judiciary 
and fundamental rights rest with the State, the two entities, the cantons and the Brčko District.  

At the state level, the High Judicial and Prosecutorial Council is the self-regulatory body of 
the judiciary, with countrywide competences over the administration and career management 
of  judicial  office  holders.  The  Ministry  of  Justice  is  responsible  among  other  things  for  the 
state-level  legislation  and  for  coordinating  the  justice  sector  reform  process  throughout  the 
country.  Entities  and  cantons  also  have  ministries  of  justice,  while  Brčko  District  does  not 
have a ministry of justice but a judicial commission which is not part of the executive.  

Four  judicial  systems  are  in  place  in  Bosnia  and  Herzegovina  at  the  level  of  the  State,  the 
entities  and  the  Brčko  District,  each  of  them  having  its  own  jurisdiction  and  internal 
institutional structures. The Court of Bosnia and Herzegovina and the Prosecutor’s Office of 
Bosnia and Herzegovina are established at the state level. Both entities have their own courts, 
including supreme courts, as well as prosecutors’ offices. In the Federation entity, each canton 
has its own court system. The Brčko District also has its own Prosecutor’s Office and court 
system.   

The  Republika  Srpska  entity  contests  the  criminal  jurisdiction  of  the  Court  of  Bosnia  and 
Herzegovina  over  criminal  offences  prescribed  by  entities’  and  Brčko  District  laws.  The 
Constitutional Court has confirmed the constitutionality of that jurisdiction while noting that 
its inappropriate application can result in violation of the human rights in individual cases. 

All  levels  of  government  have  competences  in  the  fight  against  corruption.  The  state-level 
anti-corruption agency has coordination functions; corruption prevention bodies exist also at 
all  other  levels  of  government.  All  judicial  systems  and  law  enforcement  agencies  are 
responsible for corruption repression.  

In  the  area  of  fundamental  rights,  the  main  actors  at  the  state  level  are  the  Human  Rights 
Ombudsman,  the  Ministry  of  Human  Rights  and  Refugees  and  the  Ministry  of  Justice.  The 
Ministry of Security, the Ministry of Civil Affairs and the Personal Data Protection Agency 
have specific responsibilities regarding the protection of human rights. In addition, at the level 
of the entities, Brčko District and cantons, various ministries are also responsible in this area, 
such as the ministries of justice, interior, health, social policy, and education. 

Functioning of the judiciary 

Strategic documents  

A  countrywide  2014-2018  Justice  Sector  Reform  Strategy  was  only  adopted  in  September 
2015, and its action plan in 2017; their implementation is significantly behind schedule. The 
Council  of  Ministers  needs  to  urgently  extend  the  action  plan.  A  monitoring  and  reporting 
mechanism is in place at technical and political level. A ministerial conference meets twice a 
year  under  the  coordination  of  the  Ministry  of  Justice  to  provide  political  oversight.  A 
technical  secretariat  and  functional  working  groups  are  operational.  However,  the  measures 
set out in the strategy are not sufficiently funded by the respective levels of government.  

Legal and institutional framework 

The courts and prosecutors’ offices are established under separate laws and apply four distinct 
sets of substantive and procedural rules in civil, criminal and administrative matters. Except 
for the Constitutional Court, judicial power is not explicitly mentioned in the Constitution and 
there is no supreme judicial body with countrywide appellate jurisdiction in all matters. Entity 
constitutions and the Brčko District Statute provide for judicial and prosecutorial authorities 
at the respective levels of government. 

29 

 
At the state level, the Court of Bosnia and Herzegovina and the Prosecutor’s Office of Bosnia 
and Herzegovina were established in the period 2000-04 to ensure the effective exercise of the 
competences of the State and the respect for human rights and the rule of law. The Court of 
Bosnia and Herzegovina has jurisdiction on (i) war crimes; (ii) international and inter-entity 
serious  crime  (organised  crime,  corruption,  terrorism  and  money  laundering);  and  (iii) 
administrative and civil cases involving state-level institutions, including in electoral matters. 
In  2001  the  Constitutional  Court  held  that  the  Court  of  Bosnia  and  Herzegovina  had  been 
established in conformity with the Constitution. 

The  Court  of  Bosnia  and  Herzegovina  has  three  divisions:  criminal,  administrative  and 
appellate.  The  appellate  division  has  second-instance  jurisdiction  as  there  is  no  state-level 
appellate  court.  The  Prosecutor’s  Office  of  Bosnia  and  Herzegovina  is  responsible  for 
prosecuting  crimes  falling  within  the  jurisdiction  of  the  Court.  It  comprises  a  general  crime 
department  and  two  specialised  departments  –  for  war  crimes  and  for  organised  crime, 
economic crime and corruption.  

The  Court  of  Bosnia  and  Herzegovina  and  the  Prosecutor’s  Office  apply  state-level 
legislation.  They  also  have  jurisdiction  for  criminal  offences  stipulated  in  the  laws  of  the 
entities  and  Brčko  District,  when  these  criminal  offences:  (a)  endanger  the  sovereignty, 
territorial  integrity,  political  independence,  national  security  and  international  personality  of 
Bosnia and Herzegovina; (b) might have serious repercussions or detrimental consequences to 
the economy of Bosnia and Herzegovina; (c) might cause other detrimental consequences for 
Bosnia  and  Herzegovina;  or  (d)  might  cause  serious  economic  damage  or  other  detrimental 
consequences beyond the territory of the respective entity or Brčko District. Following legal 
challenges  to  some  of  these  provisions,  in  2009  the  Constitutional  Court  confirmed  the 
constitutionality of this criminal jurisdiction while noting that its inappropriate application can 
result  in  violation  of  the  human  rights  in  individual  cases.  This  jurisdiction  has  been  used 
rarely.  The  Court  of  Bosnia  and  Herzegovina  has  not  developed  consistent  criteria  for  the 
application  of  this  provision  and  has  not  used  it  since  2013.  The  Venice  Commission 
recommended clarifying this provision on criminal jurisdiction9.  As some circumstances do 
not  sufficiently  guarantee  the  legal  certainty  which  is  essential  in  criminal  matters,  the 
European  Commission  has  been  providing  detailed  recommendations  on  the  subject  within 
the  Structured  Dialogue  on  Justice  since  2011.  However,  Bosnia  and  Herzegovina  failed  to 
adopt the Law on the Courts of Bosnia and Herzegovina in line with EU standards, including 
the definition of criminal offences and sanctions in specific areas of particularly serious crime 
on  the  model  of  Article  83  of  the  Treaty  on  the  Functioning  of  the  European  Union.  The 
country needs to adopt this law with no further delay with a view to reinforcing legal certainty 
and  the  functioning  of  the  judiciary,  notably  in  the  fight  against  serious  crime.  This  law 
should  also  provide  for  a  separate  second-instance  appellate  court  to  strengthen  the 
independence of the judicial review of the decisions of the Court of Bosnia and Herzegovina.  

Each entity has its own judicial system, which is hierarchically organised.  

In the Republika Srpska entity, the court system comprises a Supreme Court, 6 district courts 
and  19  basic  courts.  District  courts  have  second-instance  jurisdiction;  they  act  as  courts  of 
first instance for criminal offences punishable with at least 10 years imprisonment, in which 
case  the  Supreme  Court  acts  as  second-instance.  In  addition,  there  are  courts  of  special 
jurisdiction:  the  district  commercial  courts  and  a  Higher  Commercial  Court.  The  entity 
prosecutorial service includes a Prosecutor’s Office and six district prosecutors’ offices. The 

9  Venice  Commission,  Opinion  on  Legal  Certainty  and  the  Independence  of  the  Judiciary  in  Bosnia  and 
Herzegovina, 
CDL-AD(2012)014,  
https://www.venice.coe.int/webforms/documents/default.aspx?pdffile=CDL-AD(2012)014-e. 

648/2011, 

15-16 

2012, 

June 

No. 

30 

 
                                                 
entity  Prosecutor’s  Office  has  a  special  department  for  fighting  corruption,  organised  crime 
and the most serious forms of economic crime.  

In the Federation entity, the court system comprises a Supreme Court, 10 cantonal courts and 
32 municipal courts. Cantonal courts have second-instance jurisdiction; they act as courts of 
first instance for criminal offences punishable with at least 10 years imprisonment, in which 
case the Supreme Court acts as second-instance. There is no specialised court on commercial 
matters, which are adjudicated by commercial and civil departments in ordinary courts of first 
and  second  instance.  The  entity  prosecutorial  service  includes  a  Prosecutor’s  Office  which 
supervises  the  work  of  10  cantonal  prosecutors’  offices,  each  being  governed  by  different 
rules  of  organisation.  With  11  laws  governing  the  entity  prosecutors’  offices,  such  a 
fragmented  prosecutorial  system  needs  simplification  and  harmonisation.  The  special 
department for fighting corruption and organised crime within the entity Prosecutor’s Office, 
provided for by the 2014 Law on fighting corruption and organised crime, has not  yet been 
established. 

The Brčko District judiciary comprises a Basic Court and an Appellate Court as well as the 
District  Prosecutor’s  Office.  The  Court  of  Bosnia  and  Herzegovina  has  administrative 
jurisdiction  over  state  laws  applied  in  the  Brčko  District  and  the  appellate  division  of  the 
Court  of  Bosnia  and  Herzegovina  is  the  final  appellate  authority  over  the  Brčko  District 
judiciary.  

Management body 

The High Judicial and Prosecutorial Council of Bosnia and Herzegovina (HJPC) is the single 
managing body responsible for guaranteeing the independence of judges and the autonomy of 
prosecutors throughout the country and regulating their careers.  

Budgetary  matters  of  the  judiciary  are  the  responsibility  of  executive  and  parliamentary 
authorities  at  each  level  of  government.  The  executives  are  also  responsible  for  some 
administrative 
In  Brčko  District,  ministerial 
administrative and budgetary competences are carried by the Judicial Commission. 

issues  concerning  non-judicial  staff. 

The HJPC is not mentioned in the Constitution. It was established by law in 2004, replacing 
entity-level judicial and prosecutorial councils, on the basis of an agreement on the transfer of 
certain  competences  from  the  entities  to  the  State  in  the  area  of  the  judiciary.  In  2009  the 
Constitutional  Court  held  that  the  HJPC  had  been  established  in  conformity  with  the 
Constitution.  However,  the  Republika  Srpska  entity  has  not  repealed  the  conflicting 
provisions of its Constitution providing for an entity-level HJPC.  

The  Republika  Srpska  entity  adopted  some  amendments  to  its  law  on  courts    regarding  the 
appointment of judges, thus legislating on a matter that had been transferred from the entity to 
the State by virtue of the transfer agreement. In spite of commitments taken in the context of 
the  Structured  Dialogue  on  Justice  since  2012,  the  Republika  Srpska  entity  has  not  yet 
amended its legislation to render it compatible with the Law on HJPC. The Republika Srpska 
entity  Law  on  the  public  prosecution  service  is  equally  incompatible  with  the  state-level 
legislation  as  regards  the  conditions  for  the  appointments  of  prosecutors  and  needs  to  be 
brought into line with the Law on HJPC and the transfer agreement with no further delay.  

To strengthen the role of the HJPC as  a guarantor of the independence  of the judiciary, the 
HJPC needs to be provided with an explicit constitutional status, including clear rules on its 
composition and powers.  

The HJPC is composed of 15 members with a four-year mandate, renewable once. Of these, 
11  members  represent  various  judicial  and  prosecutorial  structures  and  are  elected  by  their 

31 

 
peers. The other four members represent non-judicial bodies: two are elected by entities’ bar 
associations  among their members, one by the Council of Ministers and  one by Parliament. 
The HJPC members elect its president and two vice-presidents. Of the 15 HJPC members 9 
are women. 

The  HJPC  is  primarily  in  charge  of  appointing  all  judicial  office  holders  in  the  country, 
including the judicial associates in the municipal courts of the Federation entity. It also takes 
part  in  the  selection  procedure  for  judges  in  the  entity  constitutional  courts,  notably  by 
interviewing  candidates  and  proposing  a  ranking  of  candidates  to  the  entity  parliaments.  It 
sets  also  criteria  for  the  evaluation  of  the  performance  of  judges  and  prosecutors  by  the 
respective  court  presidents  and  chief  prosecutors.  The  HJPC  issues    codes  of  ethics, 
supervises the judicial and prosecutorial training centres in the entities (including deciding on 
minimum training needs and induction training) and provides information and communication 
technology  services  to  all  courts  and  prosecutors’  offices.  Its  Office  of  the  Disciplinary 
Prosecutor  is  tasked  with  overseeing  judges  and  prosecutors.  The  HJPC  appoints  separate 
disciplinary  commissions  to  hear  first  and  second  instance  disciplinary  cases.  In  plenary,  it 
acts as third instance in disciplinary proceedings. A Secretariat was established to support the 
professional, financial and administrative work of the HJPC. 

However,  the  Law  on  the  HJPC  has  several  deficiencies  concerning  judicial  appointments, 
performance appraisal, disciplinary procedures, conflict of interest and declaration of assets. 
Moreover, it does not provide for the right to an effective legal remedy against final decisions 
of  the  HJPC,  except  those  on  the  dismissal  of  judges  and  prosecutors.  In  order  to  align  the 
Law on the HJPC with European standards, in its related opinions10 issued in 2012 and 2014 
the Venice Commission recommended in particular to: (i) improve the rules on selecting the 
HJPC members; (ii) establish two sub-councils, for judges and prosecutors respectively; (iii) 
avoid setting quotas along ethnic lines as they may undermine the effective functioning of the 
system;  and  (iv)  avoid  an  increased  risk  of  politicisation  of  appointment  procedures.  The 
Ministry of Justice has not implemented those recommendations by finalising a consolidated 
draft law.   

In the context of the Structured Dialogue on Justice, the European Commission recommended 
stepping  up  the  level  of  independence  and  accountability  of  the  judiciary  by  addressing 
shortcomings  in  particular  in  relation  to  appointments,  integrity  and  disciplinary  matters.  It 
also  recommended  significantly  improving  the  quality  criteria  in  performance  appraisal.  In 
June 2018, the HJPC submitted to the Ministry of Justice a legislative initiative to amend the 
Law  on  the  HJPC  with  a  view  to  complying  with  those  recommendations.  The  Law  on  the 
HJPC needs to be finalised on the basis of that initiative and adopted in Parliament as a matter 
of priority. 

Within the current legislative framework, a number of rules were adopted in 2018-19 by the 
HJPC on the basis of its self-regulatory powers. They aim to address some deficiencies of the 
judiciary, in particular regarding the criteria for the appointment and performance appraisal of 
judges  and  prosecutors.  A  2018-20  HJPC  action  plan  is  in  place,  covering  most  notably 
measures to strengthen the fight against organised crime and corruption, by strengthening the 
autonomy  of  the  main  actors  in  the  criminal  procedure  chain,  improving  the  quality  of 
financial  investigations,  increasing  the  impact  of  assets  seizure  and  improving  the  courts’ 
sentencing policy, including on sentences pursuant to plea bargain agreements. However, the 

Commission 

10 Opinion on Legal Certainty and the Independence of the Judiciary in Bosnia and Herzegovina adopted by the 
2012).  
Venice 
Opinion on the Draft Law on the High Judicial and Prosecutorial Council of Bosnia and Herzegovina adopted by 
the  Venice  Commission 
2014). 
Plenary 
98th 
https://www.venice.coe.int/webforms/documents/default.aspx?pdffile=CDL-AD(2014)008-e  

21-22  March 

(Venice, 

(Venice, 

Plenary 

Session 

Session 

15-16 

June 

91st 

its 

its 

at 

at 

32 

 
                                                 
implementation  of  some  reforms  decided  by  the  HJPC,  notably  on  integrity  and  efficiency, 
has met resistance from within the judiciary in particular with regard to declaration of assets 
and  performance  appraisal.  This  is  worrying.  The  HJPC  needs  to  pursue  reforms  with 
determination, also through reinforced monitoring, to increase accountability. There is also a 
need  to  ensure  a  better  distribution  of  human  resources  throughout  the  judiciary  and  to 
improve judicial transparency through better interaction with media and society.   

Independence and impartiality 

The independence of the judiciary is not guaranteed explicitly under the Constitution, which 
only refers to the general principle of the rule of law. The constitutions of the entities and the 
Brčko  District  Statute  includes  the  principle  of  independence  of  the  judiciary.  In  practice, 
judges and prosecutors are vulnerable to pressures, including through self-censorship. Judges 
and prosecutors have been subject to politically motivated threats. Judicial independence and 
prosecutorial  autonomy  must  be  further  strengthened.  In  particular,  the  HJPC  needs  to  be 
provided  an  explicit  constitutional  status  and  the  rules  on  appointment,  conflict  of  interests 
and  disciplinary  measures  need  to  be  strengthened  in  line  with  European  standards.  Judges 
and prosecutors throughout the country need to act independently and impartially.  

Regulatory safeguards aiming at ensuring impartiality are generally in place. There are rules 
on  disqualification  of  judges,  notably  for  conflict  of  interests  in  court  cases.  The  case 
management  system  for  judges  and  prosecutors  provides  for  random  case  allocation. 
However,  reassignments  without  a  specific  justification  are  possible,  in  particular  in  small 
courts; moreover, there is overall no control system in place. The security features of the case 
management  system  for  courts  and  prosecutors’  offices  need  to  be  improved  to  prevent 
possible abuse.  

Accountability 

The regulatory and institutional  framework ensuring the accountability of the judiciary is  in 
place as part of the general competence of the HJPC, notably its monitoring powers.  

Separate  codes  of  ethics  for  judges  and  prosecutors  have  been  in  place  since  2005,  and 
guidelines  for  drafting  and  implementing  the  integrity  plans  in  judicial  institutions  have 
applied  since  2016.  All  courts  and  prosecutors’  offices  have  integrity  plans.  Their 
implementation  needs  to  be  closely  monitored  by  the  HJPC.  The  recommendations  of  the 
integrity  plans  should  feed  into  the  anti-corruption  policy  for  the  justice  sector.  There  is  no 
specific disciplinary measure for violation of the codes of ethics. Rules on conflict of interests 
in the judiciary only cover the HJPC members. Other measures to prevent conflict of interests 
are provided for in non-binding guidelines issued by the HJPC, which should be enforced by 
the courts and prosecutors’ offices. Enforcement should be strengthened   also through closer 
monitoring by the HJPC.  

The revision of the Law on the HJPC should introduce stricter rules on conflict of interests for 
both judges and prosecutors who are already in place and for candidates for judicial positions, 
including  judicial  associates.  Failure  to  declare  a  conflict  of  interests  in  the  appointment 
procedure  should  be  a  reason  for  disqualification.  In  the  area  of  declarations  of  assets  for 
judges and prosecutors, the HJPC has adopted a rulebook aiming to clarify and improve the 
system of submission, verification and processing of financial statements, which were in the 
past collected and shelved without any meaningful verification and follow-up. This rulebook 
also provides for the publication of the financial statements, while aiming to protect sensitive 
personal information. Due to some objections of the Data Protection Agency the rulebook has 
been  suspended  pending  a  solution  to  the  legal  controversy.  The  absence  of  an  effective 
system of submission, verification and processing of financial statements seriously affects the 

33 

 
credibility of the efforts to strengthen the integrity within the judiciary. The transparency and 
credibility of the system need to be further strengthened by adopting legislation allowing to 
cross-check financial statements with databases of other relevant administrations, notably the 
tax administration. 

The legal framework regulating disciplinary procedures is weak. Enforcement has improved 
but  is  not  satisfactory,  with  too  little  dissuasive  effect.  In  2018,  there  were  33  disciplinary 
proceedings initiated, the biggest number over the past years, and 30 disciplinary proceedings 
completed. 27 cases resulted in disciplinary measures, of which 16 involved disciplinary plea 
bargaining.  Two  judicial  office  holders  were  dismissed.  Significant  legislative  changes  are 
needed,  in  particular  to  ensure  that  disciplinary  sanctions  serve  as  more  effective  deterrents 
and to introduce guarantees for the judicial review of final disciplinary decisions of the HJPC. 
The  scope  of  some  disciplinary  offences  also  needs  further  clarification  in  order  to  ensure 
legal  certainty.  The  Disciplinary  Prosecutor  alone  has  discretion  to  decide  whether  to 
prosecute a disciplinary complaint, and there is no possibility to seek judicial review of that 
decision. The first and second instance disciplinary panels are almost exclusively composed 
of  HJPC  members  and  are  appointed  by  the  President  of  the  HJPC  without  clear  selection 
criteria. When the HJPC acts  in  its  plenary  composition  as the third instance in  disciplinary 
proceedings, there are no rules guaranteeing full independence and impartiality with respect to 
those  HJPC  members  who  sat  in  the  disciplinary  commissions.  Only  final  decisions  on  the 
dismissal  of  judges  and  prosecutors  may  be  subject  to  judicial  review  before  the  Court  of 
Bosnia  and  Herzegovina,  while  decisions  imposing  other  disciplinary  sanctions  cannot  be 
reviewed. The HJPC needs to ensure the publicity of relevant statistical information as well as 
final decisions, including the rejections of disciplinary suits, also providing a comprehensive 
reasoning.  The  administrative  and  functional  position  of  the  Office  of  the  Disciplinary 
Prosecutor within the HJPC needs to be revised to further strengthen its operational autonomy 
for  undue 
and 
interference. When  deciding  on  final  appeals  in  disciplinary  matters,  the  HJPC  must  ensure 
that  the sanctions pronounced are proportional,  appropriate and  with  deterrent  effect  for the 
judiciary  as  a  whole.  While  respecting  the  presumption  of  innocence  the  HJPC  should 
consider  suspending  any  appointment  or  promotion  until  the  disciplinary  proceedings  have 
been concluded.  

in  decision-making  and 

the  potential 

independence 

reduce 

to 

Professionalism and competence 

The  system  of  appointment  and  career  advancement  of  judges  and  prosecutors  is  not 
sufficiently  based  on  merit,  especially  regarding  presidents  of  courts  and  chief  prosecutors. 
Ethnic criteria often prevail over merit, which is a source of serious concern and is in conflict 
with EU principles. To improve the system, the conditions for the first entry into the judiciary 
should be distinguished from those applying to transfer and promotion during the career.  

Criteria  on  performance  appraisal  for  all  judges  and  prosecutors  have  been  in  force  since 
January 2019 with the aim to reform the previous appraisal system based on quantity which 
could be abused by prioritising easy cases to fill in the quota or by neglecting the quality of 
the  legal  reasoning.  The  new  system  also  takes  into  account  quality  of  performance.  This 
reform  has  met  with  significant  resistance  within  the  judicial  community.  With  a  view  to 
strengthening  the  independence  and  the  impartiality  of  the  judiciary,  there  is  a  need  to 
undertake a thorough and balanced appraisal of performance of judges and prosecutors along 
the  criteria  adopted  by  the  HJPC  and  based  on  EU  standards,  which  promote  a  merit-based 
career and ensure that quality of work is better reflected in the overall evaluation of judicial 
professionals.  There  is  no  effective  judicial  appeal  against  final  HJPC  decisions  concerning 
either  appointment  or  performance  appraisal;  such  appeal  needs  to  be  guaranteed  in  the 
relevant legislation.  

34 

 
Quality of justice 

The justice system is not sufficiently transparent. Even when complying with data protection 
standards, key court decisions and confirmed indictments are not widely available online, in 
particular  in  corruption  cases.  The  judicial  documentation  centre  of  the  HJPC  administers  a 
judicial  database  with  search  functions  which  is  accessible  to  all judges  and  prosecutors,  as 
well as other parties upon payment of an annual fee. This database needs to be strengthened to 
foster  the  establishment  of  a  harmonised  case-law  across  the  country.  Dedicated  case-law 
departments should also be established in all highest judicial instances. 

Case-law lacks consistency as there is no judicial body with countrywide jurisdiction tasked 
with  ensuring consistent interpretation  of the law across the four legal  orders in  Bosnia and 
Herzegovina.  Since  2014,  panels  for  harmonisation  of  case-law  in  civil,  criminal  and 
administrative  matters  have  been  in  place  to  address  this  issue.  They  are  composed  of 
representatives of the entity supreme courts, the Brčko District Appellate Court and the Court 
of Bosnia and Herzegovina. However, they meet only on a voluntary basis in the context of a 
project run by the HJPC judicial documentation centre. According to the authorities, the legal 
positions of the panels are binding for the highest instance courts and are of an instructional 
character for the lower instance courts, while their effect on harmonising case-law depends on 
the strength of the argumentation. The legal status of these panels needs to be better defined in 
order  to  formalise  and  upgrade  their  work  to  be  able  to  effectively  contribute  to  the 
consistency  of  case-law,  without  calling  into  question  the  independence  of  all  judges. 
According  to  European  standards,  the  consistency  of  case-law  needs  to  be  ensured  through 
decisions of higher courts rather than through instructions or guidelines. There is ultimately a 
need to establish a judicial body to effectively ensure the consistent interpretation of the law 
and the harmonisation of case-law across the legal orders in the country, in order to guarantee 
a more uniform application of the law, while fully ensuring the principle of independence of 
all judges.   

There are 1 013 judges and 377 prosecutors, including court presidents, chief prosecutors and 
their deputies. 60% of the total number of judges and prosecutors and 47% of managers are 
women.  In  the  Federation  entity,  judicial  associates  in  municipal  courts  can  issue  judicial 
decisions in enforcement matters and in small claims; they are appointed by the HJPC as all 
other judicial office holders. The planning of the overall budget of the judiciary is coordinated 
by the HJPC but the responsibility for adoption is divided among 14 budgetary authorities at 
the  various  levels  of  government,  often  with  court  presidents  and  chief  prosecutors 
negotiating  the  budget  allocations  directly  with  the  relevant  executives.  In  most  cases, 
ministries  of  finance  or  justice  can  reduce  the  budget  of  judicial  institutions  without  any 
justification.  This  affects  the  efficient  administration  of  justice.  The  2018  budget  for  the 
judiciary  was  EUR  130.5  million  (0.81%  of  the  GDP),  which  amounts  to  EUR  37  per 
inhabitant, covering the HJPC as well as all prosecutors’ office and courts including ex officio 
defence. The 2017 budget was EUR 122.2 million (0.8% of GDP). Around two thirds of the 
budget  is  spent  on  salaries.  Domestic  funds  are  not  sufficient  to  cover  investment  needs, 
including  improving  the  judicial  infrastructure.  The  fragmented  and  unsustainable  financing 
of  the  judiciary  must  be  addressed  to  ensure  allocation  of  sufficient  funds  throughout  the 
country.  

Training  for  judges  and  prosecutors  is  provided  through  the  two  judicial  and  prosecutorial 
training  centres  in  the  entities  and  through  the  internal  training  structures  of  the  Court  of 
Bosnia and Herzegovina and of the Brčko District Judicial Commission. Both training centres 
need  sufficient  budgets  to  maintain  sustainable  training  programmes.  They  have  not 
undertaken a regular, comprehensive and analytical assessment of training needs on the basis 
of  career  development,  job-related  skills  and  regular  performance  reports.  Better  targeted 

35 

 
judicial  training  is  needed  to  ensure  professionalism  as  well  as  efficiency.  Training  should 
address practical skills in performing judicial and prosecutorial activities, judicial ethics and 
communication with  the parties in  judicial proceedings and the media. Court presidents  and 
chief prosecutors need to be more involved in identifying the training needs of their staff. The 
HJPC  is  legally  required  to  supervise  and  coordinate  all  judicial  training  activities.  The 
current legal requirements include eight days compulsory initial training for newly appointed 
judges  and prosecutors in their first  year without links to  the incumbent's future post or the 
necessary skills. During the career, the annual compulsory training amounts to three days on 
subjects often of theoretical nature. Compulsory initial and ongoing legal training needs to be 
more  comprehensive.  A  mentorship  system,  in  place  in  a  number  of  prosecutors’  offices, 
needs to be fully established throughout the courts as well. 

Monitoring and measuring of the day-to-day activities of courts and prosecutors’ offices take 
place through the case management system, making it possible to check the performance of 
judges  and  prosecutors  on  the  basis  of  the  annual  workload.  All  courts  and  prosecutors’ 
offices regularly produce statistical reports for the HJPC as well as an annual activity report. 
Reliable statistical  data  on the performance of the judicial system need  to  be systematically 
collected  and  analysed,  particularly  on  case  reallocations  and  on  serious  crimes.  The  HJPC 
needs  to  step  up  oversight  of  the  managerial  aspects  of  courts  and  prosecutors’  offices 
operations  on  the  basis  of  statistical  data  in  order  to  strengthen  managerial  capacities  and 
accountability. 

Efficiency 

Plans are in place for reducing the backlog of the oldest cases. Their implementation, together 
with  annual  quotas  for  measuring  the  performance  of  judges,  has  led  to  a  progressive 
reduction in the number of pending cases and their duration. However, the overall backlog for 
pending court cases amounts to 2.2 million cases, out of which approximately 1.9 million are 
unpaid utility bill cases. This seriously harms judicial efficiency.  

The  backlog  of  unpaid  utility  bill  cases  and  small  financial  claims  needs  to  be  reduced 
significantly by urgently amending the enforcement procedure laws at all levels to make debt 
collection more efficient, in particular in the Federation entity, and by finding an appropriate 
model for transferring these cases from courts to other bodies, public or private. The reform 
initiated  in  the  Republika  Srpska  entity  and  the  Brčko  District  on  enforcement  procedure 
helped decreasing the backlog, but has not managed to disburden the courts from uncontested 
claims. Establishing debtor’s registers at all levels and a payment order procedure instead of 
authentic documents should help in this regard and make the procedure more expedient. The 
average length of court proceedings in 2018 was 444 days and the clearance rate was 105%. 
The  average  duration  of  pending  non-utility-related  civil  cases  before  first  instance  courts 
(464  days)  is  high  but  in  decrease  compared  with  2017  (494  days)  and  2016  (502  days). 
Modifications of the instruments for measuring the performance of judges and persecutors  – 
such  as  annual  quotas  and  backlog  reduction  plans  –  leading  to  a  longer  duration  of  the 
proceedings  would  jeopardise  efficiency.  Backlog  cases  tend  to  concentrate  in  the  courts  of 
bigger cities. Measures need to be taken to temporarily increase the workforce in such courts 
in  order  to  swiftly  reduce  the  number  of  pending  cases.  Alternative  dispute  resolution 
methods,  in  particular  court  settlement  and  mediation,  need  to  be  improved,  promoted  and 
used more widely. 

Domestic handling of war crime cases  

The backlog of war crimes cases has been reduced in the context of the implementation of the 
National  War  Crimes  Strategy  adopted  in  2008.  From  an  estimated  amount  of  1502  war 
crimes cases in December 2008, as of end of 2018 the total number of the most complex cases 

36 

 
was reduced by 409 out of 693 (-59%) and the number of less complex cases was reduced by 
602 out of 809 (-74.5%)  However, the objective of processing of the most complex cases by 
end-2015 was not achieved. The capacity of the prosecutor's offices and courts throughout the 
country  was  reinforced  with  significant  EU  support.  Conviction  rates  in  recent  years  in  the 
entities and Brčko District are over 60%, at the state level they are at 40%. Over the last five 
years, the entity level prosecutors’ offices have reduced their backlog of cases by 62% and the 
Prosecutor’s  Office  of  Bosnia  and  Herzegovina  has  reduced  its  backlog  by  28%.  A 
supervisory body is in place to oversee implementation of the strategy. It is established by a 
decision  of  the  Council  of  Ministers  and  composed  of  representatives  of  the  ministries  of 
justice  and  finance  from  all  levels  government  as  well  as  the  HJPC.  The  mandate  and 
capacities  of  this  body  are  weak.  The  Supervisory  Body  main  weakness  is  the  non-binding 
nature of its decisions. It cannot send instructions to authorities nor request accountability for 
prosecutors or judges failing to abide by timelines or defined parameters for processing of war 
crimes. Regional cooperation in the area of war crime cases processing is largely ineffective. 
(See part C. Obligation stemming from the Stabilisation and Association Process – Regional 
issues and International Obligations) 

In  recent  years,  there  has  been  an  increase  in  the  number  of  confirmed  indictments  for  war 
crimes cases involving sexual violence. Efforts in this area need to continue steadily.  The in-
court victim and witness support has improved since the court police was formally authorised 
to  ensure  protection  in  both  entities.  However,  its  long-term  sustainability  is  linked  to  the 
continued guarantee of domestic financing. 

The  Council  of  Ministers  needs  to  adopt  the  revised  National  War  Crimes  Strategy.  This   
document aims at setting new timelines for the completion of all war crimes cases by 2023, 
including around 340 complex cases out of a total of 693 pending cases; defining new criteria 
to  identify the complexity  of the  cases and their  distribution between levels  of  government; 
improving  harmonisation  of  case-law;  increasing  human  resources;  and  strengthening  the 
supervisory body’s oversight on the implementation of the strategy. 

Bosnia and Herzegovina is at an early stage/has some level of preparation in the area of the 
judiciary. The constitutional  and legal  framework governing the judiciary  is  incomplete and 
does  not  provide  sufficient  guarantees  of  independence,  accountability  and  efficiency.  The 
Law  on  the  High  Judicial  and  Prosecutorial  Council  (HJPC)  needs  to  be  revised  to  better 
regulate the appointment, appraisal and disciplinary procedures of members of the judiciary, 
and  provide  appropriate  legal  remedies  against  final  decisions  of  the  HJPC,  in  line  with 
European standards. A Law on the Courts of Bosnia and Herzegovina in line with European 
standards should also  be adopted to  prevent  conflicts  of jurisdiction in  criminal matters and 
ensure  the  required  legal  certainty.  In  order  to  strengthen  the  guarantees  of  judicial 
independence  and  prosecutorial  autonomy,  including  from  all  forms  of  politicisation  and 
pressures,  the  HJPC  and  the  state-level  court  system  should  be  provided  with  an  explicit 
constitutional  status.  In  view  of  the  plurality  of  legal  orders  in  the  country,  Bosnia  and 
Herzegovina  needs  to  establish  a  judicial  body  to  ensure  the  consistent  interpretation  of  the 
law and the harmonisation of case-law, while fully ensuring the principle of independence of 
all  judges.  Political  will  and  adequate  capacities  are  needed  to  effectively  implement  the 
Justice Sector Reform Strategy and to reduce the backlog of war crime cases. Further efforts 
are required to improve the functioning of the judiciary, in particular as regards impartiality 
and  efficiency  by  upgrading  the  existing  case  management  system  and  reforming  the 
enforcement  procedure  laws  to  relieve  the  courts  of  the  burden  of  uncontested  civil  and 
commercial  claims.  Initial  and  continuous  training  need  to  be  significantly  improved, 
including by establishing a functioning mentorship system.  

37 

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

  adopt the revised Law on the HJPC and Law on the Courts of Bosnia and Herzegovina in 
line with European standards; implement the measures in the area of criminal procedure as 
set out in  the HJPC action plan; apply consistently and improve rules on the appointment, 
performance appraisal, integrity and training of judges and prosecutors;  

  adopt the revised National War Crimes Strategy; 
  revise the enforcement procedure laws in the entities and Brčko District, in particular with 
a view to reducing the backlog of utility bill cases by relieving the courts from the burden 
of uncontested claims.   

Fight against corruption 

Institutional framework 

Prevention of corruption 

The Agency for the Prevention of Corruption and the Coordination of the Fight against 
Corruption (APIK) was set up at state level in 2009 as an independent body, accountable to 
Parliament.  It  became  operational  only  in  2014.  Its  mandate  include  to  develop  the 
anticorruption  strategy  and  action  plan  and  monitor  their  implementation;  design  a  uniform 
methodology for  collecting data on civil  servants’ assets and for developing integrity plans; 
coordinate  the  work  of  public  institutions  in  preventing  and  combating  corruption;  monitor 
implementation of anticorruption legislation,  and conflict of interests. The Agency carries out 
some limited anti-corruption activities in the private sector, notably through training. It is also 
responsible  for  taking  action  upon  receiving  information  on  corruption-related  acts  and 
developing educational programs. 

The  Parliament  appoints  APIK’s  director  and  two  deputies  through  open  competitions.  The 
selection committee is composed of nine members (three from the House of Representatives, 
three  from  the  House  of  Peoples,  two  from  the  academic  community  and  one  from  civil 
society). The APIK reports to the Parliament. The APIK has an appropriate budget but 20% of 
its 41 positions are vacant, including in key areas. Its premises are not adequate. 

Corruption prevention bodies have also been set up in both entities, in Brčko District and in 
all  cantons.  In  most  cantons,  corruption  prevention  institutions  have  been  set  up  as  ad  hoc 
bodies without full-time professional members. The mandate of these bodies is usually linked 
to the duration of cantonal government and they need to be reappointed when new cantonal 
government  are  in  place.  The  Sarajevo  canton  has  a  professional  body  with  full-time  staff. 
Corruption  prevention  bodies  at  all  levels  of  government  need  to  be  permanent,  fully 
resourced  and  independent  institutions  ready  to  cooperate  among  themselves  and  with  the 
APIK.  Prevention corruption bodies at all levels have the legal obligation of cooperating with 
the  APIK.  The  APIK  has,  in  total,  26  memoranda  of  understanding  for  cooperation  and 
information exchange with the other corruption prevention bodies as well as with the HJPC, 
government agencies, NGOs, and several higher education institutions.  

The  APIK,  however,  does  not  have  direct  access  to  the  databases  of  other  bodies,  such  as 
interior  ministries,  real  estate  agencies,  tax  authorities,  land  registers  and  registries  of 
in  real-time  or  automatically  detect  potential 
vehicles.  It  cannot  cross-check  data 
incompatibilities  of  functions.  It  does  not  have  any  legal  basis  to  impose  administrative 
sanctions  if  institutions  do  not  cooperate,  for  example  by  failing  to  forward  reports  on  the 
implementation of anti-corruption strategies or related action plans.  

There  are  a  large  number  of  mechanisms  for  citizens  to  report  corruption.  They  can  do  so 
through  APIK  or  any  corruption  prevention  body,  inspection  bodies,  law  enforcement 

38 

 
agencies,  dedicated  phone  lines,  and  directly  through  the  prosecutors’  offices.  Anonymous 
reporting is allowed. 

Notwithstanding the legal and organisational constraints, the APIK should play a much more 
proactive  role,  particularly  in  responding  to  citizens’  complaints  concerning  allegations  of 
corruption,  following  up  on  reports  of  corruption  and  enhancing  citizen’s  education  for 
corruption prevention, including through countrywide awareness raising campaigns.    

Parliaments and governments at various levels of government have codes of ethics in place. 

The Commission on Deciding on Conflict of Interests, established in September 2015, is not 
independent. As six out of nine members of the Commission are Members of Parliament, the 
Commission’s mandate is limited to the term of the Parliament. Furthermore, the Commission 
adopts its decisions by a majority of votes of its nine members, including a minimum of two 
from  each constituent  people. Both  the Commission’s composition  and the decision-making 
methods need to be changed.  In Republika Srpska entity, a Commission for the Prevention of 
Conflict of Interests in public institutions has been established within the entity parliament. In 
the Federation entity, there is no institution effectively dealing with conflict of interests. The 
entity law assigned such task to the Central Election Commission. This is in contrast with the 
state-level  legislation  regulating  the  functions  of  the  Central  Election  Commission.    The 
Brčko District Electoral Commission, which is in charge of enforcing legislation on conflict 
of  interests,  does  not  perform  this  function  due  to  uncertainties  about  the  available  legal 
remedies and insufficient human resources. 

The implementation of the legislation on whistle-blower protection is entrusted to the APIK at 
the state level, to the judiciary in the Republika Srpska entity and to the District’s Office for 
Corruption Prevention in the Brčko District. In the Federation entity there is no law providing 
for the establishment of a similar institution. 

The Central Election Commission is responsible for implementing the Law on political party 
financing throughout the country. 

Audit offices are in place but they do not play an effective role in the fight against corruption.  

Law enforcement 

The State Investigation and Protection Agency (SIPA) has a dedicated unit for the prevention 
and  detection  of  financial  crime  and  corruption.  Similar  structures  exist  within  the  police 
administration in the entities. 

A special prosecution department has been established at the state level and in the Republika 
Srpska entity. In the Federation entity, specialised departments in the Prosecutor’s Office and 
in  the  Supreme  Court  have  not  been  established,  although  the  relevant  legislation  has  been 
adopted.  

The  capacity  to  investigate  economic,  financial  and  public  procurement-related  crimes  – 
including  financial  investigations  –  needs  to  be  substantially  enhanced  in  terms  of  staff 
numbers and equipment, the degree of autonomy, the level of specialisation of staff and their 
cooperation.  

Legal framework 

Bosnia and Herzegovina is party to all international anti-corruption conventions, including the 
United  Nations  Convention  against  Corruption.  The  Council  of  Europe  Group  of  States 
against Corruption (GRECO) concluded in its compliance report adopted in December 2018 
that  Bosnia  and  Herzegovina  had 
the  22 
recommendations it had issued in 2011 on incriminations and transparency of party financing. 

implemented  satisfactorily  only  10  of 

39 

 
Prevention 

The state-level Law on the APIK regulates the area of corruption prevention. The legislation 
on whistle-blower protection provides administrative protection to all staff employed in the 
institutions and bodies established at state level. The legislation grants pre-emptive protection 
to employees before retaliation may occur. Anonymous reporting is allowed. In the Republika 
Srpska entity, legislation on whistle-blower protection provides for judicial protection against 
retaliation and applies to all persons who report corruption in the public or private sector. It 
also  provides  for  a  reversed  burden  of  proof,  a  non-exhaustive  list  of  possible  harmful 
consequences  from  which  protection  can  be  requested  and  access  to  an  urgent  court 
procedure. No legislation is in place in the Federation entity. In Brčko District legislation on 
whistle-blower  protection  is  in  place  and  provides  for  administrative  protection.  The 
legislation on whistle-blower protection needs to be aligned with the new acquis on this issue. 

As regards conflict of interests, the legal framework at all levels is weak as regards both the 
rules themselves and the way in which they are implemented. Legislation on the declaration 
of  assets  is  fragmented  and  not  harmonised  across  levels  of  government,  making  its 
implementation  ineffective,  including  on  the  penalties  imposed.  To  step  up  anti-corruption 
efforts,  new  legislation  needs  to  be  adopted  at  all  levels  on  the  declaration  of  assets  and 
conflict  of  interests  in  line  with  international  standards,  in  particular  relevant  GRECO 
recommendations.  At  the  state  level,  the  Law  on  conflict  of  interest  in  the  governmental 
institutions  of  Bosnia  and  Herzegovina  is  not  in  line  with  international  standards.  In  the 
Republika Srpska entity, legislation on conflict of interests is in place but needs to be aligned 
with  international  standards.  The  Federation  entity  has  legislation  regulating  conflict  of 
interests  which  is  not  implemented  due  to  legal  uncertainty  on  the  institution  in  charge. 
Similarly, the Brčko District has legislation on conflict  of interests in  the public institutions 
but  is  not  implemented  The  Sarajevo  canton  has  a  Law  on  asset  declarations  of  public 
functions holders in the canton, covering conflict of interests.   

There is no legislation to effectively prevent corruption in the private sector and no regulation 
of lobbying. Bosnia and Herzegovina also needs to introduce a comprehensive and effective 
system  of  electronic  procurement  to  foster  transparency  and  to  reduce  opportunities  for 
abuses.  

The  Law  on  political  party  financing  needs  to  be  further  aligned  with  international 
standards, particularly with pending GRECO recommendations.  

Legislation on freedom of access to information at state and entity level is only partly in line 
with  international  and  European  standards.  Access  to  information  is  hampered  by  the 
legislation on data protection, which is  interpreted in  a way that protects private rather than 
public  interests.  Lack  of  transparency  seriously  hinders  the  fight  against  corruption.  (see 
section on Fundamental rights) 

Repression 

The  legislative  framework  for  the  repression  of  corruption  in  Bosnia  and  Herzegovina  is 
fragmented, as there are numerous laws at various levels of government regulating the issue, 
without sufficient consistency between them.  

In the framework of criminal  legislation, corruption-related offences are primarily  regulated 
in specific chapters of the four criminal codes. Corruption-related offences are defined in line 
with the provisions of key international agreements which have been ratified by Bosnia and 
Herzegovina.  

40 

 
Provisions of the state-level criminal procedure code regarding the use of special investigative 
measures,  witness  immunity,  and  how  to  complete  an  investigation  and  issue  an  indictment 
were amended in September 2018 to comply with a 2017 decision of the Constitutional Court. 
Those  provisions  are  in  line  with  international  and  EU  standards,  particularly  in  that  they 
preserve the full capacity of the judicial authorities to fight against serious crime. The Law on 
the Security-Intelligence Agency (OSA) needs to be amended in the same way. 

In the Republika Srpska entity, the Law on crimes against electoral rights and crimes against 
the economy and the payment system also contain definitions of corruption-related offences. 
The  entity  Prosecutor’s  Office  includes  a  special  department  for  fighting  corruption, 
organised crime and the most serious forms of economic crime. In the Federation entity the 
2014 Law on fighting corruption and organised crime is not applied. As a result, the special 
departments  to  fight  corruption,  organised  and  inter-cantonal  crime  at  the  entity  Supreme 
Court and the entity Prosecutor’s Office provided for in that legislation are not in place. Those 
departments  need  to  be  established  with  no  further  delay.  Specialised  prosecutors  should 
focus their activities on serious corruption. 

The  criminal  justice  policy  throughout  the  whole  country  is  largely  ineffective  in  the  fight 
against corruption,  also  due to  inadequate penalties that do not  ensure sufficient  deterrence. 
Frequent conflicts of jurisdiction, leading to transfers of cases between levels of government, 
slow down proceedings and reduce efficiency, thus undermining the credibility of the system. 
The police is not proactive in investigating corruption cases, which is a serious concern.  

Rules  are  in  place  concerning  the  immunity  of  members  of  parliaments  in  criminal 
proceedings, as are procedures governing the lifting of immunity. 

Strategic framework 

Anti-corruption strategies are in place at the various levels of government.  

At  state  level,  the  2015-2019  anti-corruption  strategy  and  action  plan  are  in  place,  having 
been  adopted  after  wide  public  consultations.  The  APIK  carries  out  annual  reviews  of  the 
implementation of the strategy and action plan. Pursuant to the law on the APIK, the entities, 
Brčko District and cantons have to develop and adopt their own anti-corruption strategies and 
action plans in line with the principles of the state-level strategy. The APIK provides support 
to other levels of government in drafting and updating their strategies and action plans, but the 
Republika Srpska entity bodies do not engage with APIK on these issues.  

In the Republika Srpska entity, there is an anti-corruption strategy for the period 2018-2022 
with  a related  action plan.  In the Federation entity, a strategic framework has been in  place 
since 2016. Each canton also has its own strategy for the prevention of corruption except the 
Bosnia-Podrinje Canton, which opted for a stand-alone action plan. The Brčko District has its 
own strategic framework to counter corruption. 

Anti-corruption  strategies  need  to  be  harmonised  throughout  the  country  and  to  receive 
adequate  funding.  The  implementation  of  anti-corruption  strategies  and  action  plans  at  all 
levels needs to be systematically monitored by the APIK. A software application administered 
by  APIK  aims  to  improve  proactive  monitoring  of  policy  documents  but  other  levels  of 
government  do not  provide sufficient  data. The fragmentation of strategies and action plans 
means  that  they  have  had  only  a  very  limited  impact  in  the  fight  against  corruption.  Data 
collection and evidence-based policy making on anti-corruption should be introduced.  

According  to  risk  assessments,  sectors  such  as  education,  employment,  health  and  public 
procurement  are  particularly  prone  to  corruption.  Integrity  plans  in  these  areas  are  widely 
established. They need to be systematically feed into regular strategy and action plan updates. 

41 

 
Track record  

In 2018, there were a total of 168 investigations by the State Investigation Protection Agency 
into  financial  crimes  and  corruption,  of  which  90  were  finalised.  19  reports  against  115 
persons (108 natural and 7 legal entities) and 7 supplementary reports against 33 persons (31 
natural  and 2 legal  entities) were sent  to  the competent prosecutors’ offices. The trend over 
the past years shows that only a limited number of investigations are launched and finalised. 

In  the  same  period,  there  were  a  total  of  284  indictments  countrywide,  with  a  decrease  of 
6.5%  compared  with  2017  while  the  number  of  convictions  was  164,  a  majority  of  which 
were  suspended  sentences.  The  trend  shows  that  there  is  a  very  limited  number  of  final 
conviction in high-profile cases. Based on the criteria adopted by HJPC for the identification 
of  high-level  corruption  cases,  two  persons  received  a  final  conviction  in  2017.  No  final 
conviction  in  high-level  corruption  case  was  recorded  in  2018.  Plea  bargain  agreements  are 
frequent  and  sanctions  are  lenient  because  of  the  frequent  application  of  mitigating 
circumstances, with  prison sentences often suspended or even converted  into fines. Most of 
the convictions were pronounced for abuse of office or authority.  

Further efforts are needed to establish a track record of proactive investigations, prosecutions 
and  final  convictions  for  corruption,  in  particular  in  high-level  cases  resulting  in  major 
damage to public funds. Effective sanctions are also necessary to serve as a deterrent. Audit 
reports  and tax administration reports need to  be used in  a systematic and proactive way  to 
fight corruption. Financial investigations are not launched systematically in corruption cases 
and  the  concept  needs  further  alignment  with  Financial  Action  Task  Force  standards.  Law 
enforcement  agencies  need  to  enjoy  operational  autonomy,  free  from  undue  political 
interference, as they need to act effectively and impartially when investigating allegations of 
corruption.  

There  is  no  system  in  place  for  effectively  checking  the  funding  of  political  parties  and 
electoral campaigns.  

In the area of conflict of interests, the state-level commission has not taken any decision over 
the past year. 

As regards whistle-blowers’ protection, APIK granted administrative protection in two cases 
in 2017, and two cases in 2018. 

As  regards  asset  declarations,  there  are  585  public  officials  at  the  state  level,  who  are 
required  to  submit  their  financial  reports  to  the  Commission  for  Deciding  on  Conflict  of 
Interests. In 2018, the number of financial reports filed was 350. The other officials failed to 
submit their financial reports. 346 reports were  checked, but  no sanctions were imposed.  In 
2017, out of the 162 financial reports filed and checked, the Commission imposed 8 sanctions. 
Rules on conflict of interests are not enforced in the Federation entity or in the Brčko District.  

Assets  declarations  of  elected  officials  are  made  available  to  the  public  through  the  official 
website of the Central Election Commission, which has no obligation to check their accuracy. 

Bosnia  and  Herzegovina  is  at  an  early  stage/has  some  level  of  preparation  in  the  fight 
against corruption.. All levels of government show signs of political capture directly affecting 
the  daily  life  of  citizens,  notably  in  health,  education,  employment  and  public  procurement 
matters.  Decisive  political  commitment  is  needed  to  actively  promote  integrity  and  fight 
corruption. 

The country has overall established an institutional, legal and strategic framework to combat 
corruption.  However,  there  are  still  significant  gaps.  The  lack  of  harmonisation  of  the 
entity-level  criminal  codes  seriously  hamper  anti-corruption  policy.  The  fragmentation  of 

42 

 
strategies  and  action  plans  across  the  different  levels  of  government  makes  their 
implementation  less effective. Anti-corruption strategic documents need to  be better aligned 
throughout  the  country.  Adequate  funding  has  to  be  provided.  Enhanced  coordination  and 
cooperation  involving  all  levels  of  government  is  a  prerequisite  for  countering  corruption 
more  effectively.  Corruption  prevention  bodies  at  all  levels  of  government  need  to  be 
permanent,  independent  institutions  with  a  clear  and  ambitious  mandate  and  adequate 
resources. The APIK, as the coordinating corruption prevention body, needs to assume a more 
proactive role, notably on raising the awareness of citizens for corruption prevention and on 
following  up  to  their  complaints  on  allegations  of  corruption.  Legislation  on  conflict  of 
interests  at  all  levels  needs  to  be  aligned  with  GRECO  recommendations  and  international 
standards. Enforcement capacity needs to be strengthened. Overall, corruption is widespread 
and remains an issue of concern. There is a need for strong political will to effectively address 
corruption issues, as well as a robust criminal justice response to high-level corruption. In the 
coming year, Bosnia and Herzegovina should therefore in particular: 

  ensure  the  implementation  of  anti-corruption  strategies  and  action  plans,  notably  by 

providing appropriate resources and establishing monitoring mechanisms; 

  ensure the effective functioning and coordination of corruption prevention bodies among 
themselves  and  with  the  Agency  for  Prevention  of  Corruption  and  Coordination  of  the 
Fight against Corruption (APIK); 

  demonstrate progress towards establishing a track record on the repression and prevention 
of  corruption,  notably  by  imposing  effective  and  deterrent  sanctions,  including  the 
confiscation of proceeds of crime. 

Fundamental rights 

The legislative framework on human rights and on the protection of minorities is in place; it 
needs to be fully implemented and further brought in line with EU standards. The Constitution 
aims  to  guarantee  the  highest  level  of  protection  of  internationally  recognised  human  rights 
and  fundamental  freedoms.  The  Constitutional  Court  is  the  highest  judicial  instance  for  the 
protection of human rights in the country. Bosnia and Herzegovina is not an observer country 
of  the  European  Union  Agency  for  Fundamental  Rights.  The  country  should  already  apply 
FRA methodology for the collection of relevant data on fundamental rights. 

The  country  has  ratified  all  major  European  and  international  human  rights  instruments, 
most of which are included in its Constitution. The European Convention on Human Rights 
(ECHR)  and  its  Protocols  are  directly  applicable  within  the  domestic  legal  order  and  enjoy 
supremacy over other laws, though not over the Constitution, which has been found to be in 
breach  of  the  Convention  as  regards  non-discrimination  in  electoral  matters.  There  is  no 
available  data  on  the  direct  enforcement  of  international  human  rights  treaties  by  courts. 
Bosnia and Herzegovina still needs to implement the 128 accepted recommendations from the 
2014 UN Universal Periodic Review. 

The European Court of Human Rights (ECtHR) delivered 6 judgments in 2018 finding that 
Bosnia and Herzegovina had violated rights guaranteed by the ECHR, most of them related to 
the protection of property and non-enforcement. Since September 2016, the ECtHR has found 
violations of the ECHR in 10 cases (out of 11) relating mainly to the right to a fair trial. 898 
applications  have  been  submitted  to  the  Court  during  2018,  bringing  the  total  number  of 
applications  pending  before  the  court  to  901.  Outstanding  cases  relate  mainly  to  property 
rights, missing persons and discrimination on the grounds of ethnic origin. There are six cases 
against Bosnia and Herzegovina under the enhanced supervisory procedure of the Council of 
Europe. The Sejdić-Finci, Zornić, Šlaku and Pilav rulings have not been implemented as they 
require constitutional amendments to ensure the equality of political rights among all citizens.  

43 

 
Bosnia  and  Herzegovina  needs  to  develop  a  comprehensive  policy  framework  on  the 
promotion  and enforcement of human rights, including countrywide strategies on human 
rights, on non-discrimination, and on the protection of minorities. This is required to ensure 
coordination  of  the  legislation  governing  the  promotion,  implementation  and  protection  of 
human rights at different levels of government. In the absence of strategies setting minimum 
standards,  the  lack  of  harmonisation  of  legislation  and  of  coordination  among  institutions 
leads to uneven protection of human rights across the country.  

Several  state  bodies  and  institutions  are  responsible  for  the  promotion  and  enforcement  of 
human rights. The Ministry of Human Rights and Refugees monitors and reports on the state 
of human rights  and the application of international  conventions and laws on prohibition of 
discrimination and on gender equality. It consists of specialised organisational units, including 
the Gender Equality Agency. Most legislative and executive authorities have established their 
own working bodies on human rights, gender equality and protection of national minorities.   

The  Institution  of  the  Human  Rights  Ombudsman  of  Bosnia  and  Herzegovina  is  the 
national human rights institution, equality body, and supervisory body on freedom of access 
to information. It needs to be designated as national preventive mechanism against torture and 
ill-treatment. The Ombudsman is composed of three persons selected by an ad hoc committee 
and appointed by the Parliament for a term of 6 years. The law states that ‘the Ombudsmen 
shall  be  appointed  from  among  the  three  constituent  peoples  (Serb,  Bosniak,  and  Croat), 
which  shall  not  preclude  the  possibility  of  appointing  the  Ombudsmen  from  among  the 
Others’; no self-declared member of the ‘Others’ has been appointed Ombudsman so far. Out 
of the 10 people appointed as Ombudsman since 1996, three were women (of which two in 
the current term) and seven men. The last selection procedure held in 2017 was open to the 
participation  of  civil  society.  The  three  Ombudsmen  decide  by  consensus  on  the  proposed 
recommendations,  which  causes  significant  delays  or  inaction  in  sensitive  cases.  This  is 
detrimental  to  the  performance  of  the  institution  and  needs  to  be  changed.  Besides  issuing 
recommendations,  the  Ombudsman  has  the  power  to  initiate  or  intervene  in  judicial 
proceedings and to ask for the reopening of proceedings or reviews of court decisions, but has 
never  made  use  of  these  powers.  123  (35%)  recommendations  of  the  Ombudsman  were 
implemented by public and private institutions in 2018; 125 (35%) were implemented in 2017 
and  84  (31%)  in  2016.  Failure  to  implement  a  recommendation  of  the  Ombudsman  or  to 
cooperate  in  cases  of  discrimination  may  amount  to  a  minor  offence.  However,  the 
Ombudsman has  not  opened any minor offence proceedings in  the last 3 years.  In 2017 the 
Global  Alliance  of  National  Human  Rights  Institutions  (GANHRI)  re-accredited  the 
Ombudsman  with  ‘A  status’.  Bosnia  and  Herzegovina  should  amend  the  Law  on  the 
Ombudsman to align it with the Paris Principles and the June 2018 EU recommendations on 
standards for equality bodies, especially as regards financial independence, appointment and 
dismissal procedures, and cooperation with civil society. 59 positions have been filled out of 
the  87  provided  for  in  the  Ombudsman’s  rulebook.  The  Ombudsman  should  reform  its 
internal  organisation  by  introducing  a  thematic  division  of  labour  among  its  three  members 
and its staff, to help it make better use of the available resources. It should be provided with 
adequate human and financial resources to perform its tasks effectively. 

The  Parliamentary  Assembly’s  Joint  Committee  on  Human  Rights  and  the  Committee  on 
Gender  Equality  of  its  House  of  Representatives  exercise  parliamentary  oversight  on  issues 
related to human rights and fundamental freedoms.  

On the right to life, in 2003 Bosnia and Herzegovina ratified Protocol  No 13 to  the ECHR 
concerning  the  abolition  of  the  death  penalty  in  all  circumstances.  Cases  of  loss  of  life  and 
unresolved killings throughout the country should be the subject of effective and independent 
investigations.  Judicial  follow-up,  including  prosecution  and  convictions,  is  necessary  to 

44 

 
prevent a climate of impunity. The provision on the death penalty included in the Constitution 
of the Republika Srpska entity, even though not enacted in law, is not in line with European 
standards and needs to be repealed.  

The Constitution prohibits torture and ill-treatment. Bosnia and Herzegovina is party to the 
UN  Convention  against  torture  and  other  cruel,  inhuman  or  degrading  treatment  or 
punishment  and  its  optional  protocol.  In  2002  it  ratified  the  European  Convention  for  the 
prevention  of  torture  and  inhuman  or  degrading  treatment  or  punishment.  Bosnia  and 
Herzegovina  needs  to  designate  a  national  mechanism  for  the  prevention  of  torture  and  ill 
treatment as required under the Optional Protocol to the UN Convention against torture and 
other  cruel,  inhumane  or  degrading  treatment  or  punishment  (OPCAT)  which  the  country 
ratified  in  2008.  The  Ombudsman’s  department  for  the  protection  of  the  rights  of  detainees 
and  prisoners  conducts  visits  to  persons  deprived  of  liberty;  the  Ombudsman  received  144 
complaints in 2018 and 135 in 2017, with a 19.6% decrease in 2016. Reports of ill-treatment 
of suspects and prisoners in police stations and detention facilities have decreased but remain 
a matter of concern. Such cases are slowly processed and only few officers are punished.  

Legislation on the prison system is not sufficiently harmonised throughout the country nor is 
it fully aligned with European standards. Execution of criminal sentences is hampered by the 
lack  of  coordination  and  harmonisation  of  procedures  across  the  country.  Bosnia  and 
Herzegovina  has  started  addressing  some  of  the  recommendations  of  the  2016  report  of  the 
European  committee  for  the  prevention  of  torture  and  inhuman  or  degrading  treatment  or 
punishment (CPT). Prison and detention facilities have seen improvements in conditions and 
management, with positive effects on living conditions. Overcrowding has diminished, also as 
a result of the use of alternatives to detention in the Federation entity. Investments are needed 
to replace certain older facilities which cannot provide adequate detention conditions. Despite 
improvements,  healthcare  services  in  prisons  lack  resources  and  in  particular  medical  staff. 
There are no programmes to accompany the reintegration in society of former prisoners. The 
forensic psychiatry institution in Sokolac is operational but are not fully used. The state prison 
in East Sarajevo is not in use. Police holding facilities are often in poor condition, lack natural 
light, adequate ventilation and decent hygienic conditions. Further efforts are needed to meet 
international  and  European  standards  in  the  treatment  of  persons  deprived  of  their  liberty. 
Bosnia  and  Herzegovina  should  strengthen  its  efforts  to  improve  detention  conditions  in 
prisons  and  police  holding  facilities  and  ensure  that  they  are  in  conformity  with  ECHR 
standards and the United Nations Standard Minimum Rules for the Treatment of Prisoners.  

Bosnia  and  Herzegovina  lacks  a  countrywide  strategy  on  transitional  justice  to  ensure  a 
policy framework for dealing with the legacies of the past. The system of redress for civilian 
victims of war needs to be substantially improved, including by discontinuing the practice of 
applying the statute of limitations in civil proceedings for compensation claims, introducing a 
budget-funded  mechanism  for  compensation  claims  where  convicted  perpetrators  are 
insolvent, and better protecting the identity of victims and witnesses in civil proceedings. To 
comply  with  the  UN  Convention  against  Torture  to  which  the  country  acceded  to  in  1993, 
Bosnia  and  Herzegovina  needs  to  adopt  a  state-level  framework  law  clearly  defining 
countrywide  criteria  on  the  rights  of  civilian  victims  of  war-time  torture.  In  the  absence  of 
such a framework, civilian victims of war-time torture do not receive equal treatment across 
the  country  as  entity-level  laws  are  not  harmonised.  Bosnia  and  Herzegovina  also  needs  to 
implement the November 2017 recommendations of the UN Committee against Torture. The 
Constitutional  Court  has  recognised  that  charging  court  fees  to  unsuccessful  claimants  has 
resulted in the violation of human rights of victims of wartime sexual violence. This judicial 
practice, which has a particularly detrimental impact on women, should be discontinued.  

45 

 
The  political  environment  is  not  yet  conducive  to  reconciliation,  which  requires  an  honest 
and  factual  assessment  of  the  past,  coming  from  within  societies  and  bringing  together  all 
parties  to  the  conflict  on  the  basis  of  awareness  and  understanding.  Currently,  established 
facts  about  wartime events,  including  war crimes and  genocide, are  frequently  contested by 
high-level  political  leaders,  who  cast  doubts  on  the  independence  or  impartiality  of 
international tribunals. Convicted war criminals are glorified. The Republika Srpska entity has 
established new historical commissions on Srebrenica and on the Serbs in Sarajevo. All actors 
in  Bosnia  and  Herzegovina  need  to  demonstrate  full  cooperation  with  the  international 
tribunals by acknowledging and respecting their decisions. Revisionism and denial contradict 
the most fundamental European values.  

A law on the protection of personal data has been in place since 2006. However, it needs to 
be aligned with the General Data Protection Regulation 2016/679 (GDPR) and with the Law 
Enforcement  Directive  2016/680.    In  2006,  Bosnia  and  Herzegovina  ratified  the  Council  of 
Europe Convention for the Protection of Individuals with regard to Automatic Processing of 
Personal Data and its Additional Protocol. The country has not signed or ratified Protocol 223 
amending  and  updating  that  Convention.  All  four  criminal  codes  in  the  country  define  the 
criminal offence of unauthorised use of personal data.  

The Personal Data Protection Agency is the independent body responsible for supervising the 
implementation  of  relevant  legislation,  acting  on  complaints  and  providing  opinions  on 
provisions on personal data in legislative proposals. The Agency needs adequate human and 
financial resources to perform its tasks effectively. The Agency conducted 69 procedures  ex 
officio in 2018, following public information pointing to illegal processing of personal data, 
an  increase  from  the  45  procedures  in  2017  and  55  in  2016.  It  received  140  complaints  in 
2018 compared to 96 in 2017 and 113 in 2016. The Agency conducted 42 inspections in 2018, 
83 in 2017 and 93 in 2016.  It issued 15 minor offence orders in 2018, 15 in 2017 and 11 in 
2016.  In  2018  there  were  12  administrative  proceedings  against  decisions  of  the  Agency 
before  the  Court  of  Bosnia  and  Herzegovina  –  the  same  number  as  in  2017  and  2016.  It 
provided 169 expert opinions in 2018, 180 in 2017 and 213 in 2016. The agency provided 37 
opinions on laws and by-laws in 2018 and 38 in 2017, which is a significant increase given 
that  this  is  a  higher  number  than  in  all  previous  years  combined.  The  state  Parliament  has 
introduced  in  its  rules  of  procedure  an  obligation  to  consult  the  Agency  on  legislative 
proposals; no such requirements exist at entity or cantonal level.  

----------------------------------------------------------------------------------------------------------------- 

Freedom of expression 

Freedom  of  expression,  including  media  freedom,  is  guaranteed  by  the  Constitution  and  by 
law.  The  media  landscape,  although  comprising  a  relatively  large  number  of  media  outlets, 
does not reflect real diversity and pluralism and is segmented on the basis of ethnic, business 
and political affiliation. 

Intimidation of journalists  

Political  pressure  and  intimidation  against  journalists  are  a  cause  for  concern;  physical  and 
verbal  attacks  take  place  without  systematic  institutional  response  and  effective  protective 
measures.  The  authorities  often  downplay  the  intimidation  of  journalists, and  their  reaction, 
including  public  condemnation,  is  weak.  Data  on  threats  and  attacks  against  journalists  and 
media  workers  is  collected  by  professional  organisations  but  not  by  public  institutions.  The 
BH Novinari association’s free media help line recorded 58 cases of violation of journalists’ 
rights  in  2018,  including  6  cases  of  physical  assault,  17  threats,  and  9  cases  of  political 
pressure.  One  case  of  assault  on  a  journalist  reporting  on  the  ‘Justice  for  David’ 

46 

 
demonstrations in Banja Luka is under investigation as attempted murder. In two occasions, a 
high-level  political  leader  verbally  attacked  independent  journalists  in  public.  In  2018,  the 
Ombudsman’s  office  received  nine  complaints.  There  was  no  progress  in  2018  in  the 
investigation and prosecution of past attacks against journalists, and no convictions. 

The  police  and  the  judiciary  need  to  ensure  impartial,  prompt,  thorough,  independent  and 
effective  investigations  and  prosecutions  in  cases  of  threats  and  violence  against  journalists 
and  media  workers.  Journalists  under  threat  need  to  be  ensured  adequate  police  protection. 
The  authorities  are  expected  to  act  swiftly  and  demonstrate  zero  tolerance  for  threats  or 
attacks  against  the  media,  and  should  refrain  from  making  statements  that  may  create  an 
environment not conducive to freedom of expression. 

Legislative environment 

Defamation  has  been  decriminalised  since  2002,  but  politicians  often  use  civil  suits  to 
intimidate  journalists.  Courts  should  ensure  expedient  processing  of  defamation  cases  and 
consistency of case-law on damage awards, as the abuse of defamation lawsuits risks having a 
chilling effect on freedom of expression and pushing journalists towards self-censorship. The 
legislation  on  hate  speech  needs  to  be  fully  aligned  with  the  ECtHR  case-law  and  the  EU 
acquis,  as  it  currently  only  provides  for  a  criminal  offence  of  incitement  to  religious  and 
national hatred and intolerance. Legislation on freedom of access to information at state and 
entity  level  needs  to  be  harmonised  across  the  country  and  aligned  with  international  and 
European standards.  

Implementation of legislation/institutions 

The  laws  on  freedom  of  access  to  information  are  only  partially  respected,  in  particular  as 
regards  statutory  deadlines  for  replying  to  public  information  requests,  the  completeness  of 
information provided, and the use of a comprehensive public interest test to justify a refusal to 
grant access to information. Legal provisions on data protection and on access to information 
are interpreted in a way that protects private rather than public interests.  

The  Communications  Regulatory  Agency  (CRA)  has  the  power  to  regulate  the  audio-visual 
media  market,  and  enjoys  political  and  institutional  independence,  but  not  full  financial 
independence.  Bosnia  and  Herzegovina  needs  to  improve  the  procedure  to  appoint  its 
management  to  ensure  transparency  and  openness,  and  to  provide  sufficient  safeguards 
against  any  political  and  economic  interference.  (Also  see  Chapter  10  -  Information  society 
and media) 

The Press Council operates as a self-regulatory membership-based body for both online and 
printed media outlets across the country. The Press Council issues recommendations and has 
no power to impose fines on media outlets. It plays an important role in improving the media 
quality  and  ensuring  that  media  outlets  comply  with  professional  standards.  Since  1999  the 
Press  Council  has  issued  the  press  and  online  media  code  of  Bosnia  and  Herzegovina;  all 
major media outlets have committed to comply with the code.  

Public service broadcaster 

The 2003 Law on the public broadcasting system is only partially enforced, and entity laws on 
broadcasting  are  not  in  line  with  it.  Therefore,  the  three  public  service  broadcasters  are 
exposed to political influence, in particular through politically controlled steering boards, with 
a worrying trend of self-censorship.  

Bosnia  and  Herzegovina  does  not  have  an  adequate  and  harmonised  RTV  fee  collection 
model,  as  provided  for  by  the  law.  Entity  broadcasters  also  have  substantial  unpaid  debts 

47 

 
towards  the  state-level  broadcaster,  which  are  subject  to  long  court  cases.  These  issues 
threaten the financial independence and sustainability of the public broadcasting system.   

Bosnia and Herzegovina needs to fully implement the law on the public broadcasting system, 
strengthen the political and financial independence of public broadcasters, and proceed with 
the digitalisation process. (Also see Chapter 10 - Information society and media) 

Economic factors 

thus  preventing 

Bosnia and  Herzegovina needs to  adopt  legislation on  media  ownership transparency  and 
establish a detailed register of media ownership to enable systematic insight  into ownership 
structures, 
the  risk  of  hidden  media  concentration.  Local  public 
broadcasters, which are not within the public broadcasting system, receive funds from local 
government  budgets  and  are  often  under  strong  political  pressure  and  influence.  There  is  a 
need to increase transparency on the work of marketing companies, often linked to political 
parties and on advertisements by public agencies and publicly-owned companies. Bosnia and 
Herzegovina  should  adopt  legislation  on  advertising  in  the  media.  The  lack  of  transparency 
and  clear  criteria  in  the  distribution  of  subsidies  are  a  matter  of  concern.  Job  security  for 
journalists  is  very  limited,  as  many  are  employed  on  short-term  contracts  or  work  as 
freelancers.  This  makes  them  vulnerable  to  undue  influence  from  editors  or  owners,  as 
journalists do not have adequate guarantees against dismissals or disciplinary measures.   

Internet 

Freedom  of  expression  online  is  not  specifically  regulated,  except  in  the  Republika  Srpska 
entity Law on public peace and order, which includes social media in the definition of public 
place in which public order violations can be committed. There is a high degree of online hate 
speech; criminal prosecution is based on the offence of inciting religious, ethnic and national 
hatred  by  means  of  internet  or  social  networks.  Online  media  outlets  self-regulate  via  the 
Press Council, which handles complaints from the public.  

Professional organisations and working conditions 

Journalism  in  Bosnia and Herzegovina is  a precarious profession, with  low wages  and little 
job  security  and  it  is  therefore  prone  to  self-censorship.  A  significant  number  of  journalists 
work  without  adequate  contracts.  The  employment  rights  provided  for  by  the  entity-level 
labour  laws  are  often  not  respected.  There  is  no structured  dialogue  between  the  authorities 
and  the  media  community  on  the  working  conditions  of  journalists.  Trade  unions  for 
journalists are multiple but weak and with little recognition or independence; unionisation is 
low,  and  there  are  no  branch  collective  agreements  for  media  workers.  The  BH  Novinari 
association and the Banja Luka club of journalists play an important role in the protection of 
journalists and media integrity.  

(See also Chapter 10 - Information society and media) 

There is some level of preparation on freedom of expression. The legislative framework on 
media  freedom,  including  hate  speech,  defamation  and  access  to  information  needs  to  be 
applied effectively and be further aligned with the EU and international standards. The law on 
the  public  broadcasting  system  has  not  been  implemented  and  entity-level  legislation  is  not 
harmonised with it. The financial situation of public broadcasters is not sustainable and they 
are  subject  to  political  influence.  Violence,  threats  and  political  pressure  against  journalists 
are a cause for concern, with a worrying trend of self-censorship due to the lack of systemic 
institutional follow-up.  

48 

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

  ensure  protection  of  journalists  and  a  systematic  institutional  follow-up  of  threats  and 

violence against them;  

  ensure the financial sustainability and political independence of public broadcasters, and 
harmonise entity legislation with the state-level law on the public broadcasting system;  

  adopt legislation on media ownership transparency and criteria on public advertising. 

Freedom of thought, conscience and religion 

Freedom  of  thought,  conscience  and  religion  is  guaranteed  by  the  Constitution  and 
legislation, and is generally upheld in practice. The 2004 Law on freedom of religion and the 
legal  position  of  churches  and  religious  communities  prohibits  a  state  religion,  prescribes 
separation  between  the  state  and  the  religious  communities,  and  recognises  the  legal 
personality  and  continuity  of  historically  established  religious  communities:  the  Islamic 
Community in Bosnia and Herzegovina, the Serb Orthodox Church, the Catholic Church and 
the  Jewish  Community.  Other  religious  groups  may  apply  for  public  registration  and 
recognition. Under the 2004 law, basic agreements (concordat) were signed in 2007 with the 
Catholic  Church  and  in  2008  with  the  Serb  Orthodox  Church,  granting  them  a  number  of 
rights,  including  the  recognition  of  religious  holidays.  A  concordat  with  the  Islamic 
Community is pending.  

While  religious  tolerance  was  symbolically  promoted  on  some  well-publicised  occasions, 
cases  of  discrimination  on  religious  grounds  continue  to  occur,  as  do  incidents  targeting 
religious sites. Several controversial cases concerning the construction of religious buildings 
or  monuments  on  private  or  public  land  have  been  reported  in  the  past  decade.  The  law  on 
freedom  of  religion  provides  religious  communities  with  the  right  to  restitution  of 
expropriated religious properties, which is dealt with on an ad hoc basis.  

Freedom of assembly and association 

Freedom  of  assembly  is  guaranteed  in  the  Constitution  and  regulated  at  entity  or  cantonal 
level.  The  legislation  provides  for  a  number  of  grounds  for  restrictions,  imposes  excessive 
responsibility on assembly organisers (requiring their engagement with multiple authorities), 
and does not differentiate between gatherings for commercial and non-commercial purposes. 
Freedom  of  assembly  laws  should  be  harmonised  across  the  country  and  brought  into  line 
with  European  and  international  standards.  Civil  society  organisations  have  also  reported 
increasing  attempts  by  authorities  to  restrict  peaceful  assemblies.  In  late  December  2018, 
peaceful  protests  by  the  ‘Justice  for  David’  movement  in  Banja  Luka,  which  had  been 
ongoing since March, were violently dispersed by the police. Members of the movement have 
been unable to organise gatherings since.  

Freedom  of  association  is  enshrined  in  constitutions  and  legislation  at  all  levels,  and  is 
generally  upheld.  Associations  can  be  registered  at  state,  entity  or  cantonal  level.  There  are 
25,339 associations registered in the country, including sport clubs and political parties. Civil 
society  activists  dealing  with  sensitive  issues  such  as  war  crimes  and  the  fight  against 
corruption, as well as human rights defenders, have been subject to threats, verbal abuse and 
physical  attacks;  women  activists  have  received  threats  to  their  bodily  integrity.  The 
authorities need to promote a conducive and enabling environment for civil society and ensure 
that any legislative development on freedom of association is subject to effective consultation. 

Issues  of  labour  and  trade  union  rights  are  covered  in  Chapter  19  –  Social  policy  and 
employment. 

49 

 
Property  rights  are  protected  by  the  Constitution.  Each  entity  manages  its  own  property 
cadastre and land registry, which need to be updated and mutually linked in order to ensure 
that  all  citizens  can  enjoy  their  property  rights.  Entity-level  legislation  on  expropriation 
prescribes  compensation  at  market  value.  Legalisation  of  property  is  managed  at  entity  and 
cantonal  level.  There  is  no  legislative  framework  on  handling  restitution  claims.  Few  cases 
related  to  repossession  are  outstanding.  In  2018,  five  rulings  out  of  six  against  Bosnia  and 
Herzegovina at the ECtHR concerned violations of the right to property. The Commission for 
real property claims of displaced persons and refugees stopped operating in 2014 due to a lack 
of  funding.  There  is  no  information  on  the  number  of  ongoing  administrative  disputes  in 
which  the  Commission  is  a  respondent.  Foreigners  are  entitled  to  purchase  property  on  the 
basis  of  reciprocity  agreements;  in  other  cases,  they  must  register  a  local  company.  Land 
registries need to become more accessible for women, the poor, and vulnerable groups.  

In  the  field  of  non-discrimination  policies,  the  Law  on  prohibition  of  discrimination  has 
been in force since 2009. Amendments aiming at full alignment with the acquis were adopted 
in 2016. However, the law needs to be effectively applied and enforcement mechanisms need 
to be improved. There are no countrywide human rights and anti-discrimination strategies. No 
adequate and reliable statistical data is collected on discrimination cases. Documented cases 
should  receive  effective  administrative  and  judicial  follow-up;  court  rulings  need  to  be 
enforced.  Legal  professionals  and  the  wider  public  need  access  to  training  and  awareness 
raising about antidiscrimination provisions.  

The country has been in breach of the ECHR since 2009 for discrimination as regards political 
rights, since citizens not identifying as Bosniaks, Croats or Serbs or residing in certain parts of 
the  country  are  not  allowed  to  stand  for  office  in  the  state-level  House  of  Peoples  and 
Presidency  (Sejdić-Finci  case-law).  The  Constitutional  Court  also  found  the  electoral 
provisions for entity presidents and vice-presidents to be discriminatory. Such decision in case 
U-14/12 remains not implemented as well.   

The  practice  of  ‘two  schools  under  one  roof’  was  recognised  as  discriminatory  by  a  final 
ruling of the Supreme Court of the Federation entity in  2014. However,  56 schools are still 
organised  in  this  way  in  28  localities  of  13  municipalities  in  three  cantons  (Zenica-Doboj, 
Central  Bosnia,  Herzegovina-Neretva).  Bosnia  and  Herzegovina  needs  to  implement  court 
rulings  and  overcome  ethnic-based  discrimination  and  divided  education,  as  well  as  other 
segregation and assimilation practices, and introduce systemic solutions for ensuring inclusive 
quality education for all. Disputes over mother tongue education, national groups of subjects 
and  curricula  continue.  The  common  core  curriculum  based  on  learning  outcomes  has  been 
completed but is not yet applied throughout the country. The Republika Srpska entity does not 
recognise the name of the Bosnian language, which leads to periodic school boycotts, often by 
families of returnees (See Chapter 26). 

Legislation  on  hate  crimes  is  harmonised  across  the  four  criminal  codes  in  the  country. 
Entity-level  legislation  criminalises  hate  speech  only  when  causing  national,  racial  and 
religious hatred. This needs to be harmonised and aligned with the acquis, which penalises the 
public incitement to violence or hatred based on race, colour, religion, descent or national or 
ethnic origin. The country does not have a mechanism for collecting and disaggregating data 
on hate speech, hate crimes and discrimination. Almost all reported hate-motivated incidents 
are related to religion or ethnicity. The actual number of incidents is estimated to be up to five 
times  higher,  and  to  be  more  diverse.  Most  incidents  do  not  lead  to  formal  investigation  or 
prosecution. Failure to identify acts as hate crimes, as well as the high burden of proof makes 
it difficult to establish intent, leading to low numbers of indictments and convictions. 121 hate 
incidents  were  recorded  and  2  convictions  were  handed  down  in  2018;  175  cases  were 
recorded in 2017, with 1 conviction. Case-law on hate crimes is not consistent. The authorities 

50 

 
need to take concrete measures to counter hate speech in printed and electronic media, as well 
as in official discourse. Bosnia and Herzegovina ratified the Council of Europe Convention on 
cybercrime and its additional protocol in 2006, but implementation has been slow. 

Legislation  providing  for  equality  between  women  and  men  is  largely  in  place.  The 
Constitution includes the Convention on the elimination of all forms of discrimination against 
women  (CEDAW)  as  one  of  the  human  rights  agreements  to  be  applied  in  Bosnia  and 
Herzegovina. The country is also party to the UN Convention on the political rights of women 
and  to  the  ILO  Equal  Remuneration  Convention.  The  Council  of  Europe  Convention  on 
preventing  and  combating  violence  against  women  and  domestic  violence  (the  Istanbul 
Convention) has been in force since 2014, although legislation is not fully harmonised with it. 
A law on gender equality was adopted in 2003 and revised in 2010; it is complemented by the 
2009  law  on  the  prohibition  of  discrimination,  which  improves  the  protection  mechanisms. 
This legislative framework needs to be effectively implemented. Gender equality mechanisms 
are in place; the Gender Equality Agency within the Ministry of Human Rights and Refugees 
plays  the  key  role  of  monitoring  and  fostering  the  implementation  of  the  law  on  gender 
equality, in cooperation with the entity-level Gender Centres. The gender equality strategy is 
implemented via countrywide gender action plans; the latest was adopted in 2018. Bosnia and 
Herzegovina  also  adopted  countrywide  actions  plan  for  the  implementation  of  the  United 
Nation Security Council Resolution 1325 and related ones on women, peace and security, the 
latest of which in 2018.  

The implementation of both policy and legislation is ineffective. Women are underrepresented 
in  politics  and  public  life.  The  gender  equality  law  sets  out  special  measures  to  achieve  at 
least 40% representation of each gender in legislative, executive and judicial authorities at all 
levels.  However,  these  measures  have  not  been  thoroughly  implemented.  Women  hold 
approximately 20% of all executive and legislative functions in the country. Out of nine state-
level ministers, two were women (for defence and human rights) in the 2014-2018 term. The 
electoral legislation includes a 40% quota for the least-represented gender on candidates’ lists; 
its  implementation  is  verified  by  the  Central  Electoral  Commission.  The  political 
representation  of  women  in  the  Parliamentary  Assembly  has  been  rather  low  and  stable, 
peaking at 10 members of Parliament (24%) in 2014 to fall again to seven (17%) in 2018. One 
quarter  of  members  of  Parliament  in  the  Federation  entity  and  one  sixth  in  the  Republika 
Sprska  entity  were  women  in  2018,  with  a  downward  trend  over  time.  The  participation  of 
women  in  cantonal  assemblies  increased  from  18%  in  2014  to  30%  in  2018  as  a  result  of 
electoral  law  changes.  Legislative  assemblies  at  state  and  entity  levels  have  established 
permanent  gender  equality  bodies,  while  cantonal  assemblies  have  not.  Only  seven  mayors 
out of 143 are women (4%). 

Gender  impact  assessments  of  policy  and  legislative  processes  are  not  carried  out,  although 
they are required by law. In terms of pay gap, despite the lack of official data, it is estimated 
that  women  earn  on  average  78%  to  85%  of  a  man’s  salary  for  the  same  position.  The 
treatment of maternity, paternity and family leave differs between entities and among cantons. 
Data collection needs to be improved to  enable the development of sound policies targeting 
key gender gaps, and provide relevant data on gender-based violence. (See Chapter 19)  

Strategies for the implementation of the Istanbul Convention are in place at state level and in 
the  two  entities.  However,  the  legislation  on  the  prevention  of  and  protection  from  gender-
based  violence,  in  particular  domestic  violence,  is  not  effectively  implemented,  which  is  a 
concern.  The  authorities  need  to  collect  and  publish  data  on  gender-based  violence  in  a 
harmonised way, as provided for by the Convention, to facilitate monitoring. The entity laws 
on  domestic  violence  are  not  harmonised  among  them  or  aligned  with  the  Istanbul 
Convention.  In  the  Republika  Srpska  entity,  domestic  violence  is  often  prosecuted  as  a 

51 

 
misdemeanour rather than as a criminal offence, leading to inconsistent case-law and lack of 
effective  sanctions  for  perpetrators.  There  are  no  departments  specialised  in  gender-based 
violence cases in relevant institutions, including in the police and the public sector. However, 
several  ministries  have  established  gender  contact  points  tasked  to  report  to  the  Gender 
Centres of the two entities and to the state-level Gender Equality Agency. Access to legal aid 
and  court  representation  is  very  limited.  Protective  measures  are  rarely  granted,  and  the 
general system of response and victim support needs to be improved. Institutions at all levels 
need to step up their cooperation under a victim-centred approach. The available capacity in 
safe  accommodation  is  not  sufficient.  Civil  society  organisations  have  a  key  role  in  the 
provision  of  social  services,  including  by  running  the  eight  safe  houses  for  victims  of 
domestic violence and trafficking. These services do not receive sufficient public funding (on 
women victims of trafficking in human beings, see Chapter 24).  

As regards the rights of the child, Bosnia and Herzegovina is party to the Convention on the 
Rights of the Child and its three optional protocols. The 2015-2018 action plan for children 
has  not  been  adequately  implemented  due  to  insufficient  funding  and  coordination.  Bosnia 
and Herzegovina needs to develop and adopt a new action plan on child protection including 
measures  on  children  without  parental  care,  children  with  disabilities  and  juvenile  justice 
across the country. A Council for Children is in place but does not meet regularly. In 2018, 
the Ombudsman received 216 complaints on children’s rights, up from 172 in 2017 and 138 
in 2016. Enrolment in preschool education is the lowest in Europe (17%). There are around 
1,640  children  without  parental  care  in  the  country,  49%  of  which  live  in  residential 
institutions,  as  do  71%  of  children  with  disabilities  without  parental  care  and  87%  of  very 
young  children  without  parental  care  (0-3  years).  Bosnia  and  Herzegovina  is  reforming  its 
child  protection  system,  moving  towards  community-based  care.  Foster  care  and  alternative 
solutions  for  children  should  be  promoted.  Cash  benefits  and  access  to  social  services  for 
vulnerable children need to be improved to prevent family separation, which in one third of 
cases is due to poor economic conditions or labour migration. Support needs to be provided to 
children leaving care institutions at the age of 18. The administrative capacities of the centres 
for social welfare need to be strengthened, as they coordinate multi-sectoral support. 

The exploitation of children and child begging are issues of concern. Only a small number of 
cases of violence against children are reported, resulting in few cases being brought before the 
courts.  Not  all  children  in  Bosnia  and  Herzegovina  are  covered  by  compulsory  health 
insurance,  and  marginalised  groups,  such  as  the  Roma11,  face  multiple  discrimination.  The 
authorities  need  to  collect  exact  and  consistent  data  on  child  poverty  rates  and  violence 
against  all  children,  including  children  with  disabilities,  Roma  children,  and  girls. 
Unaccompanied  migrant  children  face  specific  difficulties,  such  as  accessing  safe 
accommodation  and  asylum  procedures.  324  unaccompanied  migrant  children  have  been 
identified in 2018. Only 29 of them were appointed a legal guardian, as provided for by law. 
Alternatives  must  be  found  to  the  detention  of  irregular  migrant  families  with  children,  and 
the registration of births of children of undocumented migrants must be ensured.   

The  legal  framework  on  juvenile  justice  is  in  place.  However,  laws  at  the  entities  and  the 
Brčko  District  level  have  not  been  fully  implemented  or  harmonised  with  each  other.  The 
absence  of  separate  units  for  juveniles  during  pre-trial  detention  and  in  police  stations  is  in 
breach of international standards. The use of alternative measures to juvenile detention needs 
to  be  increased,  as  detention  should  only  be  the  last  resort.  Only  limited  reintegration 
measures  are  available  to  juveniles  upon  release  from  detention.  In  September  2018  there 
were four minors in prisons.   

11In  line  with  the  terminology  of  European  institutions,  the  umbrella  term  ‘Roma’  is  used  here  to  refer  to  a 
number of different groups, without denying the specificities of these groups. 

52 

 
                                                 
Persons with disabilities are among the most vulnerable groups. The country has ratified the 
Convention  on  the  rights  of  persons  with  disabilities  (CRPD)  and  its  optional  protocol. 
However multi-sectoral  and comprehensive implementation  mechanisms are not  in  place, in 
particular as regards accessibility and training. The law allows persons with disabilities to be 
deprived of legal capacity through a judicial process, which is in violation of the Convention. 
Bosnia and Herzegovina needs to implement the recommendations of the UN Committee on 
the rights  of persons with  disabilities from  2017. The country adopted  a  disability policy in 
May 2008 and both entities adopted strategic frameworks for advancement of the rights and 
status  of  persons  with  disabilities  following  the  expiration  of  the  state-level  policy.  Bosnia 
and Herzegovina does not  have a uniform  definition of disability and  a  database of persons 
with  disabilities.  Support  is  limited  and  varies  depending  on  the  origin  of  the  disability,  as 
persons with war-related disabilities (war veterans and civilian victims of war) enjoy priority 
over  other  persons  with  disabilities.  Such  a  status-based  discriminatory  approach  must  end. 
Even  though  the  law  prohibits  discrimination,  persons  with  disabilities  continue  to  face 
challenges  regarding  access  to  education,  healthcare  and  social  assistance.  Very  few  public 
buildings  are  accessible  to  persons  with  physical  disabilities.  The  Council  for  Persons  with 
Disabilities needs to be further engaged in all relevant processes. The authorities also need to 
improve  data  collection,  including  gender-disaggregated  data  on  women  and  men  with 
disabilities. A network of 74 community-based centres with multi-disciplinary teams provides 
quality  and  accessible  mental  healthcare  services,  in  cooperation  with  the  social  welfare 
centres. (see also Chapter 28 – Consumer and Health Protection). 

On  the  rights  of  lesbian,  gay,  bisexual,  transgender  and  intersex  (LGBTI)  persons,  the 
four  criminal  codes  are  harmonised  to  include  hate  crimes  on  grounds  of  sexual  orientation 
and  gender  identity.  Sexual  orientation,  gender  identity  and  sex  characteristics  are  also 
explicitly  prohibited  grounds  for  discrimination  since  the  2016  amendments  to  the  law  on 
anti-discrimination.  The  Sarajevo  Canton  appointed  a  prosecutor  as  contact  person  for  hate 
crimes  on  grounds  of  sexual  orientation  and  gender  identity,  which  is  a  good  practice. 
However,  the  number  of  court  cases  on  these  grounds  is  negligible.  Same-sex  couples  are 
continuously  discriminated  against,  as  the  legal  system  fails  to  recognise  their  social  and 
economic  rights,  including  the  right  to  family  life.  The  social  inclusion  of  intersex  and 
especially transgender persons, who are particularly marginalised, also needs to be improved. 
The  prosecution  of  hate  crimes  and  hate  speech  against  LGBTI  persons  is  insufficient. 
Physical assaults have not led to indictments so far. However, law enforcement officials and 
members  of  the  judiciary  have  started  to  receive  training  on  LGBTI  issues.  Events  to  raise 
public  awareness  on  LGBTI  issues  take  place  regularly.  In  2018  the  Constitutional  Court 
recognised  that  the  authorities  had  violated  the  right  to  freedom  of  assembly  of  LGBTI 
persons and the prohibition of torture or inhuman or degrading treatment by failing to ensure 
the safety of the participants at  the 2014 Merlinka Queer Film  Festival  as well as failing to 
conduct  a  thorough  investigation  and  sanction  the  perpetrators  of  violence.  The  festival  has 
taken  place  regularly  since  2014  with  adequate  public  safety.  LGBTI  associations  report 
growing  difficulties  in  obtaining  permits  for  public  events;  in  May  2017  an  LGBT  march 
could not taking place because the public authorities failed to deliver the due permits on time. 

The  procedural  rights  of  suspects,  accused  persons,  witnesses  and  victims  include  the 
presumption  of  innocence,  access  to  a  lawyer,  right  to  information,  interpretation  and 
translation.  These  rights  are  enshrined  in  criminal  procedure  codes  and  other  legal  acts  and 
generally  upheld.  The  four  criminal  procedure  codes  in  the  country  are  largely  harmonised 
with  each  other.  Practice  is  not  fully  in  line  with  the  ECtHR  case-law  and  the  acquis 
concerning the right to immediate access to a lawyer while in police detention.   

53 

 
The lack of harmonisation of the country’s fragmented legal framework leads to differences in 
the protection of procedural rights across the country and to unequal access to justice based on 
place  of  residence.  Vulnerable  groups  such  as  victims  and  witnesses  in  war  crimes  cases, 
including sexual violence cases, face particular obstacles. The Constitutional Court identified 
systemic  deficiencies  in  the  organisation  of  the  judiciary  and  effective  exercise  of 
competences at different levels of government, leading to systemic violation of the right to a 
fair  trial  within  reasonable  time.  The  authorities  need  to  develop  and  implement  a 
comprehensive set of measures to address systemic violations of the right to a fair trial within 
a reasonable time and the right to an effective remedy. 

Without  comprehensive  coverage  and  clear  minimum  common  standards  for  legal  aid 
applicable to all levels  of  government  and for all type of proceedings, the right  to  legal  aid 
continues  to  be  upheld  inconsistently,  particularly  to  the  detriment  of  the  most  vulnerable 
groups. The Federation entity and the Central Bosnia canton need to adopt laws on legal aid. 
A  countrywide  assessment  of  legal  aid  needs  should  be  carried  out  to  determine  the  main 
gaps.  This  should  help  ensure  minimum  standards  and  effective  equal  access  to  justice  for 
everyone, irrespective of where they live. 

Respect for and protection of minorities and cultural rights 

The  rights  of  persons  belonging  to  minorities  are  guaranteed  by  the  Constitution.  The 
antidiscrimination  law  is  complemented  by  the  2003  Law  on  the  protection  of  the  rights  of 
members of national minorities, which commits the country to respect, protect, preserve and 
develop  the  ethnic,  cultural,  linguistic  and  religious  identity  of  the  17  recognised  national 
minorities. The entities also have their own laws on the protection of national minorities.  

In 2010, Bosnia and Herzegovina ratified the Council of Europe’s Framework Convention for 
the Protection of National Minorities (FCNM) and European Charter for Regional or Minority 
Languages.  The  Council  of  Europe’s  advisory  committee  on  the  framework  convention 
released its fourth opinion on Bosnia and Herzegovina in 2017. The advisory committee noted 
in particular the need to remove institutional discrimination to comply with the  Sejdić–Finci 
case-law of the ECtHR, and to overcome the practice of ‘two schools under one roof’. 

Bosnia  and  Herzegovina  does  not  have  a  countrywide  strategic  document  on  national 
minorities. The institutional framework is largely in place but its capacity to engage in policy-
making is limited. The Ministry of Human Rights and Refugees is in charge of implementing 
the  law  on  national  minorities,  as  well  as  of  supporting  awareness  raising  and  cultural 
promotion activities in cooperation with the representative associations of national minorities, 
to  whom  around  EUR  75,000  in  grants  are  allocated  annually.  The  Council  of  National 
Minorities  is  an  advisory  body  to  the  Parliamentary  Assembly  and  is  composed  of  one 
representative  from  each  recognised  national  minority.  Similar  councils  exist  in  the  two 
entities and in Sarajevo Canton. The authorities need to improve their cooperation to ensure 
that  members  of  national  minorities  are  able  to  enjoy  their  rights.  Members  of  national 
minorities continued to have a low presence and participation in political and public debates 
and in the media. The election law provides for a reserved seat in the municipal councils for 
representatives of minority groups comprising more than 3% of the local population. In 2018 
the Ombudsman received eight complaints concerning minority rights. 

There is no comprehensive data on the civil, political and socio-economic status of national 
minorities.  The  Agency  for  Statistics  has  not  released  disaggregated  data  on  all  recognised 
national  minorities.  In  the  2013  census,  3.6%  of  the  total  population,  i.e.  130,056  persons, 
declared affiliation to a group different from Bosniaks, Croats or Serbs, or no affiliation at all. 
Of these, the biggest group is the Roma. Other recognised national minorities are very limited 
in  numbers.  Bosniaks,  Croats  or  Serbs  who  live  in  a  minority  situation,  often  formerly 

54 

 
internally  displaced  persons  or  refugees,  also  face  discrimination  in  access  to  education, 
employment  and  social  rights,  and  are  often  target  of  ethnic-based  hate  speech  and  hate 
crimes. Their number is  not known. The law on national minorities does not grant them the 
protections  foreseen  by  the  FCNM.  As  regards  cultural  rights,  while  the  law  guarantees 
national  minorities  the  right  to  education  in  their  own  language  and  the  right  to  have  their 
history and culture included in the curricula, the availability of the ‘national group of subjects’ 
for Bosniaks, Croats or Serbs living in a minority situation is limited, as access thresholds are 
very high (18 minority pupils per class).  

The  Roma  are  the  most  vulnerable  and  disadvantaged  minority.  Roma  women  in  particular 
face multiple forms of discrimination. The social inclusion of the Roma population requires a 
more  comprehensive  and  integrated  approach  based  on  reliable  data.  Only  12,583  people 
identified  as  Roma  in  the  2013  census,  while  the  Council  of  Europe  estimates  there  to  be 
between 40,000 and 76,000 Roma in Bosnia and Herzegovina, with an average of 58,000. A 
Roma strategy has been in place since 2005; it is being implemented via the 2017-2020 Roma 
action plan on housing, employment and healthcare and the 2018-2022 action plan on Roma 
educational  needs.  These  action  plans  require  appropriate  financial  allocations  from 
competent  institutions  at  all  levels.  The  Ministry  of  Human  Rights  and  Refugees  allocates 
EUR 1.2 million  each  year to  fund Roma-related activities, matched by  funds  from  entities, 
cantons, and municipalities as  well as international  organisations, particularly  in  the area of 
housing.  A  Roma  Committee  acts  as  a  consultative  body  to  the  Council  of  Ministers  and 
manages  a  public  call  for  grants  to  Roma  associations  in  cooperation  with  the  Ministry  of 
Human  Rights  and  Refugees.  The  Roma  Committee  has  a  mixed  composition  of  11 
representatives of Roma associations and 11 representatives of public institutions, of which 3 
and 5 women respectively as of March 2017. The implementation of Roma inclusion policies 
needs to be regularly monitored by the relevant institutions, including the Roma Committee. 

Despite  recent  improvements,  housing  conditions  for  the  Roma  population  in  Bosnia  and 
Herzegovina are not  adequate, as many live in  informal settlements  without access  to  water 
and  electricity.  The  legalisation  of  settlements  is  ongoing  but  uneven.  The  Roma  face  the 
highest level of discrimination in employment opportunities and are almost completely absent 
from  the  workforce,  working  instead  in  the  informal  sector  or  remaining  without  means  of 
subsistence.  Their  unemployment  rate,  at  56%,  is  among  the  highest  in  the  Western  Balkan 
region and twice as high as that of non-Roma living nearby. Enrolment rates in compulsory 
education have increased over the last few years to 72%, but the number of school drop-outs 
is very high. The completion rate of compulsory education is 42%, less than half that of their 
non-Roma neighbours. There are very few Roma in secondary and higher education. Access 
of Roma to mainstream education in Bosnia and Herzegovina is rather good and there are no 
reports of segregated classes or schools. There is no teaching in and of the Romani language, 
and  awareness  of  Roma  culture  by  the  rest  of  the  population  is  very  limited.  Around  two 
thirds  of  Roma  have  access  to  healthcare  services,  which  depends  on  registration  with 
employment or education administrations. Children outside education and elderly Roma face 
the  biggest  hurdles.  As  a  result  of  the  good  cooperation  between  the  authorities  and  civil 
society  organisations,  the  process  of  civil  registration  of  the  Roma  population  is  almost 
complete: in 2018 the number of Roma persons without documents fell from some 300 to 83. 
This  accomplishment  needs  to  be  made  sustainable  by  removing  outstanding  administrative 
obstacles, including residence requirements for birth registration and for access to healthcare 
and  education  and  the  recognition  of  documents  for  children  born  abroad.  Prejudices  and 
formalistic attitudes still hinder the social integration of the Roma. 

Bosnia  and  Herzegovina  hosts  around  100 000  refugees  and  internally  displaced  persons 
following the conflict in the 1990s, of which 8 547 live in collective centres and alternative 

55 

 
accommodation.  The  Ministry  for  Human  Rights  and  Refugees  is  responsible  for  the 
coordination  of  inter-entity  return  activities.  In  2010,  the  Council  of  Ministers  adopted  a 
revised strategy for the implementation of Annex VII to the Dayton Peace Agreements. This 
strategy  includes  measures  to  meet  the  housing  needs  of  refugees  and  internally  displaced 
persons and close the collective centres, as well as measures to ensure access to economic and 
social rights, including employment opportunities, and unimpeded access to education, health, 
pensions  and  the  social  welfare  system.  Minority  returnees  are  among  the  most  common 
targets  of  ethnically-driven  hate  speech  and  hate  crimes.  Bosnia  and  Herzegovina  should 
complete the process of return and fulfil its obligations to allow closure of Annex VII. Bosnia 
and  Herzegovina  also  needs  to  provide  humanitarian  protection  (shelter,  food  and  medical 
assistance) and effective access to the asylum procedure to the migrants and asylum-seekers 
present in the country since 2018. (See also Chapter 24)  

EU citizens’ rights 

Bosnia  and  Herzegovina  will  have  to  amend  its  legal  framework,  including  its  Constitution 
and election laws, to  ensure  EU citizens’ rights  upon accession, including the  right  to  vote 
and stand as candidates in municipal and European Parliament elections. In terms of rights of 
residence  of  EU  citizens,  the  Law  on  Aliens  is  broadly  aligned  with  the  acquis.  The 
procedures on the establishment of an emergency travel document provided for in the Law on 
Official  Documents  are  in  line  with  the  acquis.  The  legislation  on  diplomatic  and  consular 
protection needs to be further aligned with the acquis. 

The  legislative  and  institutional  framework  on  fundamental  rights  is  largely  in  place;  it 
needs  to  be  fully  implemented  and  substantially  improved  by  harmonising  legislation 
throughout the country and aligning it with European standards, strengthening administrative 
capacities  and  providing  adequate  resources  for  the  effective  enforcement  of  fundamental 
rights.  

Significant reforms are needed to ensure that all citizens are able to effectively exercise their 
voting  rights  and  thus  bring  the  country’s  constitutional  and  legislative  framework  into  line 
with  the  Sejdić-Finci  case-law  of  the  ECtHR.  Divided  education  also  needs  to  be  ended, 
overcoming the practice  of ‘two schools under one roof’ and  ensuring inclusive and quality 
education  for  all.  Gender-based  violence,  ill-treatment  of  detainees  and  the  protection  of 
minorities, including the Roma, are also issues of concern. The country also needs to develop 
a comprehensive strategic framework on human rights and on the protection of minorities. 

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

  implement court rulings to put an end to divided education; 
  designate  the  national  preventive  mechanism  on  torture  and  ill-treatment  and  amend  the 

Law on the Human Rights Ombudsman; 

  align the legislation on data protection and on freedom of access to information with EU 

standards. 

1.2.2.  Chapter 24: Justice, freedom and security 

The EU has common rules for border control, visas, external migration and asylum. Schengen 
cooperation entails the lifting of border controls inside the EU. There is also cooperation in 
the  fight  against  organised  crime  and  terrorism,  and  judicial,  police  and  customs 
cooperation. 

Bosnia and Herzegovina has some level of preparation to implement the acquis in this area. 
The country has several strategies in place, notably on organised crime, trafficking in human 
beings  and  integrated  border  management.  Legislation  in  some  areas,  notably  on  foreigners 

56 

 
and asylum, is broadly aligned with the acquis. However, legislation is not harmonised across 
the  country,  and  institutional  cooperation  and  coordination  are  weak.  As  a  result, 
implementation  is  often  unsatisfactory.  Efforts  to  prevent  violent  extremism  and  to  counter 
terrorism need to be reinforced. Border and migration management capacities are insufficient 
and  coordination  among  institutions  across  the  various  levels  of  government  is  poor. 
Implementation  of  asylum  procedures  is  very  weak.  In  the  coming  year,  Bosnia  and 
Herzegovina should in particular: 

  improve capacity for countering terrorism through better cooperation and coordination, by 
enhancing the exchange of criminal intelligence, and establishing programmes to prevent 
radicalisation and facilitate disengagement from violent extremism; 

  ensure effective coordination of border control and migration management, and strengthen 

asylum  procedures to provide persons in need with international protection;  

  adopt  the  action  plan  to  allow  for  the  implementation  of  the  national  strategy  on 
supervision over narcotic drugs, prevention and suppression of the abuse of narcotic drugs 
for the period 2018-2023. 

Cooperation  in  the  area  of  justice,  freedom  and  security  makes  up  an  important  part  of  the 
SAA.  Title  VII  of  the  Agreement  establishes  cooperation  in  a  wide  range  of  areas,  notably 
border  management,  asylum  and  migration,  money  laundering  and  the  prevention  of 
organised crime. 

According to the constitutional and legal framework, the State has exclusive competence on 
asylum, migration, visa policy and border management. Other issues such as the fight against 
organised crime, drugs and terrorism are the responsibility of all levels of government. 

At state level, the main actors in this area are the Ministry of Security, the Ministry of Justice, 
the  Ministry  of  Foreign  Affairs,  and  the  relevant  law  enforcement  agencies.  At  entity  and 
cantonal  level,  ministries  of  interior  and  justice  as  well  as  law  enforcement  agencies  are  in 
place.  In  the  Brčko  District,  the  institutions  responsible  for  this  area  are  the  police  and  the 
Judicial Commission.  

The  Republika  Srpska  entity  contests  some  competences  of  the  state-level  Directorate  for 
Coordination of Police Bodies of Bosnia and Herzegovina with regard to international police 
cooperation.  

Fight against organised crime  

Bosnia and Herzegovina is at an early stage/has some level of preparation to implement the 
acquis  in  this  area.  The  country  has  several  strategies  in  place,  notably  on  combating 
organised crime and trafficking in human beings. However, the legal provisions at the various 
levels of government are not harmonised within the country. There are systemic shortcomings 
in  the  operational  cooperation  of  law  enforcement  agencies  and  a  very  limited  exchange  of 
intelligence.  Criminal  organisations  operating  in  the  country  take  advantage  of  legal  and 
administrative  loopholes.  The  police  is  vulnerable  to  political  interference.  Financial 
investigations  and  asset  seizures  are  largely  ineffective.  The  lack  of  National  Contact  Point 
for  cooperation  with  Europol  is  at  odds  with  the  authorities’  commitment  to  fight  serious 
crime.  In the coming year, Bosnia and Herzegovina should in particular: 

  strengthen  cooperation  among  law  enforcement  agencies,  notably  by  establishing 
specialised  multi-agency  investigation  teams  for  complex  cases  involving  economic 
crime,  corruption  and  organised  crime,  improving  mutual  access  to  databases  and  the 
secure exchange of information, strengthening financial investigations and establishing a 
firearms focal point;  

57 

 
  fully  implement  the  operational  cooperation  agreement  with  Europol,  notably  by 
appointing the national contact point, and sign the cooperation agreement with Eurojust; 
   demonstrate progress towards establishing a track record of investigations, prosecutions, 
final  convictions,  the  seizure  and  confiscation  of  proceeds  of  crime  in  organised  crime 
cases, with a particular focus on money-laundering.  

Institutional set-up and legal alignment 

The  institutional  structure  of  law  enforcement  mirrors  the  distribution  of  competences 
across the various levels of government. There are multiple distinct law enforcement bodies, 
out of which 15 have investigative powers: at the state level, there is the State Investigation 
and  Protection  Agency  and  the  Border  Police  within  the  Ministry  of  Security;  the  police 
bodies in the Republika Srpska entity, in the Federation entity, and in each of the ten cantons 
within their respective ministries of interior; and the Brčko District police. A Directorate for 
Coordination of Police Bodies of Bosnia and Herzegovina is established at the state level with 
responsibilities  also  for  international  police  cooperation,  but  does  not  have  operational 
investigative functions.  

Relations among law enforcement agencies are not based on the principle of subordination but 
on  cooperation.  Operational  cooperation  among  law  enforcement  agencies  is  based  on  the 
law, agreements and memoranda of understanding. However, cooperation is generally limited, 
notably with regard to the use of multi-agencies investigation teams. The scope, quality and 
accessibility of databases need to be significantly improved to ensure a more comprehensive 
and  timely  exchange  of  information.  Police  chiefs  are  appointed  by  independent  boards 
established  by  the  parliamentary  assemblies  of  the  respective  levels  of  government. 
Appointment procedures for senior management positions need to be improved to strengthen 
autonomy and professionalism. Prosecutors have the responsibility to lead investigations and 
coordinate  law  enforcement  agencies  in  that  context.  The  police  is  vulnerable  to  undue 
political interference in conducting investigations, including through their command chain or 
self-censorship. This may undermine the outcome of investigations. In this regard, there is a 
need  to  strengthen  police  accountability,  notably  through  the  more  effective  use  of  control 
powers by the prosecutors. Where different law enforcement bodies investigate a given case 
at the same time, the prosecutor in charge of the investigation decides which investigation is 
to be discontinued. The total number of police officers throughout the country is 16 845, out 
of  which  3  486  at  state  level,  5  498  in  the  Republika  Srpska  entity,  600  at  the  level  of  the 
Federation entity, 7 251 at  the cantonal level  and 250 in Brčko District.  Countrywide, there 
are 481 police officers per 100 000 inhabitants, compared with the EU average of 318 in 2016 
according  to  Eurostat.  The  total  number  of  vacant  positions  countrywide  is  2  170  (11,5%). 
Several units specialised in anti-terrorism, human trafficking, drugs, cybercrime and financial 
investigation are in place at state and entity level, though they do not have sufficient capacity. 
Asset management offices are in place in the two entities but not at the state level. This poses 
a serious problem for assets seized at state-level. There is no asset recovery office responsible 
for  facilitating  the  tracing  and  identification  of  proceeds  of  crime  and  other  crime  related 
property. This is an issue of concern. 

The legal framework on the fight against organised crime is only partly aligned with the 
acquis. Extended and third-party confiscation are possible under criminal legislation, but they 
are rarely implemented. Bosnia and Herzegovina needs to develop a more comprehensive and 
coherent  legal  framework  for  the  confiscation  of  proceeds  of  crime.  At  all  levels  of 
government, legislation on trafficking in human beings is broadly aligned with the acquis. 
Further  improvements  are  needed,  notably  regarding  sanctions.  Legislation  on  cybercrime, 
mostly within the remit of the entities and Brčko District, is partly aligned with the acquis. At 

58 

 
all levels of government, legislation on the civil possession of weapons is  partly aligned with 
the acquis and needs to be further improved, in particular regarding explosives and transport 
of dangerous goods.  

A  2017-20  strategy  for  combating  organised  crime  in  Bosnia  and  Herzegovina  has  been 
adopted by the Council of Ministers. Relevant institutions at the various levels of government 
have drawn up their action plans to implement the strategy. The findings of the serious and 
organised  crime  threat  assessment  (SOCTA)  need  to  be  translated  into  a  coherent  national 
security policy based on clear priorities. The 2016-2019 Action Plan for fighting trafficking 
in human beings is in place. The country lacks a strategic framework to address cybercrime.  
A strategy for control of small arms and light weapons (SALW) for 2016-20 is in place. 

Implementation and enforcement capacity 

In 2018, there were 56 investigations into organised crime, with 551 suspects, 26 indictments 
against  132  accused  and  25  sentences,  with  146  convictions.  There  is  an  increase  in 
investigations  in  cybercrime,  including  on-line  child  sexual  abuse.  In  2018  there  were  104 
investigations against 137 individuals, comparing 69 investigations against 81 individuals in 
2017.  However,  the  number  of  convictions  in  2018  is  very  low  (22  convictions  for  23 
individuals). Most of them were suspended sentences (16 convictions for 17 individuals). In 
2017 the number of convictions was 20, out of which 11 suspended sentences.    

An agreement on operational and strategic cooperation with Europol has been in force since 
March  2017.  However,  it  has  not  yet  been  fully  implemented  by  Bosnia  and  Herzegovina. 
Despite  several  requests  in  various  fora,  Bosnia  and  Herzegovina  authorities  have  failed  to 
establish  a  national  contact  point,  as  required  in  the  agreement.  This  is  a  matter  of  serious 
concern. The national contact point has to be appointed as a matter of priority. Currently the 
exchange  of  data  goes  through  the  Directorate  for  Coordination  of  Police  Bodies.  The 
Republika  Srpska  entity  has  suspended  transmitting  information  to  the  Directorate.  As  a 
consequence of the lack of a national contact point, Bosnia and Herzegovina cannot post its 
Liaison Officer to Europol headquarters in The Hague and the Europol Liaison Officer cannot 
be  deployed  to  Bosnia  and  Herzegovina.  In  2018,  Bosnia  and  Herzegovina  took  part  in  the 
annual planning of operational actions under the European Multidisciplinary Platform against 
Criminal Threats (EMPACT) priority on the facilitation of irregular immigration. The country 
committed to participate in three operational actions together with EU Member States to fight 
migrant smuggling criminal groups in 2019. The law enforcement authorities should make use 
of  regional  initiatives,  such  as  the  Joint  Operational  Office  in  Vienna,  which  serves  as  a 
regional  operational  platform  for  international  investigations  into  migrant-smuggling 
organised crime groups. 

A working arrangement with the EU Agency for Law Enforcement Training (CEPOL) is in 
force.  Cooperation  with  Interpol  takes  place  through  the  National  Contact  Bureau  in  the 
Directorate for Coordination of Police Bodies. The country is signatory to the Convention on 
Police Cooperation in Southeast Europe.  

Proactive investigations that start with intelligence-led policing are rare, compared with those 
launched on the basis of reports received. Police chiefs do not have operational control over 
financial  and  human  resources,  in  particular  in  a  number  of  cantons  and  in  the  Republika 
Srpska  entity.  This  affects  the  swift  re-deployment  of  police  personnel  to  support  specific 
needs.  Moreover,  the  fragmentation  of  the  law  enforcement  agencies  and  their  poor 
cooperation seriously affect the quality of investigations.  

Certain arrangements for practical cooperation between prosecutors’ offices and the police 
are  in  place,  but  require  structural  improvements  to  guarantee  a  more  effective  judicial 

59 

 
follow-up, also by building upon the strategic cooperation forums between the police chiefs 
and  the  chief  prosecutors.  Forensic  support  is  fragmented,  with  the  state  and  entities 
developing  their  own  individual  resources.  There  is  no  operational  countrywide  DNA 
database  and  the  DNA  profiling  capacity  is  limited.  There  is  no  swift  exchange  of  forensic 
data with  other countries. A new automated fingerprint information  system  (AFIS) needs to 
be  put  in  place  as  the  existing  one  is  outdated.  There  is  no  effective,  coordinated  and 
consistent countrywide approach on using undercover investigators. 

There is no overall policy for carrying out financial investigations on a systematic basis, and 
the results of investigations so far have been insignificant.  

The  value  of  asset  confiscations  in  2018  amounted  to  EUR  9.7  million  for  116  cases  (first 
instance  and  final  convictions).  The  system  for  collection  and  analysis  of  statistics  on  asset 
seizure  and  confiscation  needs  to  be  improved.  The  majority  of  confiscations  target  the 
properties used or intended to be used to commit a criminal offence, rather than the proceeds 
of the crime. The current tools for freezing, managing and confiscating criminal assets are not 
sufficiently effective. The confiscation of criminal assets needs to become a strategic priority 
in  the  fight  against  organised  crime,  terrorism  and  high-level  corruption.  Freezing  of  assets 
needs  to  be  used  more  systematically  and  the  management  of  frozen  assets  needs  to  be 
strengthened. Financial investigations into a person’s assets need to continue after a criminal 
conviction in order to fully execute a previously issued confiscation order.  

Bosnia  and  Herzegovina  is  a  country  of  origin,  transit  and  destination  for  trafficking  in 
human  beings  for  forced  begging,  sexual  exploitation,  labour  exploitation  and  forced 
marriages.  The  number  of  potential  victims  of  trafficking  in  human  beings  detected  in  the 
2018  was  36.  More  than  half  of  the  detected  potential  victims  are  children,  and  almost  two 
thirds of detected potential victims are women. In 2018, there were 48 convicted perpetrators 
and 36 victims compared with 17 convicted perpetrators and 83 victims in 2017. A task force 
coordinates  the  fight  against  trafficking  in  human  beings  for  the  whole  country.  It  operates 
smoothly, but its legal status needs to be better defined and its role strengthened. Bosnia and 
Herzegovina  needs  to  improve  its  technical  capacities  for  swift  reaction  to  trends  in 
trafficking  in  human  beings  on  the  basis  of  risk  analysis  and  intelligence  gathering.  The 
relevant  agencies  need  to  have  better  defined  competences  and  must  cooperate  more 
efficiently. Prosecutors and law enforcement officers needs to be better trained at recognising 
and  prosecuting  trafficking  in  human  beings  also  through  effective  financial  investigations 
and  work  towards  ensuring  convictions.  Evidence  gathering  and  evidentiary  proceedings  in 
court  trials  should  be  standardised.  On  the  prevention  side,  significant  efforts  are  needed  to 
prevent child trafficking, including through social services taking a more proactive role. Re-
integrating  child  victims  into  their  families  requires  careful  monitoring  to  prevent 
re-victimisation.  Bosnia  and  Herzegovina  must  develop  a  comprehensive,  multidisciplinary 
and  victim-oriented  approach  to  better  identify  and  protect  victims,  especially  children. 
International cooperation should also be stepped up in particular through a more active use of 
joint investigation teams and joint operations. 

As regards trafficking of firearms, in 2018 a total of 1 221 pieces of weapons, 302 pieces of 
mine-explosive materials, 39 188 pieces of ammunition, 125 weapons parts, and 50 500 kg of 
explosives were seized and a total of 2 500 pieces of weapons and weapons parts pieces were 
destroyed.  This compares with 2 500 pieces destroyed in 2016, and 10 800 pieces destroyed 
in 2017. The implementation of the strategy for the control of small arms and light weapons 
needs  to  be  improved.  Bosnia  and  Herzegovina  has  not  adopted  an  action  plan  for  the 
implementation  of  the  roadmap  for  a  sustainable  solution  to  arms  control  in  the  Western 
Balkans.  The  State  Coordinator  in  the  Ministry  of  Security  and  the  Coordination  Board  for 
control  of  small  arms  and  light  weapons,  which  is  composed  of  representatives  from  the 

60 

 
relevant  law  enforcement  institutions  and  state  level  ministries,  cooperate  with  relevant 
domestic institutions and international organisations to improve control over small arms and 
light  weapons  and  to  destroy  seized  weapons.  However,  Bosnia  and  Herzegovina  has  not 
established  a  firearm  focal  point  bringing  together  administrative  control,  intelligence, 
enforcement and forensics.  

The country’s capacity to combat cybercrime, including addressing online child sexual abuse 
material  and  to  effectively  respond  to  cyber  security  threats,  is  inadequate.  The  law 
enforcement authorities must respond more effectively to cybercrime, and focus more on the 
detection, traceability and the prosecution of cyber criminals. 

As  regards  anti-money  laundering,  since  February  2018  Bosnia  and  Herzegovina  is  no 
longer  on  the  Financial  Action  Task  Force  (FATF)  list  of  high-risk  third  countries  with 
structural  deficiencies  in  anti-money-laundering/counter  terrorism  financing.  Bosnia  and 
Herzegovina remains on the EU list of high-risk countries. (see Chapter 4 - Free movement of 
capital) 

The Financial Investigation Unit within the State Investigation and Protection Agency (SIPA) 
needs to be more efficient. Cooperation and exchange of crime-related data between domestic 
law  enforcement  agencies  and  with  other  countries  of  the  region  need  to  be  improved.  In 
2018, there were 65 reports  involving 237 individuals, 13 indictments  confirmed against 22 
suspects, and 11 convictions against 13 defendants. 

A  witness  protection  programme  is  in  place.  However,  cooperation  between  the  witness 
protection unit and other law enforcement agencies needs to be strengthened. There is also a 
need to improve the mechanism for the designation of witness status, especially in the area of 
out-of-process protection. The specialised witness protection unit has insufficient human and 
technical resources.  

Proactively  fighting  organised  crime  and  corruption  is  fundamental  to  countering  criminal 
infiltration of the political, legal and economic systems. 

Cooperation in the field of drugs 

Institutional set-up and legal alignment 

The  legal  framework  for  the  fight  against  drugs  in  Bosnia  and  Herzegovina  consists  of 
specific  legislation  at  the  state  level  as  well  as  of  provisions  in  the  criminal  codes  at  the 
various  levels  of  government.  Bosnia  and  Herzegovina  is  party  to  the  relevant  international 
narcotic  drug  control  conventions.  Current  legislation  is  only  party  in  line  with  the  acquis. 
Minimum rules on drug-related criminal offences and sanctions need to be harmonised. 

Bosnia  and  Herzegovina  does  not  have  a  National  Drugs  Observatory  and  a  National  Early 
Warning System on psychoactive substances. There is  a Commission  for the suppression of 
abuse of narcotic drugs. It is composed of the Minister of Civil Affairs, entity level ministers 
competent  for  health  affairs  and  the  responsible  official  in  the  Brčko  District,  as  well  as  a 
representative of the Ministry of Security. This body meets very rarely. Its functions need to 
be clarified. The department for the suppression of abuse of narcotic drugs of the Ministry of 
Security,  with  its  four  staff  members,  is  in  charge  of  the  policy  on  drugs  and  cooperation 
between various authorities in the field of drugs and is entrusted with the overall coordinating 
role in the country. Coordination of the various agencies needs to be improved, in particular 
by better defining their reporting obligations.  

A  national  strategy  on  supervision  over  narcotic  drugs,  prevention  and  suppression  of  the 
abuse of narcotic drugs for the period 2018-23 is in place. However, there is no corresponding 
action plan to make the strategy fully operational. Implementation of the strategy is entrusted 

61 

 
to  the  Commission  for  the  suppression  of  abuse  of  narcotic  drugs.  The  Republika  Srpska 
entity has its own strategy on supervision over narcotic drugs, prevention and suppression of 
the abuse of narcotic drugs for the period 2016-21, with an action plan in place.  

Implementation and enforcement capacity 

In 2018 there were 2 205 reported crimes related to drug abuse, 1 753 confirmed indictments 
1 753, and 1 485 convictions, out of which 340 convictions of imprisonment.   

Bosnia  and  Herzegovina  is  a  country  of  transit  of  drugs  into  Western  Europe  and  a  final 
destination for drugs. A wide range of narcotic drugs can be found on the black market which 
is dominated by products of cannabis, heroin and synthetic drugs. Marijuana plantations and 
artificial laboratories for the production of marijuana have been found in different parts of the 
country and the production of synthetic drugs has increased. The main drugs seized in 2018 
were marijuana (508.5 kg, up from 93.8 kg in 2017), amphetamine (17.1 kg, up from 7.9 kg), 
cannabis  (9.6  kg,  up  from  9.4  kg)  and  heroin  (3.3  kg,  down  from  12.9  kg).  The  list  of 
psychoactive  substances  is  outdated.  There  is  a  need  to  introduce  a  flexible  mechanism  to 
update this list regularly. Professional capacity needs to be improved, including on emerging 
trends such as online drug markets. Cooperation with civil society needs to be strengthened. 
More  funding  is  needed  for  prevention  and  suppression  of  the  abuse  of  narcotic  drugs, 
including  the  development  of  appropriate  programmes  for  harm  reduction  and  social 
reintegration of drugs addicts. 

Bosnia  and  Herzegovina  cooperates  with  the  European  Monitoring  Centre  for  Drugs  and 
Drugs  Addiction  (EMCDDA).  The  Ministry  of  Security  department  for  the  suppression  of 
abuse  of  drugs  acts  as  national  correspondent  for  cooperation  with  EMCDDA.  It  is 
responsible  for  systematically  gathering  data  and  monitoring  phenomena,  collecting  and 
processing  data  required  for  preventing  and  combating  illicit  drug  trafficking.  Since  July 
2017, Bosnia and Herzegovina authorities use the EMCDDA standard data collection tool for 
drugs seizures. In 2018, the authorities reported one first-time detection of a new psychoactive 
substance to the EMCDDA. 

A  Commission  for  drugs  destruction  is  in  place  but  destruction  of  drugs  takes  place  very 
rarely – only four times since 2012. The lack of secure storage for drugs and drug precursors 
prior to destruction is an issue of concern. The legislation provides for the entire quantity of 
drug  seized  to  be  preserved  as  material  evidence  for  court  proceedings,  rather  than  just  a 
sample. 

Fight against terrorism 

Institutional set-up and legal alignment 

A  Counter  Terrorism  Task  Force  and  its  operational  group  are  in  place  and  should  be 
formalised. The operational group meets with the aim of sharing information and coordinating 
the  actions  of  the  different  security  and  intelligence  agencies.  The  counter-terrorism 
department  of  the  Bosnia  and  Herzegovina  Prosecutor’s  Office  requires  systematic  capacity 
building. 

Bosnia and Herzegovina’s anti-terrorism legislation is largely aligned with the acquis and the 
relevant international law. State and entity legislation has started to be implemented. Further 
amendments to criminal legislation need to be adopted without delay, in particular related to 
stricter sanctioning of travelling abroad for terrorist purposes as well online terrorist content.  

A  strategy  for  the  prevention  and  fight  against  terrorism  for  2015-2020  as  well  as  an 
accompanying  framework  action  plan  are  in  place.  A  supervisory  body  oversees  the 
implementation of the strategy.  

62 

 
A  policy  dialogue  on  counter-terrorism  between  the  EU  and  Bosnia  and  Herzegovina  takes 
place  regularly.  It  focusses  on  the  implementation  of  the  strategic  framework  and  internal 
coordination – in particular on the a prevention of violent extremism, appropriate sentencing 
for  foreign  terrorist  fighters  and  their  subsequent  social  re-integration,  on  arms  trafficking, 
border  control,  terrorism  financing,  and  regional  and  international  cooperation  on  the  full 
implementation of the agreement with Europol as well as the conclusion of an agreement with 
Eurojust.  Bosnia  and  Herzegovina  needs  to  make  further  sustained  efforts  to  address  these 
issues.  In  October  2018,  Bosnia  and  Herzegovina  signed  the  Joint  EU-Western  Balkans 
Action Plan on Counter-Terrorism, which sets out concrete steps for enhanced cooperation in 
countering  terrorism  and  preventing  radicalisation  over  the  next  two  years.  Bosnia  and 
Herzegovina has shown commitment to implement it. 

Implementation and enforcement capacity 

From 2012 to 2015, the country had a significant number of its citizens travelling to foreign 
battlefields in Syria and Iraq. 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  diaspora.  The  authorities’  efforts  have  contributed  to 
stop  departures  to  foreign  battlefields  since  then.  According  to  research  analysis  based  on 
sources  from  competent  domestic  institutions,  98  adult  Bosnians  (49  men  and  49  women) 
were believed to be still in Syria and Iraq at the end of 2018.  

Out of the 50 returned foreign terrorist fighters, 25 were indicted and subsequently convicted 
for terrorism-related offences. However, sentences were often lenient and frequently based on 
plea  bargains.  Twelve  returned  foreign  terrorist  fighters  were  sentenced  to  one-year 
imprisonment, with at least one of these having converted their sentences into fines. The rest 
received sentences of up to three years. The leniency of sentences, combined with the absence 
of a probation service or any systematic disengagement or reintegration assistance, is a source 
of concern.  

Shortcomings  still  exist  regarding  the  implementation  of  counter-terrorism  laws  as  well  as 
structured  and  efficient  cooperation  between  competent  agencies  at  the  various  levels  of 
government. Terrorists sentenced by the Court of Bosnia and Herzegovina serve their terms in 
entity prisons that are often inadequate to hold this type of prisoners. The high-security state 
prison completed in 2017, which was designed to accommodate also this type of inmates, is 
not in function due to the delayed appointment of the prison management and recruitment of 
the staff. This is a matter of concern.  

The  country’s  capacity  to  investigate  and  prosecute  financing  of  terrorism  and  to  counter 
terrorist content online needs to be further developed. Operational cooperation with Europol is 
seriously hampered by the lack of a national contact point. Spots of radicalisation have been 
identified in certain locations in the country, in particular in the Wahhabi communities.  

As regards prevention, a multi-agency approach for prevention of radicalisation is described 
in  the  strategic  documents  of  Bosnia  and  Herzegovina  but  it  needs  to  be further  developed. 
There  are  no  assistance  mechanism  for  disengagement  from  violent  extremism  and  for 
resocialisation. There is no reintegration programmes for family members of foreign terrorist 
fighters.  Institutions  at  various  levels  of  government  in  the  area  of  labour,  social  welfare, 
education, youth and health as well as the civil society need to be more effectively included in 
preventive efforts. Bosnia and Herzegovina is actively participating in the implementation of 
the Western Balkan Counter Terrorism Initiative (WBCTi). 

Legal and irregular migration  

Institutional set-up and legal alignment 

63 

 
Migration  policy  falls  within  the  exclusive  competence  of  the  state-level.  The  Service  for 
Foreigners’  Affairs  of  the  Ministry  of  Security  is  in  charge  of  the  ‘in-land’  migration 
management  in  the  border  zone.  Based  on  official  data,  it  is  significantly  understaffed  by 
around 22% and is inadequately equipped. The Sector for Immigration is understaffed as well. 
Bosnia and Herzegovina has a Coordination Body to follow migratory trends, which may act 
as  operational  headquarters  in  case  of  crisis  with  the  participation  of  authorities  from  the 
entities and Brčko District. Institutions also at other levels of government have responsibilities 
in specific areas related to management migration, including health and social services. 

The  legislation  on  foreigners  is  broadly  in  line  with  the  acquis.  It  provides  in  particular  for 
non-refoulement  principle,  residential  status  of  foreign  seasonal  workers  and  maximum 
detention  time  for  irregular  migrants  in  detention  centres.  The  legal  framework  needs  to  be 
further aligned regarding migrants’ access to rights, notably for vulnerable migrants. 

Bosnia  and  Herzegovina  has  readmission  agreements  with  the  EU  (in  force  since  January 
2008)  as  well  as  with  the  Western  Balkans  (except  Kosovo),  and  with  Turkey.  It  has 
implementing protocols with 14 EU Member States. Negotiations on additional readmission 
agreements with countries of high migratory risk have not started.  

The strategy and its action  plan  on migration and asylum for the 2016-2020 period are in 
place and implemented. The strategy defines areas for improvement, such as the fight against 
human  trafficking,  identification  and  registration  of  foreigners,  biometric  data  exchange, 
engagement  of  migration  liaison  officers  and  migration  crisis  management.  Bosnia  and 
Herzegovina needs a realistic contingency plan. 

Implementation and enforcement capacity 

In 2018, the number of people detected while irregularly crossing the border was 23 977. This 
is  a  very  significant  increase  compared  with  767  in  2017  and  218  in  2016.  In  2019,  so  far 
6 201 arrivals were detected, which is the double compared to the same period in 2018 to the 
same  period  of  2018.  Pakistan,  Iran  and  Syria  are  overall  top-three  declared  countries  of 
origin  of  arriving  refugees  and  migrants  since  2018.  The  estimated  number  of  migrants 
present  in  Bosnia  and  Herzegovina  is  approximately  6  400.  There  are  reports  of  violent 
collective expulsion of migrants and asylum seekers back into Bosnia and Herzegovina.  

The response to the increased migratory flow shows significant institutional and coordination 
weaknesses.  Political  inaction  and  negative  rhetoric  undermine  the  timely  provision  of 
assistance, primarily in the areas of access to asylum procedure, provision of accommodation 
and  basic  services  in  line  with  international  standards,  and  access  to  healthcare.  The 
authorities of the Una-Sana Canton have introduced restriction on the number of migrants in 
the  canton  and,  as  reported  by  international  organisations,  have  been  conducting  forced 
disembarkation of migrants at the cantonal borders and restricted their movements. In several 
cases,  the  authorities  did  not  allow  accommodating  migrants  and  asylum  seekers  in  the 
established facilities, thus leading to significant protection risks.  

The Coordination Body is not functioning effectively. It does not have the power to enforce 
decisions. It has proven unable to allocate suitable premises for reception centres and relocate 
asylum seekers and migrants, thus alleviating the burden on the areas mostly affected by the 
migratory flow. Operational coordination mechanisms need to be strengthened significantly.  

Due  to  the  very  limited  capacity  of  the  immigration  centre  (120  beds),  temporary 
accommodation centres were set up with EU support, notably in the Una-Sana Canton and to 
a  lesser  extent  in  the  Sarajevo  Canton,  providing  accommodation  to  around  4,000  persons, 
among  which  30%  are  families  with  children,  10%  are  unaccompanied/separated  children, 
and 1% are single women.  In March 2019, the Council of Ministers decided to take over the 

64 

 
responsibility of the reception facilities in the Una-Sana Canton. However, this decision has 
not been implemented. The authorities need to identify appropriate additional accommodation 
capacities.  Particular  attention  needs  to  be  paid  to  vulnerable  groups  of  migrants,  such  as 
unaccompanied  and  separated  children,  pregnant  women,  single  parents,  persons  with 
disabilities, sick persons and victims of violence. They need to be identified and referred to 
competent  bodies  to  receive  assistance  and  services  in  line  with  international  standards. 
Unaccompanied  children  must  have  access  to  legal  guardianship.  School  enrolment  of 
children needs to be further facilitated. The authorities need to take more effective measures 
to combat migrant smuggling.  

The  number  of  third-country  nationals  returned  to  Bosnia  and  Herzegovina  in  2018  under 
various  readmission  agreements  was  652  compared  with  324  in  2017.  In  2018,  Bosnia  and 
Herzegovina  authorities  returned  670  foreign  citizens  compared  with  358  in  2017.  Return 
mechanisms  to  the  countries  of  origin  require  additional  improvement,  especially  regarding 
voluntary  return  of  foreign  nationals  from  Bosnia  and  Herzegovina.  In  this  respect,  the 
country  has  been  repeatedly  encouraged  to  conclude  bilateral  readmission  agreements  with 
the main countries of origin of irregular migrants.  

The implementation  of the readmission agreement  with  the EU is  satisfactory. The absolute 
number  of  citizens  of  Bosnia  and  Herzegovina  returned  from  EU  Member  States  decreased 
from 4 025 in 2015 to 3 730 in 2016 and 2 660 in 2017, while the return rates are stable at 
74.8%,  74.6%  and  72.7%  respectively.  In  the  context  of  the  increased  migratory  flow,  the 
implementation  of  the  readmission  agreements  with  neighbouring  countries  concerning 
third-country  nationals  has  been  challenging.  According  to  official  data  450  persons  were 
readmitted from  Bosnia  and Herzegovina to  Serbia (275 through regular  procedure and 175 
through accelerated procedure), while 193 persons were admitted from Bosnia Herzegovina to 
Montenegro (143 through regular procedure and 50 through accelerated procedure). 

Asylum 

Institutional set-up and legal alignment 

Asylum policy falls within the exclusive competence of the state-level authorities. The Sector 
for  Asylum  of  the  Bosnia  and  Herzegovina  Ministry  of  Security  handles  first  instance 
decisions.  Inter-agency  cooperation  needs  to  be  further  improved  to  ensure  appropriate 
coordination and cooperation.  

Legislation on asylum is broadly in line with the EU acquis, notably on improved reception 
standards and rights of asylum applicants such as right for employment, secondary education, 
psychological  and  social  aid,  reunification  of  families  and  subsidiary  protection.  Further 
alignment is needed in particular on interview techniques, access to rights and legal aid.  

Implementation and enforcement capacity 

In 2018, the authorities registered 22 499 asylum intents, while only 1,567 persons chose or 
managed to  apply for asylum.  This  compares with  381 persons who lodged applications for 
international  protection  in  2017.  In  2018,  475  applications  by  659  individuals  were  closed 
with  2  applications  by  4  individuals  were  granted  the  status  of  subsidiary  protection  whilst 
473 applications by 655 individuals were rejected on merit or discontinued as the applicants 
left or attempted to leave the country or failed to show up for an interview. The remaining 482 
applications by 909 individuals were still being processed at the end of 2018. There have been 
no refugee status recognitions since 2014. 

There  are  serious  obstacles  to  an  effective  access  to  asylum  procedures.  The  Asylum 
Department  has  very  limited  human  resource  and  operational  capacities,  which  are 

65 

 
inadequate to address the increased influx of asylum seekers and ensure access to the asylum 
procedure including in the area of the countries were most asylum seekers are present. There 
is  in  particular  an  insufficient  number  of  registration  sites  and  interviewers.  Interpretation 
services  are  mainly  based  on  outsourcing  agreements.  There  is  also  a  lack  of  cultural 
mediators. Staff needs to be better trained to ensure the respect of international standards and 
procedural safeguards. The implementation of the asylum legislation needs to be improved, in 
particular to ensure the systematic respect of procedural guarantees for asylum-seekers. The 
enjoyment of rights of asylum seekers is uneven across the country, as the access to services 
varies depending on the centres’ location. The access to asylum procedures and mechanisms 
should be strengthened to ensure faster processing of claims and provide persons in need with 
international protection. As the authorities have not yet taken over the legal responsibility for 
the  reception  centres  in  the  Una-Sana  Canton,  these  are  not  recognised  as  valid  residential 
addresses  for  asylum  applications.  Consequently,  the  applicants  fall  in  a legal  limbo,  which 
entails significant protection risks. 

The  technical  infrastructure  and  IT  network  of  Bosnia  and  Herzegovina’s  diplomatic  and 
consular offices  abroad require further improvement. There is insufficient exchange of data, 
especially biometric, used for identification and registration of migrants is inadequate.  

The Asylum  Centre has a  capacity of 154 beds  which can be expanded  to  300 beds in  the 
event of need. The centre is managed by the Sector for Asylum of the Ministry of Security. In 
spite  of  the  increased  influx  of  asylum  seekers,  the  accommodation  capacity  is  not  fully 
used, mainly due to its remote location and poor access. 

Cooperation with the European Asylum Support Office (EASO) needs to be strengthened. 
Bosnia and Herzegovina does not have an agreement with the EASO.  

Visa Policy 

Visa policy falls with the exclusive competence of the state-level authorities. Legislation on 
visa is broadly in line with the acquis. Application processing, criteria and issuing processes 
for  different  types  of  visas  satisfy  EU  minimum  standards.  The  list  of  third  countries  with 
which  Bosnia  and  Herzegovina  maintains  visa-free  regimes  is  mostly  in  line  with  the 
countries  listed  by  the  EU  except  for  Azerbaijan, Bahrain,  Kuwait,  Oman,  Qatar,  Turkey, 
Russia and China. Bosnia and Herzegovina should take concrete steps to  fully align its visa 
policy with the EU visa policy. 

Security  features  of  visas  and  travel  documents  are  broadly  aligned  with  EU  standards. 
Bosnia  and  Herzegovina  has  improved  the  security  of  its  travel  documents  by  introducing 
biometric  passports  with  supplemental  access  control  since  October  2014.  However,  the 
control  over  passport  procurement  and  issuing  processes  requires  additional  improvement. 
Bosnia and Herzegovina has no  technical capacities for gathering biometric data from  visa 
applicants.  It  keeps  a  database  on  issued  and  rejected  visas.  The  system  functions  in  the 
country  and  all  diplomatic-consular  offices  abroad.  The  issuing  of  visas  at  the  border  is 
limited to exceptional circumstances.  

Bosnia  and  Herzegovina  has  an  agreement  on  consular  and  visa  issuing  cooperation  with 
Montenegro  in  force  as  of  1  January  2016.  It  has  no  joint  locations  or  representation 
agreements on visa issuing with third countries.  

The  implementation  of  the  visa-free  regime  with  the  EU  is  smooth.  There  has  been  a 
decreasing  trend  of  abuse  of  the  visa-free  regime  by  unfounded  asylum  applicants  from 
Bosnia and Herzegovina in the EU and Schengen associated countries. The country has made 
significant  efforts  in  border  control  and  raising  public  awareness  on  negative  effects. 
Increased attention should be given to a successful reintegration of returnees. This applies in 

66 

 
particular to the most vulnerable, such as Roma, which represent a high proportion of returns. 
Coordination  among  all  levels  of  government  need  to  be  enhanced  to  strengthen 
implementation  and  improve  monitoring.  Cooperation  with  international  organisations  and 
NGOs active in the reintegration of returnees needs to be stepped up. 

Schengen and external borders  

Institutional set-up and legal alignment 

The state-level  Border  Police  is  responsible for managing the state border.  Border control 
legislation is partly aligned with the EU/Schengen acquis.  

The strategic framework on Integrated Border Management (IBM) is partly aligned with the 
EU  policy  and  best  practices  and  requires  further  alignment.  Its  implementation  requires 
further  improvements  in  terms  of  human  resources,  technical  equipment,  infrastructure, 
effective returns and risk analysis. Bosnia and Herzegovina has an IBM Annual Action Plan 
in place. The Border Police has its own strategy, and its implementation is satisfactory. 

Implementation and enforcement capacity 

Capacities  of all  IBM  agencies are insufficient  due to  the lack of appropriate infrastructure 
and  human  and  technical  resources.  Border  police  has  around  400  vacant  positions, 
amounting to around 14% of its personnel capacity. In particular, more personnel needs to be 
recruited in the areas of border surveillance, border checks, identification and registration. 

Border  checks  satisfy  minimum  standards.  There  is  a  need  for  additional  technical  and 
human  resources  for  improving  the  quality  of  border  checks.  Expertise  on  detection  of 
forgeries  is  satisfactory.  A  low  number  of  forged  documents  has  been  detected.  A  vehicle 
registration  plates  readers  system  does  not  exist  and  would  require  substantial  investments. 
The  implementation  of  the  local  border  traffic  agreements  with  neighbouring  countries  is 
satisfactory.  Border  checks  are  inefficient  in  detecting  firearms  trafficking,  in  stark  contrast 
with the higher number of firearms seizures inside the country.  

Border  Surveillance  resources  are  very  limited  and  require  substantial  improvements.  The 
supervision  of  the  green  borders  (outside  the  border  crossing  points)  is  not  effective.  The 
number  of  border  patrols  is  insufficient  also  in  view  of  the  length  of  the  border.  Risk 
analysis led border surveillance requires further improvement.  

Border crossing infrastructure belongs to the Indirect Tax Administration. Further efforts are 
needed  to  clarify  the  jurisdiction  over  border  infrastructure  with  regard  to  ownership  and 
usage.  Border  infrastructure  requires  significant  improvements  given  that  a  number  of 
international border crossings do not meet minimum EU standards, especially the ones on the 
border  with  Serbia.  Adequate  offices,  passport  control  booths,  vehicle  access  lanes  and 
technical  surveillance  systems  covering  border  crossings  need  to  be  improved  urgently. 
Second-line  check  infrastructure  is  poor  and  requires  substantial  improvement.  Joint 
locations  and  joint  border  crossing  points  with  neighbouring  countries  needs  to  be  further 
improved. 

Inter-agency cooperation is satisfactory, such as that between the border police and customs 
at  the  border  crossing  points,  but  improvements  are  needed  on  information  exchange,  joint 
investigations  and  sharing  of  resources.  The  Central  Investigation  Office  of  the  border 
police  has  police  executive  powers  throughout  the  country  but  its  operational  capacity  is 
limited due to a lack of equipment and staff.  

Risk  analysis  in  the  Border  Police  aims  to  gradually  comply  with  the  Common  Integrated 
Risk  Analysis  Model  (CIRAM)  II  methodology.  The  Joint  Risk  Analysis  Centre  develops 

67 

 
border-related risk analysis but requires further improvements in inter-agency data exchange. 
Bosnia and Herzegovina participates in the Western Balkans Risk Analysis Network.  

In-land  measures  and  fight  against  cross-border  organised  crime  requires  improvement  in 
investigations  and  prosecution  of  criminal  offences.  Fighting  trafficking  in  human  beings, 
migrant  smuggling,  firearms  trafficking  and  terrorism  require  more  efficient  delineation  of 
jurisdictions  and  competences.  Exchange  of  crime-intelligence  and  biometric  data  requires 
significant  improvements.  Bosnia  and  Herzegovina  lacks  an  efficient  Advanced  Passenger 
Information/Passenger  Name  Record  (API/PNR)  system  for  further  alignment  with  the 
EU/Schengen acquis and standards.  

The training curriculum of the Border Police is  not  yet  fully harmonised with  the common 
core curriculum of the European Border and Coast Guard Agency (EBCGA).  

Cooperation  with  European  Border  and  Coast  Guard  Agency  (EBCGA)  and 
implementation of the working agreement signed in 2009 are satisfactory. Negotiations on a 
model  status  agreement  between  Bosnia  and  Herzegovina  and  the  EU  on  the  EBCGA  have 
been concluded, but the agreement has not yet been signed.  

On  international  cooperation,  Bosnia  and  Herzegovina  has  a  number  of  agreements  with 
neighbouring countries, including on joint patrols, joint cooperation centres and local border 
traffic. The Joint Centre for Police Cooperation with Serbia and Montenegro in Trebinje is 
in  function,  but  with  limited  capacity.  There  is  also  a  Joint  Contact  Centre  with  Croatia. 
Local  border  traffic  agreements  are  operational  with  Croatia,  Montenegro  and  Serbia. 
Locations suitable for illegally crossing the border with Croatia, Serbia and Montenegro have 
been closed. The 2016 border agreement with Montenegro is implemented smoothly. 

Some measures are in place to fight corruption on the border, in particular video surveillance 
systems  on  all  border  crossings  and  a  free  hotline  for  citizens’  complaints  for  reporting 
corruption cases. However, more efforts are needed to achieve concrete results.  

Crisis  response  mechanisms  related  to  border  control  are  weak  and  require  significant 
improvements.  Increased  migratory  influx  into  Bosnia  and  Herzegovina  in  2018  revealed 
deficiencies and lack of coordination among levels of government. The Ministry of Security 
failed to ensure effective coordination and provide adequate border surveillance, registration 
and  identification  of  migrants.  The  issue  has  been  exacerbated  by  the  lack  of  proper  risk 
analysis, crime intelligence and exchange of biometric data.  

Judicial cooperation in civil and criminal matters 

The legislative framework for mutual legal assistance in civil and criminal matters is in place 
but is not always applied effectively. Mutual assistance in criminal matters is regulated by a 
state-level law as well as in the criminal procedure codes at all levels of government.  

The  Ministry  of  Justice  of  Bosnia  and  Herzegovina  is  competent  for  the  implementation  of 
legislation and compliance with conventions relative to international judicial cooperation and 
plays  a  coordinating  role  among  other  relevant  authorities  in  the  country.  The  Ministry 
maintains  centralised  records  and  statistics  on  the  processing  of  requests  for  mutual  legal 
assistance.  Bosnia  and  Herzegovina  is  a  signatory  to  a  number  of  bilateral  and  multilateral 
agreements on mutual assistance in civil and criminal matters and on mutual enforcement of 
court  decisions,  the  most  important  being  the  second  Additional  Protocol  to  the  European 
Convention  on  Mutual  Assistance  in  Criminal  Matters,  allowing  for  a  more  direct  cross 
border cooperation.  

68 

 
In  2017  and  2018,  the  Ministry  of  Justice  recorded  a  total  of  9  068  requests  for  judicial 
cooperation  in  civil  matters.  It  is  estimated  that  70%  of  them  originate  from  EU  Member 
States (6 350), primarily Croatia, Slovenia, Germany, the Netherlands and Sweden. 

Foreign judicial decisions are legally enforceable in Bosnia and Herzegovina if recognised by 
a  competent  court  in  Bosnia  and  Herzegovina.  For  the  period  2017-18,  the  statistics  on 
enforcement  of  foreign  judgments  have  slightly  increased  (1  727  incoming  cases  compared 
with 1 604 in 2017) while the completion cases rate as remain stable at 88%.  

International standards are interpreted differently by courts throughout the country, the result 
of  which  is  inconsistent  implementation  of  international  standards  by  authorities  at  the 
different levels of government cooperation. 

Bosnia  and  Herzegovina  is  a  signatory  to  a  number  of  international  treaties  governing 
extraditions.  It  has  signed  treaties  on  extradition  of  its  own  nationals  with  all  neighbouring 
countries, except those nationals accused for the criminal offences of genocide, crimes against 
humanity and war crimes. 

The  country  needs  to  accede  to  several  instruments  developed  within  the  framework  of  the 
Hague  conference  on  private  international  law.  In  the  Ministry  of  Justice  there  is  a  contact 
point  for  relations  with  Eurojust.  Bosnia  and  Herzegovina  does  not  have  a  cooperation 
agreement  with  Europol.  With  a  view  to  start  negotiating  this  agreement,  Bosnia  and 
Herzegovina needs to revise the Law on personal data protection in line with the acquis and 
strengthen  the  operational  capacity  of  the  Personal  Data  Protection  Agency.  Moreover,  the 
Prosecutor’s Office of Bosnia and Herzegovina needs to adopt by-laws to better define how 
parties to a cases can access their personal data, notably via the Prosecutor’s Office website. 

All aspects of customs cooperation are now covered under Chapter 29 – Customs union. 

69 

 
2. 

FUNDAMENTALS FIRST: ECONOMIC DEVELOPMENT AND COMPETITIVENESS 

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

Economic  governance  has  become  even  more  central  in  the  enlargement  process  in  recent 
years.  The  Commission’s  monitoring  is  mainly  done  through  two  processes:  the  Economic 
Reform Programme (ERP) and the assessment of compliance with the economic criteria for 
accession  (see  below).  Every  year,  each  enlargement  country  prepares  an  ERP,  which  sets 
out a medium-term macro-fiscal policy framework and a structural  reform agenda aimed at 
ensuring competitiveness and inclusive growth.  The ERPs are the basis for  country-specific 
policy guidance jointly adopted by the EU and the Western Balkans and Turkey at ministerial 
level in May each year. 

Introduction 

2.1. 
Bosnia  and  Herzegovina  is  a  relatively  small  economy  with  a  population  of  approximately 
3.5 million,  living  on  a  territory  of  around  51  000  square  kilometres.  This  corresponds  to 
about  0.7%  of  the  EU-28  inhabitants,  while  the  country’s  gross  domestic  product  (GDP)  at 
current  prices  of  about  EUR  17  billion  represents  only  0.1%  of  the  EU-28  GDP.  The 
country’s GDP per capita in purchasing power parity terms has increased slightly in the last 
10 years, from about 29% of the EU-28 average in 2008 to 32% in 2017. 

The  SAA  stipulates  that  the  EU  and  Bosnia  and  Herzegovina  will  facilitate  the  process  of 
economic  reform  by  cooperating  to  improve  understanding  of  the  fundamentals  of  their 

70 

Bosnia and Herzegovina: Key economic figures2010-15 average201620172018*GDP per capita (% of EU-28 in PPS)30.031.032.0:Real GDP growth 1.43.13.23.1Economic activity rate of the population aged 15-64 (%), total54.054.254.554.2      female41.641.942.741.8      male66.566.266.166.4Unemployment rate (%), total27.525.520.718.4      female30.230.223.320.3      male25.922.619.017.2Employment (annual growth %)**-0.7-2.61.90.7Nominal wages (annual growth %)1.20.91.53.1Consumer price index (annual growth %)1.0-1.11.21.6Exchange rate against EUR1.961.961.961.96Current account balance (% of GDP)-6.8-4.5-4.9-4.2Net foreign direct investment, FDI (% of GDP)2.01.62.12.3General government balance (% of GDP)-1.51.22.6:General government debt (% of GDP)35.440.536.135.9Source: Eurostat and national sources* National sources** LFS, including employed, self-employed and family workers 
 
respective economies and the formulation and implementation of economic policy in  market 
economies. 

According to the constitutional and legal framework, the competences for the areas covered 
by  the  economic  criteria  are  spread  over  the  state  level,  the  level  of  the  two  entities,  Brčko 
District, but also cantonal and municipal levels. Monetary policy is one of the few areas of the 
economic  criteria  in  which  the  main  competences  are  at  state  level,  with  the  Central  Bank. 
Furthermore,  the  competences  on  trade  policy,  on  indirect  taxation  and  on  external 
representation are allocated at the state level. However, some competences of importance for 
the financial sector’s stability, such as banking sector supervision, are located at entity level. 
Competences related to economic policy are largely located at the level of the two entities and 
Brčko District, while competences related to education are located either at entity level, or, in 
the case of the Federation, at cantonal level. As regards economic policy, the main state-level 
actors  are  the  Ministry  of  Finance  and  Treasury,  the  Directorate  for  Economic  Planning  -  a 
permanent  body of the Council of Ministers responsible for administrative coordination and 
monitoring  -  and  the  Fiscal  Council.  The  Fiscal  Council  is  tasked  with  coordinating  fiscal 
policy in Bosnia and Herzegovina in order to ensure macroeconomic and fiscal sustainability 
of  the  State,  the  entities  and  Brčko  District.  However,  in  contrast  to  fiscal  councils  in  the 
European  Union,  the  Fiscal  Council  of  Bosnia  and  Herzegovina  is  not  independent  and  has 
primarily a coordinative role. At the level of the Republika Srpska entity, economic policy is 
the responsibility of the Ministry of Finance, while other ministries are in charge of particular 
aspects of the economy. In the Federation entity, the Institute for Development Programming 
is  in  charge  of  preparing  economic  policy,  while  the  Ministry  of  Finance  is  responsible  for 
fiscal  policy.  In  Brčko  District,  the  Directorate  of  Finance  is  responsible  for  this.  The  only 
authority responsible for issuing currency and for monetary policy is the Central Bank. 

2.2.  Assessment in terms of the Copenhagen Criteria 
The existence of a functioning market economy 

The existence of a functioning market economy requires that prices, as well as trade, should 
be  liberalised  and  that  an  enforceable  legal  system,  including  property  rights,  is  in  place. 
Macroeconomic stability and a consensus on economic policy enhance the performance of a 
market economy. A well-developed financial sector and the absence of significant barriers to 
market entry and exit improve the efficiency of the economy. 

Economic governance 

The  transformation  into  a  functioning  market  economy  is  frequently  delayed  by  political 
stalemates  and  an  insufficient  focus  on  investment  and  education.  Despite  a  general 
acceptance  of  the  main  principles  of  a  market-based  economy,  frequent  short-term-oriented 
political disputes have resulted in delays and interruptions of agreed and long-overdue reform 
projects. During the last 10 years, the country signed with the IMF two stand-by arrangements 
(in  2009  and  2012)  and  one  agreement  on  an  extended-funds  facility  (EFF)  in  2016.  This 
facility  is  still  in  place,  although  so  far  only  one  review  has  been  completed.  Overall, 
cooperation with the International Financial Institutions helped to overcome adverse external 
shocks;  to  keep  public  finances  on  a  sustainable  path,  to  strengthen  the  financial  sector’s 
resilience;  to  proceed  with  public  sector  reforms;  and  to  prevent  the  build-up  of  external 
imbalances.  However,  due  to  frequent  political  gridlocks,  progress  with  IFI  support 
programmes has been slow.  

Since  2006,  the  country  has  participated  in  the  EU’s  multilateral  pre-accession  economic 
policy surveillance exercise for candidate countries and potential candidates. So far, the level 
of  compliance  with  the  exercise’s  requirements  has  remained  low,  pointing  to  significant 

71 

 
weaknesses  in  administrative  coordination  and  cooperation  and  policy  formulation.  In 
particular,  insufficient  cooperation  among  the  key  stakeholders  has  prevented  substantial 
improvements. Furthermore, the implementation of the latest policy guidance adopted jointly 
in 2018 by the authorities and the EU has remained limited. In 2015, the authorities started to 
implement  an  ambitious  ‘reform  agenda’.  In  spite  of  delays  in  implementation,  some 
important and often painful decisions were taken - for example, creating more flexible labour 
market legislation and better aligning financial sector regulations with international standards. 
Following  the  expiration  of  the  2015-2018  ‘reform  agenda’,  a  new  set  of  socio-economic 
reform measures needs to be agreed and implemented by the governments at all levels in the 
country,  in  full  alignment  with  the  policy  guidance  set  out  in  the  joint  conclusions  of  the 
economic  and  financial  dialogue  based  on  Bosnia  and  Herzegovina’s  Economic  Reform 
Programme. 

Overall, frequent political stalemates and a lack of cooperation among key stakeholders lead 
to  overdue  reforms  being  frequently  delayed.  As  a  result,  the  efficiency  of  economic 
governance, in particular with respect to proceeding with structural reforms, is very limited. 
The  weakness  of  economic  governance  and  cooperation  also  has  negative  effects  on  the 
availability of countrywide statistics, which strongly impedes the assessment of the country’s 
compliance with the EU accession criteria. 

Macroeconomic stability 

During  the  last  10  years,  the  economy  has  experienced  several  external  shocks,  such  as  the 
2008-2009  financial  crisis,  the  international  growth  slowdown  in  2012  and  adverse  weather 
conditions  in  2014.  Overall  the  economy  has  demonstrated  a  remarkable  degree  of  shock 
resilience.  Despite  this,  the  economy  shows  a  rather  low  overall  growth  momentum,  in 
particular  when  taking  into  account  the  relatively  low  income  level,  with  per  capita  GDP 
(expressed in purchasing power standards) at 32% of the EU-28 average in 2017. 

Largely as a result of those external shocks, average annual output growth during the last 10 
years has been at around 1.5% only. Private consumption was a key driver of growth before 
the financial crisis and has been since 2014. Investment has at times played an important role, 
such  as  in  2014,  when  substantial 
(largely  foreign-financed)  funds  were 
used to repair flood damage. However, 
also 
strong 
translated 
imports  and 
relatively  high  external  imbalances, 
which  were 
financed  by 
largely 
workers’  remittances.  Exports  also 
played  an  important  role  as  growth 
drivers,  in  particular  during  the  last  3 
years,  however,  partly  reflecting  a 
favourable external environment.  

into  high 

domestic 

demand 

from 

External imbalances have declined, 
strengthening 
benefiting 
external  and  moderating  domestic 
demand.  During  2009-2018,  current 
account  deficits  gradually  narrowed, 
declining  to  around  4%  of  GDP  by 
2018.  The  level  of  the  underlying 
trade deficit has remained quite high, 

72 

 
dropping  from  29.4%  of  GDP  in  2009  to  around  22%  in  2018.  This  high  deficit  has  been 
largely  counter-balanced  by  significant  inflows  of  current  transfers,  mainly  in  the  form  of 
workers’  remittances,  accounting  for  more  than  10%  of  GDP.  Furthermore,  Bosnia  and 
Herzegovina  usually  achieves  a  surplus  in  the  service  balance,  reflecting  the  effect  of 
providing construction services  abroad,  as well as substantial  net  inflows from  tourism. Net 
foreign direct investments remained relatively low at less than 3% of GDP during the last 10 
years, probably as a result of factors such as the country’s poor business environment and its 
fragmented  markets.  The  main  areas  of  investment  have  been  the  manufacturing  sector,  in 
particular the coal and food industries, the financial sector, trading and the electricity sector. 
While at the beginning of the observation period foreign direct investment (FDI) was largely 
driven  by  privatisations  (of  a  telecom  company  and  two  oil  refineries),  in  recent  years  FDI 
inflows  largely  consisted  of  reinvested  earnings,  while  green  field  investment  has  remained 
very low, with the exception of some tourism projects. Largely thanks to the stable inflow of 
working  remittances  and  improving  tourism  revenues,  net  foreign  exchange  reserves 
continued to increase over the last 10 years, reaching some 35% of GDP at the end of 2018. 

Monetary policy has supported stability, based on the currency board arrangement as a 
key anchor. The Central Bank was established in 1997. Its mandate is to focus on providing 
monetary stability, in particular through foreign exchange rate stabilisation. The Central Bank 
also  coordinates  the  work  on  financial  stability,  while  its  role  concerning  banking  sector 
supervision is more limited. Overall, the Central Bank’s analytical capacities are limited. The 
currency  board  arrangement  was  adopted  when  the  Central  Bank  was  established,  and  has 
been  in  place  ever  since.  Initially,  the  anchor  currency  was  the  German  Mark,  which  since 
1 January 1999 has been replaced by the euro. This approach has served the economy well so 
far. However, this arrangement also implies that the burden of adjustment to external shocks 
has  to  be  accommodated  by  other  policy  areas,  in  particular  responsible  fiscal  policy.  This 
necessitates the building-up of sufficient fiscal buffers and a stronger emphasis on medium-
term stability, as well as structural reforms to improve the functioning of markets. 

Price  stability  has  been  largely  maintained.  In  contrast  to  the  high  inflation  experienced 
before independence, inflation has remained under control over the last 10 years. On average, 
consumer  prices  have  risen  by  0.7%  annually  in  this  time  span  with  a  period  of  a  slightly 
declining overall price levels in 2013-2016. As a small, open economy with a fixed exchange 
rate with its main trading partner, domestic inflation is largely driven by import prices, which 
have generally been low during the last decade. Private sector wage agreements have tended 
to result in low wage increases, reflecting rather low productivity growth. However, there are 
serious  issues  with  the  quality  of  price  indices,  resulting  from  an  insufficient  resource 
allocation at the country’s statistic office and a lack of cooperation from some data providers. 
Measurement  errors  in  this  area  have  major  negative  knock-on  effects  on  other  areas  of 
economic policy, such as on wage formation and thus on households’ real disposable income. 

The  general  government  accounts  remained  largely  balanced,  although  the  quality  of 
fiscal governance has remained low. Over the last 10 years, public finances have benefited 
from  solid  revenue  growth,  relatively  stable  output  growth  and  measures  to  improve  tax 
collection,  while  growth  of  spending  on  public  sector  wages  has  remained  contained.  The 
country’s general government revenues are largely based on indirect taxes, which account for 
more than 40% of total revenues. Those revenues are collected centrally, while the other taxes 
are mainly defined, collected and spent on the lower levels of government. The current system 
of public sector accounting is not aligned with EU standards. In particular, the integration of 
public  enterprises  in  the  current  public  sector  accounting  is  unclear.  As  a  result,  the  actual 
levels  of  general  government  balances  and  of  public  debt  in  terms  of  European  standards 
(ESA 2010)  are  difficult  to  specify.  Overall,  the  quality  of  fiscal  governance  is  low,  with  a 

73 

 
lack of medium-term planning and a strong focus on maintaining current spending patterns, in 
particular  on  public  sector  wages  and  social  transfers.  This  frequently  results  in  delaying 
much-needed  public  investment.  Substantial  payment  arrears  create  distortions  within  the 
public sector, but are also a burden on private companies. Public finances are suffering from 
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 
repeatedly delayed.  

The level of official public debt rose from 24% of GDP in 2009 to 35.9% at the end of 2018, 
while reaching a peak of about  43% in  early 2015, to  a certain  extent resulting from  public 
spending to fight external shocks, such as the financial crisis in 2008 and 2009, and flooding 
and a drought in 2014. Since then, public debt has remained largely stable in nominal terms, 
but  has  declined  as  a  percentage  of  GDP.  The  published  debt  level  appears  to  be  relatively 
low, in particular as a large share of this debt is long-term at rather favourable rates, leading to 
costs  for  debt  servicing  of  slightly  below  1%  of  GDP  only.  However,  due  to  the  unclear 
accounting standards, there is a significant degree of uncertainty related to the ‘real’ extent of 
public sector indebtedness. Furthermore, there are significant differences in the indebtedness 
at lower levels of general government. 

In  summary,  the  economy  experienced  several  external  shocks  during  the  last  decade,  but 
showed  a  remarkable  degree  of  resilience,  partly  benefiting  from  substantial  capital  inflows 
from  workers  abroad, but  also  from  International Financial  Institutions.  In order to  increase 
the country’s endogenous growth potential, long-overdue structural reforms are needed, such 
as  improving  the  rule  of  law,  improving  the  business  environment  and  strengthening  the 
efficiency  of  public  sector  spending,  in  particular  in  the  area  of  a  better  targeting  of  social 
transfers,  addressing  payment  arrears  and  improving  the  governance  of  public  enterprises. 
While  macroeconomic  stability  has  been  preserved  overall,  reforms  have  clearly  been 
implemented  too  slowly  to  achieve  noticeable  progress  for  the  country’s  citizens.  The 
economic policy mix suffers from an insufficient medium-term orientation, in particular with 
respect to public investment and education. Overall, the country’s macroeconomic policy mix 
suffers from implementing overdue reforms too slowly and from lacking a sufficient medium-
term orientation. 

Functioning of product markets 

Business environment 

Market entry and exit regulations are still lengthy and cumbersome, in particular as the 
high  degree  of  regional  fragmentation  leads  to  many  different  rules  and  different 
interpretations. The legal framework for market entry and exit is largely defined at the lower 
levels of government, which often results in different regulations and implementation at local 
level (i.e. in the two entities as well as in Brčko District, and partly also at the level of the 10 
cantons  in  the  Federation).  There  are  many  similarities  among  the  various  regulations  and 
procedures,  nevertheless  often  differences  remain,  which  complicates  doing  business  in 
different parts of the country. This high degree of fragmentation has a negative effect on the 
country’s  business  environment,  requiring  companies  to  comply  with  different  procedures 
within different parts of the country. Business registrations in one part of the country are not 
fully recognised in other parts of the country, requiring a costly multiplication of registration 
procedures. Furthermore, quality control rules and procedures are different in different  parts 
of the country, which also impedes trade. Business insolvency is regulated at the entity level 
and there is no countrywide framework. While a law is in place in one entity, the adoption of 
a more modern bankruptcy law is still in parliamentary procedure in the other entity. 

74 

 
A complex set of different para-fiscal fees, largely levied at cantonal or municipal level, are a 
further impediment to new company setting up in a different part of the country. The difficult 
business  environment  is  not  only  reflected  in  low  rankings  in  various  international  surveys, 
such as the World Bank’s ‘Doing business’ survey, but also is probably a key factor behind 
the low level of domestic and foreign investment. As a result, the increase in the number of 
new  companies  has  been  rather  low,  at  around  1%  annually  in  2011-2018.  Overall,  the 
procedures required to enter or leave the product market are still numerous, lengthy and have 
limited regional coverage, creating a significant impediment to market entry and exit. 

The  institutional  and  regulatory  environment  continues  to  be  a  crucial  weakness  with 
adverse  effects  on  the  business  environment.  Contract  enforcement  is  still  a  very  time 
consuming procedure. Furthermore, settling commercial disputes remains difficult, partly due 
to  the  lack  of  alternative  dispute  resolution  methods  and  a  lack  of  courts  specialised  on 
commercial  disputes.  The  backlog  in  court  cases  is  still  substantial.  Furthermore,  there  are 
frequent  disputes  on  property  rights,  partly  because  registration  of  real  estate  ownership  is 
limited  in  some  areas.  The  resource  endowment  and  independence  of  numerous  regulatory 
and supervisory institutions is insufficient. Overall, weaknesses in the rule of law, including 
in the functioning of the judiciary, affect the country’s market economy. 

The size of the informal economy has remained significant. Despite some limited progress 
in addressing the informal economy, such as improving the degree of registration in the labour 
market, the informal sector is still substantial, with informal employment estimated to account 
for  nearly  one  third  of  total  employment.  On  the  one  hand,  the  informal  economy  is  an 
important source of (unregistered) employment and income. However, on the other hand, this 
creates  an  unfair  competitive  advantage  for  companies  in  the  grey  economy  and  erodes  the 
base for taxation and social security contributions and for labour rights and labour safety. A 
high level of informal economy requires rates for taxes and social security contributions to be 
higher  than  would  be  otherwise  necessary.  This  also  adds  a  significant  fiscal  burden  on 
registered  labour,  which  in  turn  impedes  the  creation  of  formal  employment  and  negatively 
affects Bosnia and Herzegovina’s international competitiveness. 

State influence on product markets 

State  influence  on  the  economy  is  still  high.  Despite  efforts  to  reduce  state  influence, 
countrywide  public  spending  has  remained  at  a  relatively  high  level.  At  the  same  time,  the 
quality  of  the  provided  services  is  low,  in  particularly  in  the  areas  of  health  and  education. 
According to official statistics, public spending accounts for more than 40% of GDP. Sectors 
providing  public  services  (public  administration,  defence,  compulsory  social  security, 
education  and  human  health)  generate  about  17%  of  the  country’s  value  added  and  employ 
according  to  the  annual  Labour  Force  Survey  about  18%  of  the  country’s  labour  force. 
However, when taking into account the value added and the employment in public companies 
operating in other sectors, such as industry, electricity production and transmission and water 
treatment,  the role of the state in  the economy is  significantly higher. Given the rather high 
share of public spending, public procurement plays an important role for the private economy. 
However, public procurement procedures are complex, prone to corruption and still contain a 
preference for domestic suppliers, which is incompatible with the EU acquis. Payment arrears 
of  the  public  sector  are  substantial,  in  particular  in  sectors  such  as  public  health,  creating  a 
substantial  burden  for  private  companies,  but  also  a  high  degree  of  uncertainty  for  other 
public services. Furthermore, arrears are sometimes impeding the financial viability of certain 
social  security  services.  The  costs  of  supporting  public  companies  and  guarantees,  which 
often  translate  into  substantial  contingent  liabilities,  are  a  heavy  burden  on  public  finances 
and thus the country’s taxpayers.  

75 

 
The official level of state aid is low, but indirect state aid could be substantial. Although 
official  state  aid  data  points  to  a  relatively  low  level  of  support,  a  number  of  public  and 
private companies benefit indirectly from the accumulation of payment arrears of taxes and, 
in  particular  social  security  contributions.  Furthermore,  state  aid  control  is  hindered  by  the 
partial  alignment  of  legislation,  by  the  lack  of  independence  and  budgetary  issues  of  the 
authority  responsible  for  its  control,  as  well  as  by  the  ethnic  vetoes  existing  in  it.  The 
consistent  enforcement  of  state  aid  rules  throughout  the  country  is  not  assured  and  the 
competences  of the State Aid council are limited. This  leaves room for  unfair distortions in 
the competitive position of some companies in the country  

Privatisation and restructuring 

The  privatisation  process  is  still  incomplete.  Despite  recurring  initiatives  and  significant 
progress  in  one  entity,  similar  attempts  have  been  less  successful  in  the  other  entity.  As  a 
result, strategic sectors such as transport and energy (and telecommunication in one entity) are 
still  dominated  by  poorly  managed  and  often  inefficient  public  enterprises.  Restructuring 
public  companies  and  stimulating  competition  from  the  private  sector  could  improve  the 
quality  of  the  services  provided  and  relieve  public  finances  from  a  recurring  burden.  The 
share of the private sector in the country’s value added has remained rather stable over the last 
10 years. It creates some 83% of the country’s gross value added and generates some 82% of 
the country’s employment. There is still a wide range of administrated prices. However, there 
is  no information  available on the weight  of  administrated prices in  the country’s consumer 
basket. The pace of economic restructuring has been slow. 

Functioning of financial market 

Financial stability 

The financial sector has remained stable, but banking sector supervision is hampered by 
fragmented  competences.  The  sector  experienced  a  short  boom  before  the  2008  financial 
crisis,  but  weathered  the  global  financial  crisis  rather  well  and  has  remained  largely  stable 
over the last 10 years. Banking sector assets stabilised after a short drop in 2008 and reached 
nearly  90%  of  GDP  in  2018.  The  number  of  banks  is  high  in  relation  to  the  market  size, 
although  it  has  fallen  from  30  banks  in  2009  to  23  in  2018.  Foreign  banks  account  for  the 
largest share in the sector’s activities: 15 banks out of 23 have a majority foreign ownership 
and together account for some 84% of the sector’s total assets. In some banks, governance and 
risk management is  limited, posing risks in  the  event  of  financial  stress.  There  are  also  two 
public development banks. One of them is significant in relation to the entities’ GDP and the 
size of the entities’ banking sectors. The banking supervision of those state banks is limited. 

The  banking  sector’s  overall  capital  adequacy  ratio  has  remained  above  15%  of  risk-
weighted assets,  which  is  well above the country’s  regulatory minimum of 12%. However, 
there  are  still  pockets  of  vulnerabilities,  as  some  primarily  local  banks  are  confronted  with 
insufficient  capital  endowment  and  unfavourable  credit  portfolios.  Regular  stress  tests  done 
by the Central Bank monitor the sector’s shock resilience, but also confirm the vulnerability 
of  some  smaller  banks.  Credit  risk  indicators  for  the  banking  system  rose  markedly  in  the 
aftermath of the 2008 financial crisis but have somewhat improved since then, although most 
of  them  are  still  relatively  high.  Non-performing  loans,  which  accounted  for  9.4%  of  total 
loans  at  the  end  of  2018,  are  concentrated  in  domestically  owned  banks  and  are  largely  a 
legacy  issue.  A  significant  share  of  the  sector’s  asset  portfolio  is  euro-indexed,  which 
increases the country’s exposure to an exchange rate risk and underlines the importance of a 
stable exchange rate. Interest rate differentials between lending and credit rates dropped from 
6  to  4  percentage  points,  which  could  also  indicate  improved  competition  in  the  sector. 
However, in combination with a moderate profitability this relatively high interest rate spread 

76 

 
points to remaining inefficiencies in the sector. The Central  Bank’s analytical capacities are 
limited and financial sector supervision suffers from fragmented competences and insufficient 
inter-entity cooperation. 

Access to finance 

Bank lending to the private sector has gathered pace again. Financial intermediation had 
been  negatively  affected  in  the  aftermath  of  the  2008  financial  crisis,  but  has  improved  in 
recent  years.  While  credit  growth  came  to  a  near  standstill  in  the  aftermath  of  the  financial 
crisis,  growth  rates  have  increased  to  around  6%  in  recent  years.  As  a  result,  loans  to 
households and corporations rose from about 50% of GDP in 2009 to some 60% in late 2018. 
Loans  are  quite  equally  distributed  between  households  and  the  non-financial  corporate 
sector,  both  in  terms  of  absolute  amounts  and  growth  rates,  which  have  tended  to  be  quite 
similar in both sectors. However, it is still difficult for SMEs and micro enterprises to access 
finance.  The  implementation  of  the  new  banking  laws  which  were  adopted  in  2017  should 
help to preserve the soundness of the banking sector. The size of the non-financial sector and 
of the capital markets is small. 

Functioning of the labour market 

force 

rates, 

participation 

employment 

improvements 

in 
Despite  recent 
increasing 
and 
reducing unemployment, the overall 
situation  of  the  country’s  labour 
market  is  still  worrying.  Very  low 
and 
labour 
employment 
high 
unemployment  and  underemployment 
to  be  deeply  entrenched 
appear 
phenomena in Bosnia and Herzegovina. Unemployment was already relatively high in the last 
years  of  the  Socialist  Federal  Republic  of  Yugoslavia  (SFRY),  and  rose  further  during  the 
war. It has remained high since the war, as many previously public companies were no longer 
viable  and  alternative  employment  opportunities  were  scarce.  As  a  result,  unemployment  is 
very high, in particular when using administrative data, which report that at the end of 2018, 
the share of registered unemployed was 35% of the labour force, compared to  42.7% at  the 
end  of  2009.  However,  the  administrative  rate  includes  a  significant  number  of  people 
working  either  in  the  informal  sector  or  not  looking  for  work  at  all,  but  who  are  registered 
mainly  for  social  security  coverage.  According  to  the  annual  Labour  Force  Survey,  the 
unemployment rate rose from 24.1% in April 2009 to 28% in April 2012 but fell to 18.4% in 
April  2018.  Youth  unemployment  reached  a  peak  of  63.1%  in  2012,  compared  to  47.5%  in 
2009,  but  has  slightly  declined  since  then,  dropping  to  38.8%  in  2018.  According  to  the 
survey, long-term  unemployment is  high:  in  2018, a total  of 82.3% of all unemployed (15+ 
years old) were unemployed for at least 12 months. This level is similar to 10 years ago, when 
this share was 84.1%. At the same time, the activity ratio is low: in April 2018, only 54.2% of 
the working-age population were actively looking for work.  

This  high  and  persistent  unemployment  rate  points  to  significant  weaknesses  in  the 
functioning  of  the  country’s  labour  market.  In  the  last  few  years  there  have  been  some 
improvements in recording so-far-unrecorded employment and in increasing the employment 
of vulnerable groups through active labour market measures. However, those active measures 
rely  strongly  on  employment  subsidies,  which  are  usually  less  effective  in  addressing 
structural  unemployment.  Labour  legislation  has  also  been  modernised.  The  resource 
endowment  of  the  public  employment  services  and  its  cooperation  with  the  social  service 

77 

 
centres  is  insufficient.  Furthermore,  there  are  serious  shortcomings  in  the  education  sector, 
leading to  a substantial  mismatch between the education provided and labour market  needs. 
The  ability  of  the  private  sector  to  create  new  employment  is  very  limited.  The  significant 
differences  between  registered  and  survey-based  labour  market  data  signal  substantial 
weaknesses in labour market statistics. 

Bosnia  and  Herzegovina  is  at  an  early  stage  of  establishing  a  functioning  market 
economy. 

Special attention needs to be paid to speeding up and improve the country’s decision-making 
procedures, to improving the business environment as well as the efficiency and transparency 
of the public sector, in particular of public companies.  

In particular, the country should address the impediments to the proper functioning of market 
mechanisms, such as a weak rule of law, substantial red tape, corruption, lengthy and overly 
complex administrative procedures and a high fragmentation of the country’s internal market. 
Those  structural  weaknesses  have  a  negative  impact  on  the  labour  market,  reflected  in  high 
unemployment  and a very  low participation rate,  which constrains  both  actual and potential 
growth of the economy. 

In order to  improve the  functioning of the market  economy in  the coming  year, Bosnia and 
Herzegovina should in particular: 

  simplify and harmonise business registration and licensing procedures between entities to 

improve the business environment and create a single economic space; 

  increase  transparency  of  the  public  sector,  by  creating  publicly  available  registers  of 
public  enterprises  and  by  providing  timely  data  on  public  sector  employment,  public 
sector payment arrears and para-fiscal charges; 

  adopt the General Government Sectorisation in line with ESA 2010 and publish complete 

and consistent country-wide general government data in a timely manner; 

  reduce  the  tax  wedge,  especially  for  low-income  workers,  and  disincentives  to  work  in 

order to support formal employment. 

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

The ability to fulfil this criterion depends on the existence of a market economy and a stable 
macroeconomic  framework  which  allows  economic  agents  to  take  decisions  in  a  climate  of 
predictability. It also requires a sufficient amount of human and physical assets. Enterprises 
need  to  invest  to  improve  their  efficiency  and  they  need  to  innovate  in  order  to  adjust  to  a 
globalised and highly competitive external environment. The more an economy is integrated 
with  the  Union  before  accession,  the  better  it  will  be  able  to  assume  the  obligations  of 
membership.   

Education and innovation 

Bosnia  and  Herzegovina’s  level  of  human  capital  is  hampered  by  poor  educational 
outcomes and also suffers from a substantial brain drain. The country’s education system 
is  very complex and highly fragmented,  as legal competences are largely allocated  at  entity 
and cantonal level. 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  often 
outdated  and  not  sufficiently  aligned  with  the  country’s  needs.  This  leads  to  wide  skills 
mismatches,  which  is  a  major  impediment,  preventing  graduates  from  entering  the  labour 
market. The number of pupils enrolling in pre-school education is slightly increasing, but very 
low compared with the EU average (in 2017/18 approximately 18% compared with 95,3% in 
EU  for  children  from  the  age  of  4  until  the  start  of  the  compulsory  primary  education).  In 

78 

 
primary  and  secondary  education  the  number  of  enrolled  children  has  started  to  decline  in 
recent years. To some extent, this reflects demographic dynamics, such as declining net birth 
rates  but  also  emigration  of  young  families.  The  share  of  those  with  high  educational 
attainment  stood  at  10%  in  2018,  compared  to  7%  in  2009.  Data  on  country-level  public 
sector  spending  on  education  is  currently  not  available.  In  2018,  Bosnia  and  Herzegovina 
participated  for  the  first  time  in  the  OECD’s  PISA  study.  The  results  are  expected  by 
end-2019 only. The country’s illiteracy rate stood at 2.8% of the age group 10 years and older, 
according to the 2013 population census. This is one of the highest in the region, largely as a 
result of a relatively high illiteracy rate among women (of 4.8%). 

Physical capital and quality of infrastructure 

The  physical  capital  stock  suffers  from  decades  of  underinvestment.  Public  and  private 
investment  has  remained  low  over  the  last  10  years,  with  spending  on  private  gross  fixed 
capital  investment  dropping from  19.7% in  2009 to  around 17% during the last three  years. 
This drop in private investment probably reflects the poor business environment and the low 
degree of certainty  caused by  frequent  political  stalemates. Public investment accounted for 
only  about  3%  of  GDP  on  average  in  2009-2018,  significantly  less  than  in  comparable 
catching-up economies.  However, in  2018 the authorities agreed to  increase excise taxes on 
fuel,  which helped to  unlock official  foreign financing, primarily for infrastructure projects. 
Given the country’s need to  modernise its infrastructure, these investment  rates appear low. 
This  is  largely  the  result  of  a  public  spending  policy,  which  prioritises  payments  for  public 
sector  employment  and  for  transfers,  thus  leading  to  frequent  delays  in  infrastructure 
investment. This approach is delaying efforts to  improve the country’s growth potential and 
labour productivity, which in turn hampers the country’s efforts to improve income levels and 
living standards. The country’s level of digitalisation is low when compared to peer countries. 
This  applies  in  general  to  the  access  to  and  the  use  of  information  and  communication 
technologies (ICT), but also to the lack of a national broadband strategy. E-Signatures are still 
not available countrywide. 

Annual FDI inflows remained limited during the last 10 years, accounting for some 2.25% 
of GDP on average. However, during most of the period, FDI inflows have remained limited, 
and recent inflows have increasingly consisted of reinvested earnings. Nearly two thirds of the 
country’s stock in FDI originates from EU countries and is concentrated in manufacturing, the 

financial sector, retail and tourism. 

and 

Transport 
energy 
infrastructure  is  fragmented  and 
outdated.  Compared  to  its  peers,  the 
country performs very poorly in terms 
of  an  adequate 
infrastructure  for 
transport  and  energy,  which  impedes 
the  country’s  growth  potential  and 
This  weakness 
competitiveness. 
short-term 
reflects 
economic 
oriented 
prioritises 
governance, 
maintaining  the  status  quo  over  forward-looking  policies.  As  a  result,  much-needed 
investment in transport and energy infrastructure is frequently delayed as available funds are 
used to finance public sector employment or to maintain an inefficient social security system. 
Furthermore,  the  absence  of  a  single  or  sufficiently  harmonised  regulatory  framework  and 
inadequate  cooperation and coordination  among  the various stakeholders  mean that planned 
investment  projects  are  often  delayed.  The  markets  for  energy  and  transport  remain 

the  country’s 
to 

approach 

which 

79 

02004006008001000BA, 2006EU, 2006BA, 2016EU, 201604812Bosnia and Herzegovina: Selected indicators relative to populationElectricity production, GWh per 1000 inhabitantsRoad length, km per 1000 inhabitantsRail passenger-km per inhabitant, lhsSource: Eurostat 
fragmented and are frequently dominated by key incumbent companies. The natural gas sector 
is another example where fragmented regulation (at entity level) hinders the development of 
an adequate countrywide legal framework and a common market, which impedes competition. 

Sectoral and enterprise structures 

Structural change in the economy has remained very limited. Changes to the structure of 
production, employment and company composition are a sign that the economy is adapting to 
a changing environment. In Bosnia and Herzegovina, structural change has been quite limited, 
which  probably  has  to  do  with  the  governments’  approach  of  maintaining  the  status  quo. 
When looking at the production side, trade and manufacturing have been key sectors gaining 
importance, while the share of value generated in the public sector has declined. The picture is 
similar for employment: there have been relative employment gains in the manufacturing and 
services  sectors,  while  the  public  sector  has  lost  slightly.  Concerning  the  composition  of 
companies,  there  seems  to  have  been  a  significant  increase  in  medium-sized  companies, 
employing between 50-249 employees, which is a good sign. The majority of new companies 
were created in the group of micro companies (0-9 employees), which were often located in 
the  lower  value  added  area  of  trading  companies.  However,  the  lack  of  information  on  the 
informal sector might mask important changes, in particular in micro companies. Overall, the 
company structure is still dominated by small and micro businesses, with companies of less 
than  50  employees  accounting  for  95%  of  all  companies.  Their  access  to  bank  lending 
remains difficult.  Support  schemes are in  place  for small and medium-sized enterprises, but 
provides services are very limited, scattered and depend on donor funding. 

Economic integration with the EU and price competitiveness 

Trade  integration  with  the  EU  increased  markedly,  but  also  trade  with  neighbouring 
non-EU  countries  has  deepened.  During  2009-2018,  trade  integration  with  the  EU 
increased,  with  the  share  of  exports  to  the  EU-27  (i.e.  before  Croatia’s  accession  in  2013) 
increasing by 6.6 percentage points, from 53.5% in 2009 to 60.1% in 2018. When looking at 
EU-28,  i.e.  including  Croatia,  Bosnia  and  Herzegovina’s  exports  to  the  EU  rose  by  2.3 
percentage points during the last 10 years, from  70.6% of total exports in 2009 to 72.9% in 
2018. In recent  years, trade with neighbouring non-EU countries such as Serbia and Turkey 
has also increased markedly. However, the country’s openness to trade is still relatively low 
for its  limited economic size, with  total  trade in GDP accounting for 94% of GDP in  2018, 
however, compared to some 80% a decade ago. The range of export commodities is not very 
sophisticated.  Non-tariff  barriers  to  trade  with  the  EU,  such  as  required  sanitary  and 
phytosanitary  standards,  remain  a  problem,  despite  some  recent  success  in  complying  with 
some of the standards required to  export to  EU markets.  Integration of financial and capital 
markets with the EU is very limited. 

Bosnia  and  Herzegovina  is  at  an  early  stage  in  achieving  the  capacity  to  cope  with 
competitive pressure and market forces within the Union. 

80 

0510152025303540201020112012201320142015201620172018Bosnia and Herzegovina: Exports compositionEUCEFTAOtherSource: WiiW% ofGDP0255075201020112012201320142015201620172018Bosnia and Herzegovina: Imports compositionEUCEFTAOtherSource: WiiW% ofGDP 
 
In the medium-term, special attention needs to be paid to the low quality of education and its 
insufficient  orientation towards labour market  needs, the quality of physical  capital,  such as 
the insufficient transport and energy infrastructure, and the slow adjustment of the country’s 
economic structure.  

In  order  to  improve  competitiveness  and  long-term  growth  in  the  coming  year,  Bosnia  and 
Herzegovina should in particular: 

  take steps to modernise teaching curricula and undertake a review of secondary and higher 
education enrolment policies in order to improve their links to the current and prospective 
needs of the domestic labour market; 

  adopt  and  implement  consistent  medium-term  public  investment  strategies  and  focus 
fiscal policies on investment and education to increase the country’s growth potential; 

  support structural change by facilitating the establishment of new companies.  

2.3.  General evaluation 
Bosnia  and  Herzegovina  is  still  at  an  early  stage  of  establishing  a  functioning  market 
economy and of becoming competitive within the common market. 

Economic governance is impeded by a high degree of politicisation and a lack of cooperation 
among key stakeholders. This leads to frequent political stalemates and lengthy delays in the 
political  decision-making  process.  Furthermore,  economic  governance 
is  prioritising 
maintaining the status quo, which further slows down the formulation and implementation of 
overdue structural reforms. As a result, the role of the state is still disproportionate, absorbing 
substantial  resources  to  fund  generous  public  sector  employment,  inefficient  public 
enterprises and an inefficient social security system. The frequent political stalemates and the 
resulting low predictability for investors have a negative bearing on the business environment. 
This  is  further hampered by a poor rule of law, substantial  red tape,  corruption and lengthy 
and complex administrative procedures, partly a result of the high degree of fragmentation of 
the  country’s  internal  market.  As  a  result  of  this  poor  business  environment  and  of 
weaknesses in the country’s education system, structural unemployment is worryingly high, in 
particular  among  young  people  and  vulnerable  cohorts.  Furthermore,  the  informal  economy 
remains  significant,  creating  unfair  competition  and  leading  to  a  higher  tax  burden  than 
otherwise necessary. 

Education  is  of  low  quality  and  the  country  suffers  from  a  skills  mismatch,  resulting  from 
outdated teaching curricula and insufficient resource allocations. Also, in the area of research 
and development, public spending is very low, accounting to only 0.3% of GDP, according to 
officially  provided  data,  which  is  far  from  the  3%  EU  target  for  2020.  The  quality  of  the 
country’s  physical  capital  suffers 
inefficient 
implementation.  The infrastructure for transport  and energy  is  insufficiently developed.  The 
speed  of  structural  adjustment  is  slow,  partly  reflecting  the  difficulties  and  complexities  of 
establishing and maintaining new enterprises in a highly fragmented and politicised economy, 
although recently there has been some diversification in the country’s regional trade structure. 

from  chronic  underinvestment  and 

81 

 
 
 
 
OBLIGATIONS STEMMING FROM THE STABILISATION AND ASSOCIATION PROCESS - 

C. 
GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION  

Good neighbourly relations and regional cooperation form an essential part of Bosnia and 
Herzegovina’s process of moving towards the EU. They contribute to stability, reconciliation 
and  a  climate  conducive  to  addressing  bilateral  open  bilateral  issues  and  the  legacies  of  the 
past.  Bosnia and Herzegovina plays a constructive role in  regional cooperation in  Southeast 
Europe  and  actively  participates  in  initiatives  such  as  the  Brdo-Brijuni  Process,  the  Central 
European  Initiative,  the  Adriatic-Ionian  Initiative,  the  EU  Strategies  for  the  Danube  Region 
and  for  the  Adriatic-Ionian  Region,  the  Migration,  Asylum,  Refugees  Regional  Initiative 
(MARRI),  RECOM,  the  Regional  School  of  Public  Administration  (ReSPA),  the    Regional 
Youth Cooperation Office in the Western Balkans (RYCO), the Western Balkans Fund or the 
Central  European  Free  Trade  Agreement  (CEFTA).  Bosnia  and  Herzegovina  chairs  the 
Southeast European Cooperation Process for 2018 and 2019 and hosts the seat of the Regional 
Cooperation Council.  

Bosnia  and  Herzegovina’s  cooperation  with  the  International  Criminal  Tribunal  for  the 
former Yugoslavia (ICTY) and its successor institution the International Residual Mechanism 
for Criminal  Tribunals (IRMCT-Mechanism) has been consistently presented as satisfactory 
over the past years. The Prosecutor’s Office of Bosnia and Herzegovina continues to closely 
collaborate  with  the  Office  of  the  Prosecutor  of  the  Mechanism  and  has  been  processing  a 
number of requests for assistance from all prosecutors’ offices in Bosnia and Herzegovina to 
the Office of the Prosecutor. The Office of the  Prosecutor of the Mechanism  has  noted real 
improvement  in  the  past  two  years  with  the  work  of  the  Prosecutor’s  Office  of  Bosnia  and 
Herzegovina, which has taken prosecutorial decisions in all war crimes cases the Office of the 
Prosecutor  had  partly  investigated  and  transferred  to  the  jurisdiction  of  Bosnia  and 
Herzegovina  in  2008  (‘Category  II’  cases).  It  is  however  expected  from  the  Prosecutor’s 
Office of Bosnia and Herzegovina to effectively address the ‘rules of the road’ cases that were 
initially reviewed by the Office of the Prosecutor of the Mechanism. 

Regarding judicial cooperation issues, the existing bilateral  protocols on cooperation related 
to  war  crimes,  crimes  against  humanity  and  genocide  between  the  Prosecutor’s  Office  of 
Bosnia  and  Herzegovina  and  its  counterparts  of  Serbia,  Croatia  and  Montenegro  has 
contributed  to  improving  relations  and  reducing  judicial  impunity  for  war  crimes.  The 
cooperation between the Prosecutor’s Office of Bosnia and Herzegovina and the Office of the 
War Crimes Prosecutor of Serbia has delivered tangible results with a number of indictments 
filed in  Serbia pursuant  to  cases transferred  from Bosnia and Herzegovina. The cooperation 
between the Prosecutor’s Office of Bosnia and Herzegovina and the State Attorney’s Office 
of  Croatia  need  to  be  strengthened  to  deliver  results.  A  Protocol  with  the  Montenegrin 
Prosecutor’s  Office  is  in  place  but  is  not  used.  A  substantial  number  of  war  crimes 
proceedings before the Court of Bosnia and Herzegovina are pending due to the unavailability 
of  the  suspects.  Holding  multiple  citizenships,  these  individuals  are  allegedly  residing  in 
neighbouring countries, taking advantage of the existing prohibition in countries of the region 
to extradite nationals for the criminal offences of genocide, crimes against humanity and war 
crimes to escape justice. 

Bosnia and Herzegovina takes part, along with Croatia, Montenegro and Serbia, in the ‘Joint 
regional programme on durable solutions for refugees and displaced persons’, also known as 
the Regional Housing Programme. As an integral part of the Sarajevo Process on refugees and 
displaced persons initiated in 2005, this regional initiative aims to contribute to resolving the 
protracted displacement of the most vulnerable refugees and displaced persons following the 
1991-95  conflicts  on  the  territory  of  former  Yugoslavia,  including  internally  displaced 

82 

 
persons  in  Montenegro  from  1999,  by  providing  them  with  durable  housing  solutions.  The 
Regional Housing Programme is comprised of four country-based housing projects, aiming to 
benefit close to 74 000 people or 27 000 households. Its cost is estimated to be approximately 
EUR  584  million  over  a  five-year  period.  The  EU  is  the  largest  donor  with  around  EUR 
63 million  whereas  Bosnia  and  Herzegovina  co-finances  the  programme  with  some  EUR 
11 million. 

The unresolved fate of missing persons from the conflicts of the 1990s is a matter of concern. 
Around  8  000  people  are  still  missing  as  a  result  of  the  conflict.  Ascertaining  the  fate  of 
missing persons is vital for reconciliation and stability in the region. Bosnia and Herzegovina 
needs  to  assume  full  responsibility  and  ownership  of  the  process  of  accounting  for  persons 
missing  as  a  result  of  the  1992-95  war.  While  the  Missing  Persons  Institute  of  Bosnia  and 
Herzegovina is financially sustainable, its ability to fulfil its mandate is impeded by political 
pressures  and  lack  of  capacity.  A  support  fund  for  the  families  of  missing  persons  has  not 
been  established,  as  provided  for  by  the  law  on  missing  persons.  The  lack  of  local  forensic 
capacity, especially in the Federation entity, hampers the process of identification.   

Building on the results  of the Berlin process,  Bosnia and Herzegovina took various steps to 
implement  the  connectivity  agenda,  the  Regional  Economic  Area  (REA)  roadmap  and  the 
Regional Investment Reform Agenda. The country ratified the Transport Community Treaty 
in  April  2018.  Building  on  the  results  of  previous  summits,  the  July  2018  London  Summit 
brought  a  renewed  commitment  to  the  connectivity  agenda.  Dialogue  with  the  Western 
Balkans  continued  in  Skopje  on  the  implementation  of  the  Digital  Agenda,  to  which  all 
leaders  of  the  region  had  committed  through  a  statement  of  support.  More  particularly 
concerning the negotiations on roaming fees, a regional agreement was signed at the Western 
Balkans Digital Summit in Belgrade in April 2019 enabling Roam like at Home (RLAH) as of 
July  2021.  Bosnia  and  Herzegovina  participated  in  the  European  Commission’s  regional 
conference  on  media  (Media  Days)  in  Skopje.  Member  States  and  the  Western  Balkan 
partners  signed  the  Joint  Action  Plan  on  Counter  Terrorism  for  the  Western  Balkans  at  the 
Justice Home Affairs Ministerial in Tirana in October 2018. 

In February 2019, at the Ministerial Meeting on Clean Energy Transition held in Podgorica, 
the  Ministers  of  Energy  and  Environment  of  the  Western  Balkans  committed  to  adopting 
concrete  measures  aiming  at  the  implementation  of  the  Paris  Agreement  and  the  Energy 
Community obligations based on the EU Clean Energy for All Europeans Package. 

Bosnia and Herzegovina generally maintains good bilateral relations with other enlargement 
countries in the course of the accession process.  

Relations with Albania are friendly and without open issues. Since October 2016, there is an 
honorary consulate of Albania in Sarajevo.  

There  are  no  official  relations  with  Kosovo,  as  Bosnia  and  Herzegovina  does  not  recognise 
Kosovo’s  independence  and  maintains  a  strict  visa  regime.  The  Ministry  of  Foreign  Affairs 
issues  only individual short-term  visas to  citizens of Kosovo who have an invitation  from  a 
foreign  diplomatic  mission  or 
in  Bosnia  and 
Herzegovina, or for humanitarian reasons. An amendment to normalise the visa procedure for 
all citizens of Kosovo is pending. Bilateral relations with Kosovo were negatively affected by 
Kosovo’s imposition of a 100% tariff on the import of goods from Bosnia and Herzegovina 
and Serbia in November 2018. 

international  organisation  accredited 

Concerning Montenegro, bilateral relations are good and an agreement on cooperation in the 
process  of  accession to  the EU is  in  place between the two countries. An agreement on the 
state border between Bosnia and Herzegovina and Montenegro is in force.  The Ministries of 

83 

 
Foreign  Affairs  held  bilateral  consultations  on  co-location  and  consular  affairs  in  May  and 
July 2018 respectively. A plan on bilateral cooperation between the two Ministries of Defence 
was signed in May 2018.  

Regarding North Macedonia, relations are good and several bilateral agreements are in place, 
including  on  cooperation  in  the  EU  accession  process.  Bosnia  and  Herzegovina  ratified  in 
June 2018 the agreement  on travel conditions,  and since December 2018 the citizens of the 
two countries may travel among them with their ID card. A memorandum of cooperation was 
signed with the Institute of Metrology of Bosnia and Herzegovina.  

Bilateral  relations  with  Serbia  are  overall  good  and  a  number  of  bilateral  agreements, 
including  on  cooperation  in  the  EU  accession  process,  are  in  place.  At  the  same  time,  an 
agreement  on  outstanding  border  demarcation  issues  between  the  two  countries  needs  to  be 
reached. The two countries also need to reach an agreement with regard to two river dams on 
the  Drina  River  and  a  portion  of  the  Belgrade-Bar  railway  which  crosses  into  Bosnia  and 
Herzegovina’s territory.  

Relations  with  Turkey  are  good  and  exchanges  frequent.  Turkey  is  a  strong  international 
supporter of Bosnia and Herzegovina’s post-war recovery, development cooperation and the 
country’s EU integration path.  

Relations with Croatia are overall good. Bilateral visits are frequent, also at high level. The 
agreement on state border was signed in 1999 but has not been ratified. There are some open 
issues concerning the borderline at land and sea. There is no agreement on dual citizenship. 
As  regards  the  implementation  of  the  2001  succession  agreement,  there  are  open  issues  on 
private  properties  and  acquired  rights.  A  bilateral  agreement  on  cooperation  in  the  EU 
accession process was signed in 2016. 

D. 

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

Chapter 1: Free movement of goods 

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

The  Stabilisation  and  Association  Agreement  (SAA)  creates  a  number  of  obligations  in  the 
field of free movement of goods, such as establishment of a free-trade area after a period of 5 
years from its entry into force. The Agreement also provides for gradual alignment with EU 
technical  regulations  and  standards  and  metrology,  accreditation  and  conformity  assessment 
procedures. 

According to  the  constitutional  and legal  framework the competences  for free movement  of 
goods  rest  predominantly  with  the  state  level.  The  two  entities  and  Brčko  District  are 
responsible for certain elements of the quality infrastructure.  

infrastructure 

At  state  level,  the  lead  ministry  is  the  Ministry  of  Foreign  Trade  and  Economic  Relations.  
level  and  act  as 
Quality 
independent administrative  organisations  within  the  scope  of  their  competences  or  have  a 
coordination  role  in  certain  areas  for  which  the  entity-level  and  Brčko  District  bodies  are 
responsible. 

institutions  are  established  at 

the  state 

The  Republika  Srpska  entity  has  established  its  own  parallel  legislation  and  contests  the 
competences at state level in a number of areas covered by the chapter. This has an adverse 

84 

 
 
impact  on  the  functioning  of  the  overall  system  and  leads  to  blockages  and  delays  in  the 
alignment of the country as a whole with the acquis.  

General principles 

Regarding  the  general  principles  the  legislative  and  institutional  framework  for  the  free 
movement  of  goods  is  not  in  place.  Bosnia  and  Herzegovina  has  neither  a  coherent 
countrywide approach, nor a strategy or action plan for alignment with the acquis. 

Non-harmonised area 

Bosnia  and  Herzegovina  needs  to  analyse  its  legislation  and  administrative  practices  as 
regards  the  non-harmonised  area  to  ensure  that  they  comply  with  Articles  34-36  of  the 
Treaty on the Functioning of the European Union and relevant case law of the European 
Court  of  Justice.  No  specific  body  has  been  established  or  empowered  concerning  the 
obligation to notify technical regulations.  

Harmonised area: quality infrastructure 

The  legal  basis  and  administrative  structure  for  technical  regulations,  standards,  conformity 
assessment, accreditation, metrology and market surveillance are in place, but are uneven and 
fragmented,  and  are  not  aligned  with  the  acquis.  Similarly,  the  relevant  administrative 
structures  involve  institutions  set  up  at  the  state  and  entity  levels,  and  the  coordination 
between  them  is  weak.  There  is  no  countrywide  strategy  to  put  in  place  the  quality 
infrastructure. 

Standardisation  is  regulated  by  the  Law  on  Standardisation  and  the  Law  establishing  the 
Institute  for  Standardisation  of  Bosnia  and  Herzegovina.  The  Institute  for  Standardisation 
(BAS)  is  a  full  member  of  the  European  Telecommunications  Standards  Institute  and  the 
International  Standardisation  Organisation  and  an  affiliate  member  of  the  European 
Committee  for  Standardisation  (CEN),  of  the  European  Committee  for  Electro-technical 
Standardisation  (CENELEC)  and  of  the  International  Electro-technical  Commission.  So  far, 
the BAS has adopted 18 593 European standards (ENs) as national standards (approximately 
86% of CEN and CENELEC standards). Conflicting ex-Yugoslav mandatory standards have 
not  been  withdrawn  in  a  systematic  manner  across  the  country  and  there  is  no  countrywide 
register  of  current  legislation.  The  BAS  is  active  in  raising  public  awareness  about  the 
importance  of  standardisation  and  in  improving  the  technical  competence  of  its  staff.  In 
addition  to  BAS,  an  entity-level  standardisation  and  metrology  institute  operates  in  the 
Republika Srpska entity. 

The  accreditation  framework  consists  of  the  Law  on  Accreditation  and  the  Law  on  the 
establishment  of  the  Institute  for  Accreditation  of  Bosnia  and  Herzegovina  (BATA).  The 
Institute for Accreditation is the single national accreditation body in Bosnia and Herzegovina 
and  is  a  full  member  of  the  International  Laboratory  Accreditation  Cooperation  and  an 
associate  member  of  the  European  cooperation  for  accreditation  (EA).  The  Institute  for 
Accreditation  signed  a  bilateral  agreement  with  the  EA  under  the  conditions  applicable  to 
signatories  of  the  EA  Multilateral  Agreement  in  the  fields  of  testing  and  calibration 
laboratories  and  inspection  bodies.  The  Institute  for  Accreditation  is  understaffed  with  21 
employees  out  of  the  28  as  required  under  the  implementing  legislation.  Its  representatives 
regularly participate in the work of European and international accreditation organizations and 
its staff’s expertise is regularly upgraded.  

Bosnia  and  Herzegovina  has  120  conformity  assessment  bodies:  68  testing  laboratories,  2 
medical and 8 calibration laboratories, 2 product certification bodies and 40 inspection bodies. 
The  designation  of  conformity  assessment  bodies  and  the  application  of  conformity 

85 

 
assessment procedures are not ensured consistently throughout the country. In this respect, the 
Federation entity and Brčko District implement the state-level Law on technical requirements 
for products and conformity assessment while the Republika Srpska entity implements its own 
law  on  technical  regulations  and  a  regulation  on  conformity  assessment  procedures  and  the 
appointment of respective conformity assessment bodies. 

The legal framework in the area of metrology comprises the Law on Metrology, the Law on 
Measurement  Units  and  the  Law  establishing  the  Institute  of  Metrology  of  Bosnia  and 
Herzegovina  (IMBiH).  In  addition,  the  entities  have  competence  on  legal  metrology  and 
control  of  articles  of  precious  metals.  The  Institute  of  Metrology  participates  in  technical 
committees, European development programmes and cooperation projects with EU metrology 
institutes.  The  Institute  of  Metrology  is  an  associate  member  of  the  General  Conference  on 
Weights and Measures, the International Bureau of Weights and Measures, the International 
Organisation  of  Legal  Metrology,  and  the  European  Cooperation  in  Legal  Metrology.  It  is 
also  a  signatory  of  the  International  Committee  for  Weights  and  Measures  Mutual 
Recognition  Agreement  and  a  full  member  to  the  European  Association  of  National 
Metrology  Institutes.  The  Institute  of  Metrology  is  understaffed  with  53  staff  out  of  the  72 
required  under  the  implementing  legislation.  The  metrology  institutes  should  cooperate  and 
coordinate in implementing the legislation in this area, but the appointment of the members of 
the Metrology Council has been pending since 2012 due to disagreement on its composition. 
Bosnia and Herzegovina has not adopted a development strategy for the metrology system.  

The  legal  framework  for  market  surveillance  includes  the  laws  on  market  surveillance, 
general  product  safety, technical  requirements and conformity  assessment. Compliance with 
these laws is supervised by the Market Surveillance Agency and the inspection bodies of the 
entities and the Brčko District. These institutions cooperate through initiating, implementing 
and  coordinating  proactive  and  reactive  market  surveillance  activities.  The  market 
surveillance system is largely based on mandatory standards and pre-market control. The Law 
on market surveillance needs to be aligned with the acquis.  

Harmonised area: sectoral legislation 

As regards the ‘New and global approach’ and ‘Old approach product legislation’, Bosnia 
and Herzegovina has started to align its legislation with the relevant part of the acquis. At this 
stage,  it  has  in  place  several  technical  regulations  aiming  at  aligning  with  the  acquis  on: 
electrical  equipment,  machinery,  electromagnetic  compatibility,  lifts,  personal  protection 
equipment,  non-automatic  weighing  instruments  and  pressure  equipment.  However,  the 
regulations are not applied across the country, as the legislative framework is fragmented and 
the  Republika  Srpska  entity  implements  its  legislation  separately  while  the  distribution  of 
competences  between  levels  of  government  is  unclear.  Bosnia  and  Herzegovina  needs  to 
ensure prioritisation of legal alignment in taking into account the market needs. 

The  country  needs  to  align  with  the  acquis  on  Registration,  Evaluation,  Authorisation  and 
Restriction  of  Chemicals  (REACH)  and  further  strengthen  its  administrative  capacities  as 
required  for  its  effective  implementation.  On  medical  products  pricing,  the  conditions  for 
the refusing to add products to the reimbursement list are aimed at aligning with the acquis. 
Economic  operators  involved  with  civil  explosives  are  subject  to  registration  at  entity  and 
state level and are required to keep track of sales. However, Bosnia and Herzegovina lacks a 
comprehensive legal framework on the transport of dangerous goods. The relevant norms are 
not  harmonised  across  the  entities  with  international  agreements  or  with  the  acquis.  The 
legislation on  fertilisers  aims at  aligning with  the  acquis. As regards the return of  cultural 
objects  unlawfully  removed  from  the  territory  of  an  EU  Member  State,  Bosnia  and 

86 

 
Herzegovina  needs  to  align  its  legislation  with  the  acquis.  The  division  of  competences 
between levels of government on procedural measures also remains unclear. 

Bosnia and Herzegovina is at an early stage of preparation in the area of free movement of 
goods.  Initial  steps  to  establish  a  single  economic  space  and  to  align  the  legislative  and 
institutional  framework  with  the  acquis  were  taken  but  further  work  was  hampered  by 
political  disagreements  between  the  Republika  Srpska  entity  and  the  state  level  on 
competences  for  the  areas  covered  by  this  chapter.  The  country  should  further  align  the 
legislative  framework  with  the  acquis,  in  particular  on  technical  requirements  for  products, 
conformity assessment and on market surveillance, as well as ensure compliance with Articles 
34-36 of the Treaty on the Functioning of the European Union. The administrative capacities 
of  the  institutions  involved  need  to  be  strengthened  and  the  coordination  among  these 
institutions improved.  

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

  establish  a  register  of  technical  regulations  in  force  and  start  to  repeal  countrywide  the 
domestic legislation that conflicts with the EU standards, including ex-Yugoslav standards 
that conflict with those aligned with European standards;  
  adopt a countrywide strategy for the quality infrastructure; 
  appoint the members of the Metrology Council. 

Chapter 2: Freedom of movement for workers 

Citizens of  one Member  State have the right to  work in  another Member State and must be 
given the same working and social conditions as other workers. 

The SAA provides that Bosnia and Herzegovina and EU Member States must ensure that their 
nationals,  who  are  legally  employed  on  the  territory  of  the  other  partner,  are  free  of  any 
discrimination based on nationality as regards working conditions, remuneration or dismissal. 

According to the constitutional and legal framework the competences for the free movement 
of  persons  are  exercised  by  the  state  level,  the  two  entities  and  Brčko  District.  The  state  is 
competent to regulate requirements and the procedures for entry and stay of aliens in Bosnia 
and  Herzegovina  and  to  establish  quotas  for  the  access  of  foreigners  to  the  labour  market. 
Apart from this, it exercises its competences in the form of internal coordination, based on the 
constitutional  responsibilities  to  represent  and  commit  the  country  at  international level. For 
other issues covered by the chapter the competences rest with the two entities and the cantons 
in the Federation entity as well as Brčko District. 

At state level, the Ministry of Civil Affairs is in charge of internally coordinating negotiations 
for agreements with other countries in the field of employment and social security while the 
Labour  and  Employment  Agency,  in  cooperation  with  the  employment  bureaus  of  the 
Federation  entity,  the  Republika  Srpska  entity  and  the  Brčko  District,  is  responsible  for 
implementing  these  agreements.   The  Ministry  of  Security  and  its  Service  for  Foreigners’ 
Affairs  is  responsible  for  regulating  and  monitoring  the  entry,  stay  and  movement  of 
foreigners in  Bosnia and Herzegovina.  At entity and cantonal level, there are ministries and 
other  institutions  in  charge  of  social  security,  including  for  pensions,  disability  and  health. 
The entities and cantons also have employment services responsible for issuing work permits 
for foreigners in the limit of the quotas established at state level. 

The legal framework regulating access to the labour market comprises the state-level Law 
on  Aliens  and  the  entities’  as  well  as  Brčko  District’s  laws  on  employment  of  aliens.  The 

87 

 
 
state-level Law on Aliens regulates conditions and procedures for entry of aliens into Bosnia 
and Herzegovina. The entities and Brčko District’s laws on employment of aliens should be 
harmonised  with  this  law,  especially  when  it  comes  to  regulating  the  issue/approval  of 
residence on the grounds of employment.  

The  legislation  in  place  does  not  differentiate  between  EU  workers  and  other  aliens,  non-
Bosnia and Herzegovina’s citizens. All these laws, alongside the anti-discrimination law and 
labour  laws,  prohibit  direct  or  indirect  discrimination  on  grounds  of,  such  as,  race,  skin 
colour, language, religion, age, national or social origin, sexual orientation. At the same time, 
employment in the public administration is reserved for Bosnia and Herzegovina’s citizens. In 
order to work in Bosnia and Herzegovina, with several exceptions, as provided for under the 
Law on Aliens, an EU citizen has to obtain a work permit for which certain conditions must 
be  met.  Concerning  outward  mobility  of  workers,  the  country  has  signed  international 
bilateral agreements with Germany, Slovenia, Serbia and Qatar. Based on these  agreements, 
many jobseekers, including university graduates, were mediated into employment abroad by 
the public employment services. However, an even higher number of people  – often skilled 
and already in employment – found jobs abroad on their own initiative, contributing to high 
levels of labour force emigration.  

Bosnia  and  Herzegovina  lacks  the  central  database  of  vacancies  needed  for  joining  to  the 
European Employment Services (EURES), information being provided on the websites of 
the employment bureaus at each level of authority. A countrywide database and a consolidate 
website  to  ensure  wide  access  to  basic  information  concerning  EURES  portal  taking  into 
account the demands of labour market have to be established. 

As  regards  the  coordination  of  social  security  systems,  Bosnia  and  Herzegovina  has  nine 
(six  with  EU  Member  States)  international  bilateral  agreements  on  social  security  in  place, 
and  additional  16  agreements  (12  with  EU  Member  States)  have  been  implemented  on  the 
basis  of  succession  from  the  former  Yugoslavia.  Bosnia  and  Herzegovina  should  continue 
concluding bilateral agreements on social security, especially with EU Member States. 

Part  of  branches  of  social  security  falling  within  the  scope  of  EU  coordination  rules  are 
covered by laws in place. Some of the benefits are not covered in the same manner and to the 
same extent throughout the country such as duration of the entitlement to such social security 
benefits, the amounts of the same benefit, and the conditions for obtaining the right for these 
benefits,  etc.  Social  benefits  are  provided  by  different  institutions  such  as  employment 
bureaus, pension and disability funds, health insurance funds), each operating within its own 
territorial  and  subject  matter  jurisdiction.  Their  cooperation  is  often  ad  hoc  or  based  on  
memoranda.  These  institutions  throughout  the  country  have  to  establish  procedures  to 
implement  and  coordinate  the  social  security  schemes  and  associated  common  databases 
within the country. The lack of a common approach affects cooperation with other countries 
in  terms  of tracing and granting social  security  benefit. Waiting periods for entitlement to  a 
benefit, although established by law and aligned with the EU Regulations, are facing constant 
delays  in  implementation.  This  makes  the  coordination  of  social  security  inside  the  country 
difficult and hinders the mobility of workers. Special benefits are granted to war veterans.  

The Republika Srpska entity and the cantons have their own health insurance card that can be 
used  within  the  other  Entity  or  Canton  only  in  cases  of  emergencies  and  for  targeted 
treatment,  subject  to  special  conditions  and  approvals.  As  part  of  EU  accession  obligations, 
and independently of internal health cards, Bosnia and Herzegovina has to issue the European 
health insurance card to people entitled to healthcare in the country.  

88 

 
The  administrative  framework  established  in  the  country  will  have  to  ensure  effective 
cooperation with other EU Member States, including the capacity to exchange social security 
information electronically.  

Impact 

The  estimated  impact  of  Bosnia  and  Herzegovina’s  accession  on  the  EU  labour  market  is 
related  to  a  number  of  factors,  such  as  the  size  of  the  country’s  working  age  population, 
unemployment, age structure and migration movements.  

According to the 2013 census, the country’s total population is 3,531,159 million. As regards 
the  age  structure,  the  youngest  (15  years  and  under)  at  15.4%  (2013)  is  very  close  to  the 
current  EU  average  of  15.6%.  In  2013,  the  working  age  population  (aged  15-64)  was 
2,987,440,  of  whom  1,362,516  were  economically  active.  According  to  the  2018  Labour 
Force Survey conducted by the Agency for Statistics of Bosnia and Herzegovina, the working 
age population was 2,395,739 of whom 1.007.902 were economically active This equals 0.6% 
of  the  EU  working  age  population  and  0.4%  of  the  EU  economically  active  population.  In 
2018, the employment  rate in  the  country was 44% compared with  72.2% in  EU, while the 
unemployment rate was 18.4%, which is considerably higher than the 6.8% in the EU (2018). 
According to the 2018 Labour Force Survey, the activity rate was 54.2% in 2018 for the 15-
64  age  group.  In  2017,  the  country’s  GDP  per  capita  expressed  in  purchasing  power  parity 
stood  at  32%  of  the  EU  average.  This  level  is  very  low,  at  around  70%  below  the  EU28 
average, although the past 3 years saw real GDP growth of between 3-4%. 

Estimates are that at least 2 million people originating from Bosnia and Herzegovina live in 
over  50  countries  around  the  world.  More  than  half  of  them  live  in  30  European  countries, 
with  the  largest  numbers  in  Croatia,  Germany,  Slovenia,  Austria  and  Sweden.  Estimates 
suggest that around 1 million Bosnia and Herzegovina citizens live in the EU, making up 3% 
of  the  foreign  population  living  in  the  EU  and  0.2%  of  the  total  EU  population.  A  sizable 
outward migration to the EU, in particular of young people, has been  noted in the past few 
years. According to the Agency for Identification Documents, Registers and Data Exchange, 
4 270 people in  2017  and 4 034  people in  2016  have deregistered their  residence in  Bosnia 
and Herzegovina. In 2017, a total of 4 365 people renounced of the Bosnia and Herzegovina 
citizenship, as did  4 099 people in  2018 (ca. 85  000 since 1996). The statistics gathered by 
civil  society  organisations  indicate  significantly  much  higher  numbers.  According  to  the 
migration  survey  conducted  by  the  Union  for  Sustainable  Return  and  Integration  in  BiH  in 
2017, around 150 000 people have left the country since 2013. The majority of people leaving 
the country are from the IT, health, electric, building/construction sectors 

This  emigration trend has been further  facilitated by Croatia’s  accession to  EU and the fact 
that a considerable number of Bosnia and Herzegovina citizens also hold Croatian citizenship.   

This preliminary assessment indicates that the country’s membership of the EU would have a 
minor impact on the EU labour market. This needs to be monitored closely, especially taking 
into account the growing trend in labour-related emigration to the EU.  

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  field  of  free  movement  of 
workers. 

The country will need to make stronger efforts to align its legislation with the relevant acquis, 
and  to  strengthen  its  administrative  capacity  and  inter-institutional  cooperation  in  order  to 
fully  meet  all  necessary  requirements.  In  relation  to  the  coordination  of  social  security 
systems,  on  the  basis  of  existing  bilateral  agreements,  Bosnia  and  Herzegovina  has  some 
experience in applying EU principles. However, the system of coordination of social security 
schemes  is  fragmented,  has  limited  administrative  capacities  and  lacks  formal  cooperation 

89 

 
among relevant authorities covering all the governmental levels. Bosnia and Herzegovina has 
to  align  the  relevant  legislation  with  EU  Regulation  No  883/2004,  while  ensuring  that  the 
manner  of  exercising  the  rights  to  benefits,  and  the  scope  of  these  benefits  same  is  widely 
harmonised throughout the country. Efforts will be needed to strengthen the institutional and 
human resource capacities throughout the country to cope with new tasks in the context of EU 
accession.  

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

  start developing a countrywide database on vacancies and a website to lay the ground for 

joining EURES; 

  continue negotiating and concluding new bilateral agreements on social security, notably 

with EU Member States.  

Chapter 3: Right of establishment and freedom to provide services 

EU natural and legal persons have the right to establish themselves in any Member State and 
to provide cross-border services. For certain regulated professions, there are rules on mutual 
recognition of qualifications. Postal services are gradually being opened up to competition. 

The SAA provides for gradual liberalisation of the freedom to provide services between the 
EU and Bosnia and Herzegovina over a period of 4 years following its entry into force.  

According  to  the  constitutional  and  legal  framework  the  competences  for  the  right  of 
establishment  and  freedom  to  provide  services  are  exercised  by  the  state  level,  by  the  two 
entities and by Brčko District, depending on the subject matter. 

The  right  of  establishment  and  provision  of  services  in  general,  as  well  as  the  mutual 
recognition of professional qualifications, this falls predominantly within the competence of 
the  entities,  including  cantons,  and  Brčko  District;    the  state  level  exercises  a  coordination 
role and represents and commits the country at international level.  

At state level,  the Ministry of Foreign Trade and Economic Relations and Ministry of Civil 
Affairs  are  competent  to  exercise  a  coordination  role;  however,  there  is  a  wide  range  of 
authorities at all other levels responsible for the issues covered by this chapter. 

The specific field of postal services is regulated at the level of State and the two entities by 
state  legislation  on  postal  services  and  entity  legislation  on  postal  traffic  and  services, 
while regulatory  responsibilities  are  performed  at  state  level  by  a  countrywide  regulator  for 
postal traffic. The State also represents and commits the country at international level.  

The state level competences in this field are exercised by the Ministry of Communication and 
Transport and the Agency  for Postal  Traffic, while the entities have their own Ministries of 
Transport and Communications.   

The legislation on right of establishment and freedom to provide cross-border services is 
not aligned with the EU’s Services Directive. There is no law enshrining the principles of the 
Directive.  A  comprehensive  review  of  the  sector-specific  legislation  to  identify  non-
conformities with the Directive and laws that require amendments in order to be aligned with 
the Services Directive has not started.  

Legislation  at  the  level  of  entities  and  Brčko  District  on  right  of  establishment  includes 
specific requirements for the establishment of companies or their subsidiaries. Certain of these 
provisions are in fundamental breach of the principles of the Services Directive. For example, 
there are additional registration requirements for companies with commercial presence in both 

90 

 
 
entities  which  is  an  obstacle  to  creating  a  single  economic  space  in  the  country.  In  Brčko 
District  a  foreign  company  may  establish  a  subsidiary  in  the  District  subject  to  being 
registered in the domicile country for minimum 1 year and a minimum required capital.  The 
provision  of  services  by  foreign  companies  is  allowed  only  through  the  establishment  of  a 
company or a subsidiary on the territory of the respective entity/Brčko District.  

There is no central registry of business entities and the companies’ registers of the entities and 
Brčko  District  are  not  interconnected.  Authorisation  schemes,  both  horizontal  and  sector-
specific,  are  applied  at  different  levels  of  authority.  There  is  no  countrywide  authorisation 
scheme. 

The point of single contact needs to be established. Aligning of the relevant legislation at all 
levels of government requires building up sufficient administrative capacity as well as strong 
coordination between administrative bodies at all levels.   

The legal framework regarding postal services is partly aligned with the acquis. A new state-
level Law on postal services, currently being prepared, needs to be adopted, and a state-level 
strategy for the development of postal services to be elaborated, in order to ensure a consistent 
regulatory framework aligned with the acquis. There are three main postal operators in Bosnia 
and Herzegovina:  BH Pošta, Srpske Pošte and Hrvatska Pošta Mostar.  The institutional  and 
financial independence and the administrative capacities of the Agency for Postal Traffic need 
to be increased in order to enable the Agency to perform its function as the national regulatory 
authority for the postal sector. Decisions are taken by a Council composed of three members 
representing  the  three  constituent  peoples.  This  constitutes  a  discrimination  against  the 
“Others”. Its effectiveness is undermined by the need for unanimous decision-making. Bosnia 
and Herzegovina’s legal framework for providing universal postal services across the country 
needs to be harmonised and opened up to competition. 

Current legislation does not provide for the mutual recognition of foreign qualifications for 
regulated professions as required by the acquis in this area. The country adopted a general 
roadmap for the implementation of the relevant acquis. The legislative framework in this area 
needs to be completed and aligned with the acquis. Furthermore, adjustments to the training 
of  professions  benefitting  of  automatic  recognition  of  their  professional  qualifications 
(doctors, dentists, nurses responsible for general care, midwives, pharmacists, and veterinary 
surgeons) are necessary in order to comply with the minimum training requirements outlined 
in  Directive  2005/36/EC.  Significant  efforts  are  required  to  establish  adequate  institutional 
framework,  including  e-government  facilities  and  national  contact  points  assisting  citizens 
requesting recognition of their professional qualifications. 

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  regarding  the  right  of 
establishment and freedom to provide services. 

Special  attention  should  be  paid  to  aligning  existing  legislation  with  the  EU  Services 
Directive. To this end, the country should adopt a horizontal law enshrining the principles of 
the Services Directive. It should also adopt a countrywide strategy for development of postal 
services in order to create a consistent regulatory framework that is aligned with the acquis. 

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

  establish  a  register  of  the  relevant  legislation  in  force  and  identify  the  legislation  to  be 

amended to ensure alignment with the EU Services Directive;  

  elaborate  a  comprehensive  inventory   of  all  additional  administrative  and  technical 
requirements  for  the  registration  of  domestic  and  foreign  undertakings  economically 
active countrywide with a view to abolishing the ones hampering the creation of the single 
economic space;  

91 

 
  adopt a countrywide law on postal services, in line with the acquis, and open up the postal 

market to competition.  

Chapter 4: Free movement of capital 

In  the  EU,  capital  and  investments  must  be  able  to  move  without  restriction  and  there  are 
common rules for cross-border payments. Banks and other economic operators apply certain 
rules to support the fight against money laundering and terrorist financing. 

The SAA sets a five-year timetable for gradual liberalisation of capital movements until their 
full  liberalisation  by  1  June  2020.  Moreover,  Bosnia  and  Herzegovina  has  committed  to 
gradually increasing the level of implementation of EU rules on free movement of capital. 

According to the constitutional and legal framework the competences for the free movement 
of  capital  are  exercised  by  the  state,  the  two  entities  and  Brčko  District.  The  state  level 
competences are limited to certain functions which are carried out by the Central Bank. The 
entities  and  Brčko  District  regulate  domestic  payment  operations  and  foreign  exchange 
operations. The state is in charge of legislating against money laundering, while all levels of 
authority are responsible for implementing anti-money laundering legislation.  

At state level, the main bodies involved are the Financial Intelligence Department within the 
state  Investigation  and  Protection  Agency  and  the  Central  Bank.  At  entity  level,  the  main 
bodies involved are Ministries of Finance, Ministries of Trade, Ministries of Justice, Banking 
agencies, Insurance agencies as well as the Securities Commissions and privatisation agencies 
are the main bodies involved. Entities and cantonal Ministries of Interior and Brčko District 
Police are in charge of financial investigations and the fight against money laundering.   

Laws  on  foreign  exchange  operations  define  capital  transactions  with  foreign  countries.  In 
line  with  constitutional  competences,  the  foreign  exchange  operations  are  regulated  by  the 
laws on foreign exchange operations of the two entities and of Brčko District. These laws are 
mostly  harmonised  among  themselves  in  terms  of  the  degree  of  liberalisation,  and  all 
acknowledge the principle of gradual liberalisation of capital movements. All three laws are 
partially aligned with the relevant parts of the EU acquis.   

As  regards  capital  movements  and  payments,  the  country  accepted  IMF  obligations,  thus 
applying  full  current  account  convertibility.  The  convertible  mark  has  been  introduced  as  a 
legal  tender  since  1997,  and  since  2002  it  has  been  pegged  to  the  euro  at  a  fixed  exchange 
rate.  The  Law  on  the  Central  Bank  prohibits  restrictions  on  payments  of  international 
transactions,  unless  necessary  to  fulfil  international  obligations.  The  reserve  requirement  is 
the  Central  Bank’s  only  instrument  of  monetary  policy,  which  could  be  used  to  manage 
excessive inflows of foreign exchange. 

Long-term capital transactions are mostly liberalised. Some administrative restrictions remain 
for  capital  outflows  used  to  establish  a  business  abroad  or  for  investments  into  foreign 
companies.  Both  entity  laws  on  foreign  investments  stipulate  that  a  maximum  of  49%  of 
foreign  ownership  is  allowed  for  the  companies  operating  in  media  affairs  and  the  military 
industry. Nonetheless,  if there is  a specifically justified interest,  and if it is  permitted under 
the relevant legislation, an entity government may issue a decision that the share of a foreign 
investor  in  a  company  operating  in  the  sectors  under  restriction  may  exceed  49%  of  the 
founding capital. However, the restriction as such remains legislated and might not be in line 
with acquis requirements on free movement of capital.   

Deposit transactions of residents have been partially liberalised. This means that permissions 
are  required  for  maintaining  deposits  abroad,  and  such  deposits  are  limited  to  specific 

92 

 
 
purposes, including paying the expenses of branch offices or those that are associated with the 
trade or investment activity of a resident.  

However,  restrictions  remain  for  short-term  capital  transactions,  including  financial  credits 
and  loans  provided  by  residents  to  non-residents,  and  resident  payments  of  life  insurance 
premiums  to  non-residents.  Investment  rules  for  institutional  investors  -  such  as  banks, 
voluntary investment funds and the Deposit Insurance Agency - are subject to limitations on 
investment in foreign securities.  

The  state-level  Law  on  the  policy  of  foreign  direct  investments  gives  foreign  investors  and 
nationals of Bosnia and Herzegovina equal property rights to real estate [see also Chapter 23 
–  Judiciary  and  fundamental  rights].  This  law  establishes  a  reciprocity  requirement  only  in 
the case of ex-Yugoslavia successor states. As regards foreign natural persons, the entity and 
district  legislation regulating property rights  stipulates that reciprocity is  required unless the 
matter  is  regulated  by  an  international  agreement.  These  laws  also  include  additional 
requirements  such  as  secondary  residence  or  the  requirement  to  own  businesses  in  the 
country,  further  complicating  the  process  of  real  estate  acquisition  by  foreign  residents. 
Agricultural  land  cannot  be  owned  by  foreign  natural  and  legal  persons.  Those  bans  on 
ownership are not aligned with acquis requirements. Moreover, according to Article 61 (3) of 
the SAA, within 6 years from the entry into force of the Agreement, Bosnia and Herzegovina 
will  have  to  progressively  adjust  its  legislation  concerning  the  acquisition  of  real  estate  to 
treat nationals of EU Member States the same as nationals of Bosnia and Herzegovina as from 
2021.  

In  both  entities  there  are  several  companies  of  strategic  interest  (including  in  the  areas  of 
telecommunications and railway companies) where entity governments have retained majority 
shares and management rights.  

As  regards  the  payment  systems,  the  legislative  framework  governing  non-cash  payments 
comprises the Law on Central Bank of Bosnia and Herzegovina and entity and Brčko District 
legislation governing payment transactions and foreign currency operations. The gyro clearing 
system  and  real-time  gross  settlement  operations  are  established  within  the  Central  Bank. 
Commercial  banks  as  authorised  operators  are  part  of  the  system,  and  business  entities  are 
obliged  to  open  accounts  and  keep  all  cash  assets  in  their  accounts  for  making  payments. 
Payments are performed in local currency and only exceptionally some transactions between 
residents  and  non-residents  can  be  executed  in  foreign  currency.  In  addition  to  commercial 
banks,  public  enterprises  for  postal  services  are  authorised  to  perform  selected  payment 
transactions.  

Cross-border payments are regulated by the entity and district legislation on foreign currency 
operations.  Banks  and public enterprises for postal  services as authorised operators perform 
cross-border transactions on behalf of the business operators. In case of state-level authorities 
and public agencies determined by the Bosnia and Herzegovina Presidency, the role of fiscal 
and banking agent is performed by the Central Bank.  

Payment  services  need  to  be  further  liberalised  and  modernised  to  benefit  existing  and  new 
players on the market. The system should be open to operators other than banks.   

Information  on  the  conditions  governing  the  use  of  payment  services  (including  legal 
obligations of banks regulating the protection of consumers of payment services) is regulated 
by  the  entities’  banking  legislation,  legislation  on  the  protection  of  consumers  of  financial 
services,  and by legislation on domestic payment operations. The conditions  are transparent 
and easily accessed, including on the official websites on the regulators and service providers. 
The Central Bank makes a decision on charges it collects from commercial banks for use of 

93 

 
the payment systems. Commercial banks charge fees for domestic payment operations in line 
with  their  general  terms  and  conditions  and  the  individual  contracts  between  a  bank  and  a 
client. Fees for international payment operations are charged in line with the business policy 
of an individual bank. Legislation on banks and on domestic payment operations includes the 
designation  of  competent  authorities,  handling  of  consumer  complaints  and  out-of-court 
redress procedures, provisions which are required by the Payment Services Directive. There is 
no legal or institutional framework regulating the field of electronic money or the operations 
of institutions issuing electronic money.  

The  legislative  and  institutional  framework  in  anti-money  laundering  is  in  line  with 
Financial Action Task  Force  (FATF) recommendations. An NGO database is  operational  to 
ensure transparency of registration and financial reporting. Bosnia and Herzegovina is still on 
the  EU  list  of  high  risk  third  countries.  The  country  needs  to  align  with  the  acquis  on 
beneficial ownership [see Chapter 24 – Justice, freedom and security].  

Preventative measures, supervisory action and sanctions in case of breaches - especially in the 
non-financial  sector  -  need  to  be  implemented.  Efforts  are  needed  to  further  align  with  EU 
acquis  in  the  Anti-Money  Laundering  and  Countering  Financing  of  Terrorism  area,  in 
particular to ensure transparency of beneficial ownership information.  

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

Capital movements in the country are partly liberalised and efforts are necessary in order to 
fully  align  the  country’s  legislation  with  the  acquis.  The  country  needs  to  adjust  its  legal 
framework in order to guarantee free movement of capital as specified in EU legislation, such 
as  gradually  removing  the  restriction  of  foreign  investment  in  the  media  sector.  Bosnia  and 
Herzegovina  should  progressively  adjust  its  legislation  concerning  the  acquisition  of  real 
estate to treat nationals of Member States the same as nationals of Bosnia and Herzegovina as 
from  2021.  The  legislative  framework  governing  the  payment  system  is  harmonised  within 
the country, but must be aligned with EU legislation in this area. Concerning the fight against 
money laundering and the financing of terrorism, Bosnia and Herzegovina has established a 
reinforced legal framework and accompanying action plans; it must now ensure the measures 
are implemented. 

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

  start removing unjustified restrictions incompatible with the acquis on  the free movement 
of capital, including restrictions related to short-term capital transactions and acquisition 
of real estate; 

  introduce a register of beneficial ownership information for legal persons and a register of 

beneficial ownership information for legal arrangements. 

Chapter 5: Public procurement 

EU rules ensure that public procurement of goods, services and works in any Member State is 
transparent  and  open  to  all  EU  companies  on  the  basis  of  non-discrimination  and  equal 
treatment. 

In  line  with  the  provisions  of  the  SAA,  EU  companies  not  established  in  Bosnia  and 
Herzegovina  must  be  granted  access  to  contract  award  procedures  in  the  country  under 
treatment no less favourable than that accorded to companies of Bosnia and Herzegovina at 
the latest five years after its entry into force. 

94 

 
 
According to the constitutional and legal framework the competences for public procurement 
are predominantly exercised by the state level. Contracting authorities at all levels of authority 
apply the state level law on public procurement. 

As far as concessions are concerned, these are regulated at state, entity, cantonal and Brčko 
District level, resulting in 14 separate laws on concessions at all levels, while public-private 
partnerships  are  regulated  by  separate  laws  in  the  Republika  Srpska  entity,  in  the  Brčko 
District, and in nine cantons. 

The  2016-2020  strategy  for  development  of  public  procurement  provides  an  outline  for  the 
development,  implementation  and  monitoring  of  public  procurement  policy  in  Bosnia  and 
Herzegovina. Its strategic objectives include better coordination with the public procurement 
systems, further aligning the legislative framework with the acquis, enhancing transparency, 
strengthening institutional capacity and competition, and putting a stronger focus on a ‘value 
for money’ approach. 

In  the  area  of  public  procurement,  the  competent  institutions  at  state  level  are  the  Public 
Procurement  Agency  and  the  Procurement  Review  Body  which  act  as  the  second  instance 
authority  in  procurement  cases.  For  concessions  and  private  public  partnerships  various 
bodies  are  competent  at  the  state,  entity,  cantonal  and  Brčko  District  levels.  These 
include commissions  for  concessions,  commissions  for  public-private  partnerships,  the 
Council of Ministers at the state, and governments at entity, cantonal and Brčko District level, 
as well as the respective ministries competent in this area. . 

The Public Procurement  Law is  partially in  line  with  the  acquis. The  Law aims at  ensuring 
respect  for  the  principles  of  non-discrimination,  open  competition,  transparency  and  equal 
treatment.  However,  the  principle  of  non-discrimination  is  not  fully  applied  as  the  country 
maintains  a  system  of  domestic  preferences,  which,  should  be  gradually  phased  out,  in  line 
with the SAA rules referred to above. Furthermore, the Law covers exemptions, which are not 
covered  by  the  acquis.  The  country  needs  to  align  with  the  2014  public  procurement 
directives,  including  on  classic  procurement,  utilities  and  defence  procurement.  The 
legislative  framework  on  concessions  and  public  private  partnerships  is  highly  fragmented 
and  needs  to  be  aligned  with  the  EU  acquis.  The  administrative  bodies,  which  apply  this 
framework, needs formal channels of communication to resolve the current legal uncertainty 
and  avoid  high  administrative  costs.  All  legal  and  financial  instruments  used  in  the  area  of 
public procurement and concessions, including inter-governmental agreement concluded with 
third  countries,  should  comply  with  the  principles  of  transparency,  competition,  equal 
treatment and non-discrimination.   

As regards implementation and enforcement capacity, the Public Procurement Agency of 
Bosnia  and  Herzegovina  is  the  body  authorised  to  initiate,  implement  and  monitor  public 
procurement  reform  in all sectors. However, its  administrative capacities are insufficient  to 
fulfil its tasks. Specialised procurement functions need to be established in each contracting 
authority and be staffed with officials who have the relevant skills and expertise. 

The Public Procurement Agency manages the central procurement portal, where tender and 
contract notices and other important information and guidance are published and the relevant 
data from more than 95% of all contracting authorities in the country is collected. The use of 
electronic  procurement  enables  downloading  of  tender  documents.  The  e-auction  module, 
introduced in 2016, was used in 2 713 procedures in 2017. 

Statistics  collected  from  contracting  authorities  and  published  by  the  Public  Procurement 
Agency  provide  a  solid  tool  for  monitoring  the  use  of  procurement  procedures  and  show  a 
decrease in the use of the negotiated procedure without prior publication (21.4% of the value 

95 

 
of all awarded contracts in 2015, 10.9% in 2016 and 9.3% in 2017). However, the Agency’s 
monitoring  role  should  be  strengthened  to  enable  it  to  identify  potential  weaknesses  and 
irregularities in procurement procedures.  

Rights  on  an  efficient  remedies  system  are  laid  down  in  the  Bosnia  and  Herzegovina 
Constitution  and  in  the  Public  Procurement  Law.  The  legislation  on  review  procedures  is 
broadly in line with the relevant part of the acquis although time limits are excessively short. 
The  legislation  on  review  procedures  does  not  cover  concessions  and  private  public 
partnerships; these are covered by other regulations and need to be aligned with the  acquis. 
The  institutions  responsible  for  the  review  procedures  are  the  contracting  authority,  as  the 
first  instance  body,  the  Procurement  Review  Body  of  Bosnia  and  Herzegovina,  as  the 
second-instance  body  and  the  Court  of  Bosnia  and  Herzegovina  as  the  third  instance  body. 
The  Procurement  Review  Body,  with  offices  in  three  locations  (Sarajevo,  Banja  Luka  and 
Mostar), has 33 staff, which is insufficient for it to carry out its tasks. Consequently, a high 
number  of  complaints  are  unaddressed.  A  formal  mechanism  to  co-ordinate  the  three 
Procurement  Review  Body  offices  should  be  put  in  place  to  ensure  consistent  decision-
making and legal certainty. 

The  rising  trend  in  the  number  of  appeals  submitted  to  the  Procurement  Review  Body 
requires Bosnia and Herzegovina to strengthen the Body’s capacity. Only a small number of 
the Body’s decisions have been challenged before the Court of Bosnia and Herzegovina. The 
transparency  of  the  Procurement  Review  Body’s  decision-making  needs  to  be  significantly 
enhanced.  Decisions  taken  by  the  Body  and  by  the  Court  of  Bosnia  and  Herzegovina  have 
only been published since 2015, and the vast  body of its previous case-law is  inaccessible. 
The  Procurement  Review  Body’s  decisions  are  published  months  after  they  have  been 
adopted.  In  order  to  make  the  system  more  transparent,  decisions  of  both  the  Procurement 
Review Body  and the Court of Bosnia and Herzegovina should be published without delay. 

Bosnia and Herzegovina has some level of preparation in the area of public procurement.  

Special attention should be paid to aligning the legislation with the 2014 EU Directives in the 
area  of  classic  procurement,  utilities  and  concessions.  In  the  field  of  concessions,  the  legal 
framework  is  highly  fragmented  and  needs  to  be  harmonised  to  eliminate  overlaps, 
inconsistencies  and  uncertainties.  The  country  should  also  strengthen  the  functioning  of  the 
remedies system, including at branch offices, such that complaints and handled and resolved 
in a timely, effective and competent manner that will improve legal certainty and transparency 
in this area. 

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

  adopt the new law on public procurement and establish a specialised procurement function 

within contracting authorities; 

  strengthen  the  administrative  capacities  of  the  Public  Procurement  Agency  and  the 
Procurement  Review  Body  by  increasing  their  staff  and  providing  appropriate  training, 
and make the procurement process more transparent;  

  establish  a  formal  coordination  mechanism  within  the  Procurement  Review  Body  to 

ensure consistent decision-making by its three offices. 

Chapter 6: Company law 

The  EU  has  common  rules  on  the  formation,  registration  and  disclosure  requirements  of  a 
company,  with  complementary  rules  for  accounting  and  financial  reporting,  and  statutory 
audit. 

96 

 
There are no specific provisions in the SAA concerning company law or rules for accounting, 
financial  reporting  and  statutory  audit.  At  the  same  time,  Bosnia  and  Herzegovina  has 
committed  under  the  SAA  to  ensure  that  its  existing  laws  and  future  legislation  will  be 
gradually made compatible with the EU acquis and properly implemented and enforced.  

According to the constitutional and legal framework the competences in the area of company 
law are predominantly exercised by the two entities and the Brčko District. Matters related to 
companies  and  registration  procedures  for  businesses  are  regulated  at  the  level  of  the  two 
entities  and  Brčko  District,  whereas  the  state-level  Framework  Law  on  registration  of 
businesses lays down the manner of registration at all levels of authority. At the entity level, 
the  Federation  entity  Ministry  of  Energy,  Mining  and  Industry,  the  Republika  Srpska  entity 
Ministry of Economy and Entrepreneurship and the Department of Economic Development, 
Sports  and  Culture  of  the  Brčko  District  are  responsible  for  company  law,  whereas  the 
entities’  Ministries  of Justice  and  the  administrative  department  of  the  expert  service  of  the 
Judicial Commission of the Brčko District are responsible for legislation governing business 
registration. 

State-level legislation on corporate accounting and auditing lays down countrywide obligatory 
accounting  and  auditing  standards  a  professional  ethics  code,  and  common  educational  and 
licensing requirements. However, the entities and Brčko District are competent to adopt and 
implement detailed legislation in this area.  

At the state level the Accounting and Auditing Commission is responsible for establishing and 
overseeing  the  implementation  of  uniform  standards  throughout  the  country,  as  well  as  for 
ensuring  that  professional  education  and  licencing  processes  are  in  line  with  standards 
adopted by the International Federation of Accountants. The bodies responsible at entity level 
for this and for keeping the registers of statutory auditors and audit firms are the Ministries of 
Finance and the Directorate of Finance in Brčko District, including, while quality assurance is 
the  responsibility  of  professional  bodies  and  associations.  Public  oversight  in  this  area  is 
exercised  by  independent  boards  in  the  Federation  entity  and  Brčko  District,  while  in  the 
Republika  Srpska  entity  this  responsibility  is  with  respective  department  of  the  Ministry  of 
Finance.     

Company laws at all levels are to a limited extent aligned with the acquis in this field. There 
is no central registry of businesses in Bosnia and Herzegovina, no cross-entity/ Brčko District 
connection  between  the  companies’  registers,  or  mechanisms  in  place  allowing  for 
coordination and cooperation with registers from EU Member States or other countries. In this 
respect,  only  the  Republika  Srpska  entity  has  a  one-stop-shop  system  and  the  registration 
procedure  is  performed  by  the  Agency  for  Intermediary,  Information  Technology,  and 
Financial Services. . 

Corporate  accounting  is  regulated  by  legislation  at  state,  entities  and  Brčko  District  level. 
The  state-level  law  on  accounting  and  audit    regulates  the  application  of  mandatory 
accounting  and  auditing  standards,  uniform  qualifications,  training,  testing,  certification  and 
licensing  requirements  and  provides  the  legal  basis  for  the  Accounting  and  Auditing 
Commission of Bosnia and Herzegovina. The entities’ and Brčko District’ laws on accounting 
and auditing regulate accounting at each level, while all companies, including branch offices 
of legal entities with the head office outside the respective entity or Brčko District fall within 
the scope of the respective legislation according to the location of the head office.  

The  legislative  framework  in  this  area  is  partially  aligned  with  the  acquis.  As  regards  the 
accounting standards, the respective laws in the entities and Brčko District prescribe the use 
of International Financial Reporting Standards (IFRS) for annual and consolidated accounts of 
all legal entities. This is in line with the options offered in the acquis, to use the IFRS beyond 

97 

 
the  required  scope  of  consolidated  financial  statements  of  listed  entities,  however  more 
demanding on companies than the mere application of the Accounting Directive. In terms of 
company  and  group  size  requirements,  legislation  at  all  levels  does  not  comply  with  the 
acquis,  specifically  the  Accounting  Directive.  The  notion  of  ‘public  interest  entities’  was 
introduced by the Republika Srpska entity in the law on accounting and Audit; it needs to be 
introduced by the Federation entity and the Brčko  District. 

A  state-level  Accounting  and  Audit  Commission  of  Bosnia  and  Herzegovina  has  been 
established  as  an  expert  body  responsible  for  accounting  and  auditing  standards, 
accompanying  instructions  and  practices.  The  entities’  professional  bodies  are  authorised  to 
translate and officially publish standards. 

Auditing  is  regulated  under  the  same  legislation  as  corporate  accounting.  The  registers  of 
statutory auditors are kept at the level of entities and Brčko District by the respective entities' 
Ministries of Finance and the Brčko District Finance Directorate.  

The  legislative  framework  in  this  area  is  partially  aligned  with  the  acquis.  As  regards  the 
application  of  the  auditing  standards,  the  laws  in  the  entities  and  the  Brčko  District  require 
audits to be performed in accordance with international standards on auditing. This is in line 
with the EU Audit Directive. 

In the Republika Srpska  entity, the financial statements of public interest entities  as well as 
large  legal  persons  are  subject  to  mandatory  audit.  In  the  Federation  entity,  financial 
statements of large and medium enterprises and those that are listed on the securities market 
are subject to mandatory audit. Similarly, large enterprises and listed companies are subject to 
mandatory  audit  in  the  Brčko  District.  Public  audit  oversight  is  performed  by  the  Public 
Oversight Board in the Federation, by the Ministry of Finance in the Republika Srpska entity 
and by the Accounting and Auditing Board in Brčko District, all of which are financed from 
respective budgets. The respective authorities should allocate adequate financial resources to 
ensure  the  proper  oversight  of  the  public  audits.  In  line  with  acquis  requirements  on  audit, 
Bosnia and Herzegovina needs to designate a single authority with countrywide competence 
to bear the ultimate responsibility of the oversight of statutory auditors. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  regarding  the  company  law, 
corporate accounting and audit.  

Special attention should be paid to harmonising the legislation in these areas to ensure equal 
level  of  harmonisation  across  the  country  and  to  further  aligning  it  with  the  acquis.  The 
country should also take steps towards establishing a single countrywide competent authority 
bearing the ultimate responsibility for the oversight of statutory auditors. Adequate financing 
should be secured to ensure proper functioning of public audit oversight. 

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

  improve  the  connection  and  coordination  between  the  companies’  registers  among  both 

entities and the Brčko District; 

  establish one-stop-shops for companies in the Federation entity and Brčko District. 
Chapter 7: Intellectual property law 

The EU has harmonised rules for the legal protection of intellectual property rights (IPR) and 
of  copyright  and  related  rights.  Rules  for  the  legal  protection  of  IPRs  cover,  for  instance, 
patents and trademarks, designs, biotechnological inventions and pharmaceuticals. Rules for 
the legal protection of copyright and related rights cover, for instance, books, films, computer 
programs and broadcasting. 

98 

 
In line with the SAA, since August 2013 Bosnia and Herzegovina has to guarantee a level of 
protection of intellectual, industrial and commercial property rights similar to that existing in 
the EU, as well as including effective means of enforcing such rights. The SAA also requires 
the country to  accede to a number of multilateral  conventions on intellectual, industrial and 
commercial property rights. 

According to the constitutional and legal framework the legislative competences in the area of 
intellectual  property  law  rest  predominantly  with  the  state  level.  The  legislative  framework 
includes  Laws  on  copyright  and  related  rights,  collective  management  of  copyright  and 
related  rights,  trademark,  industrial  design,  patent,  geographical  origin,  and  topographies. 
Law enforcement is a task for all levels of Government, i.e.  the state level, the two entities, 
the cantons and Brčko District.  

In  the  area  of  copyright  and  neighbouring  rights,  the  legislative  framework  includes  the 
Law on Copyright and Related Rights in Bosnia and Herzegovina and the Law on Collective 
Management of Copyright and Related Rights as well as the implementing legislation. They 
are  largely  aligned  with  the    acquis,  although  further  alignment  is  necessary  to  take  into 
account  the recent  development  of the  acquis, in particular in  the area of orphan works and 
collective rights  management. Currently four organisations in  the country are authorised  for 
the collective management of copyright and related rights. 

The  Institute  for  Intellectual  Property  of  Bosnia  and  Herzegovina  (IIP)  operates  as  an 
independent administrative body. The development strategy of the institute gives it the role of 
coordinator in the system of enforcing intellectual property rights. The administrative and IT 
capacity of the institute is adequate.  The information and educational function of the institute 
needs  to  be  strengthened  through  making  the  dedicated  centres  established  for  this  purpose 
fully operational. 

In the area of industrial property rights, the legislative framework is designed to be broadly 
aligned  with  the  EU  acquis.  However,  further  alignment  is  necessary  to  take  into  account  
recent  developments  in  the  acquis,  in  particular  in  the  area  of  trademarks  and  trade  secrets. 
Bosnia and Herzegovina has acceded to the relevant multilateral conventions, as required by 
the SAA, except for the European Patent Convention, where it has yet to adopt the relevant 
amendments to the Law on Patents. 

Competences  in  the  field  enforcement  of  intellectual  property  rights  are  shared  by  a  large 
number of institutions at various levels of government across the country. These include the 
Institute for Intellectual Property of Bosnia and Herzegovina, the Indirect Taxation Authority 
of Bosnia and Herzegovina, the State Investigation and Protection Agency, and inspectorates 
competent  on  market  control  at  all  levels.  Bosnia  and  Herzegovina  has  recently  adopted  a 
strategy  in  this  area,  but  the  administrative  capacity  of  enforcement  institutions  remains 
insufficient. 

Interinstitutional  cooperation  takes  place  on  a  bilateral  and  ad  hoc  basis  and  is  not 
institutionalised. The country still does not have reliable system for collecting and analysing 
data  and  for  data  exchange  between  the  various  enforcement  institutions.  Steps  need  to  be 
taken  to  ensure  businesses  and  consumers  are  involved  in  preventing  counterfeiting  and 
piracy,  including  through  awareness-raising  campaign,  across  all  enforcement  institutions. 
Prosecutors, judges and court panels handling cases involving intellectual property law should 
be better specialised.  

Bosnia and Herzegovina is moderately prepared in the area of intellectual property law.  

99 

 
The country should pay special attention to improving its enforcement record in this area. The 
capacity and coordination of its enforcement institutions should therefore be strengthened to 
ensure intellectual property rights are protected. 

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

  implement the recently adopted strategy on enforcing intellectual property rights; 
  adopt  the  amendments  to  the  Law  on  Patents  drafted  by  the  Institute  for  Intellectual 

Property of Bosnia and Herzegovina. 

Chapter 8: Competition policy 

EU rules protect free competition. They include antitrust rules against restrictive agreements 
between companies and abuse of dominant position, and also include rules on concentrations 
between  companies  which  would  significantly  impede  competition.  EU  rules  also  set  out  a 
system  of  State  aid  control.  Governments  are  only  allowed  to  grant  State  aid  if  restrictive 
conditions are met, with a view to preventing  distortion of competition 

The  SAA  includes  provisions  stemming  from  the  acquis  on  competition,  covering 
anti-competitive  agreements,  abuses  of  dominant  position  and  State  aid  as  well  as  rules 
applied to public undertakings and undertakings with special and exclusive rights. The SAA 
calls  for  operationally  independent  authorities  to  supervise  application  of  the  competition 
rules in Bosnia and Herzegovina. 

According  to  the  constitutional  and  legal  framework,  the  competences  in  the  area  of 
competition and State aid rest predominantly with the state level. The legislative framework 
includes state-level  legislation  on competition  and State aid  control.  In the area of State aid 
the state level, entities and Brčko District may also adopt by-laws harmonised with state level 
legislation. Entities and cantons also own public utility companies which enjoy special rights 
and need to be subject to the applicable State aid legislation.   

The  relevant  authorities  in  charge  of  enforcing  competition  and  State  Aid  rules  are  the 
Competition Council, the State Aid Council and the Ministry of Foreign Trade and Economic 
Relations,  all  at  state  level.  In  the  area  of  State  aid,  the  implementing  authorities  are  the 
Council  of  Ministers  and  the  entities’  and  Brčko  District  governments  through  their 
competent authorities, i.e. the Ministry of Foreign Trade and Economic Relations, the entities’ 
Ministries of Finance and the Brčko District Directorate of Finance.  

The legislative framework on antitrust and mergers is broadly aligned with the acquis. The 
Law on Competition of Bosnia and Herzegovina largely mirrors the provisions of the Treaty 
on  the  Functioning  of  the  European  Union  on  restrictive  agreements  and  on  abuse  of 
dominant position. It provides for an ex ante control of the effects on competition of mergers 
above  certain  turnover  thresholds,  in  line  with  the  principles  of  the  EU  Merger  Regulation. 
Implementing  legislation  providing  further  substantive  and  procedural  rules  as  well  as 
guidance on implementing competition rules is in place and aims at broadly complying with 
the acquis. Secondary legislation needs to be further aligned with the acquis. 

As  regards  the  institutional  framework,  the  Competition  Council  is  an  operationally 
independent  body  responsible  for  implementing  the  Law  on  Competition.  The  Competition 
Council has exclusive competence and decision-making power in competition matters. 

The  Competition  Council  is  composed  of  six  members  appointed  from  among  legal  and 
economic  experts  by  the  Council  of  Ministers  and  by  the  entity  governments.  They  are 
assisted  by  20  staff  members.  The  functioning  of  the  Competition  Council  is  significantly 
impeded  by  tight  procedural  deadlines  and  ethnic-based  decision-making  procedures. 

100 

 
 
Decisions  of  the  Competition  Council  must  be  supported  by  at  least  one  member  of  the 
Council representing  each constituent  people in  order to  have legal  effect.  This  could  result 
for  instance  in  a  number  of  cases  where  the  potential  abuse  of  dominant  position  is  not 
prohibited  or  the  concentration  is  automatically  approved  with  the  expiry  of  the  procedural 
deadlines. As a result, the relevant provisions in the area of competition, even if aligned with 
the acquis, fail to be implemented in practice.  

The Competition Council may act upon a complaint or notification, or on its own initiative. 
When  carrying  out  an  investigation,  it  may  issue  requests  for  information  and  carry  out 
unannounced on-site inspections. It may impose fines and remedies if it identifies a breach of 
competition  rules.  It  applies  a  leniency  policy  for  fines  in  cartel  cases  where  companies 
provide information. The Competition Council prohibits or authorises mergers, the latter with 
or without conditions, and provides opinions on draft legislation that may affect competition. 
In  line  with  the  EU  rules,  the  decisions  of  the  Competition  Council  can  be  challenged.  An 
appeal may be launched before the Court of Bosnia and Herzegovina, as administrative court 
acting in second instance. 

On administrative capacity, while the Competition Council has adequate human resources, the 
staff lack the required expertise and investigative capacity. Regarding enforcement, a number 
of decisions issued by the Competition Council imposed fines. Nevertheless, the Competition 
Council  needs  to  step  up  its  enforcement  activities,  in  particular  on  cartels,  by  conducting 
more  on-site  inspections,  imposing  remedies  in  merger  cases  and  raising  awareness  on  its 
leniency programme. The court’s capacity to handle complex competition cases needs to be 
reinforced. 

As regards State aid, the legislative framework is partially aligned with the acquis and with 
the  provisions  of  the  SAA.  It  comprises  the  Law  on  the  State  aid  system  in  Bosnia  and 
Herzegovina  and  the  regulations  adopted  by  the  Council  of  Ministers  and  the  entities’  and 
Brčko  District  governments.  The  two  entities  adopted  decrees  on  the  purpose,  criteria  and 
conditions for granting State aid, with the aim of further alignment with acquis. Overall, the 
relevant  by-laws  are  not  adopted  evenly  across  the  country.  For  instance,  a  decision  on  de 
minimis  aid,  and  on  aid  to  services  of  general  economic  interest,  is  only  in  place  in  the 
Federation entity. A regional aid map has yet to be drawn up. This aid map would show the 
geographical  areas  determined  at  NUTS  II  level  where  companies  are  eligible  to  receive 
regional State aid at defined intensities in line with the regional State aid guidelines. 

As regards the institutional framework, the State Aid Council is responsible for ensuring the 
consistent  implementation  of  the  Law  on  State  Aid  System.  The  State  Aid  Council  is 
composed  of  eight  members  appointed  by  the  Council  of  Ministers  and by  the  entities’  and  
Brčko  District  governments.  A  secretariat  provides  it  with  expertise,  technical  and  legal 
assistance. The functioning of the State Aid Council is significantly impeded by ethnic-based 
decision-making  procedures,  which  require  decisions  of  the  Council  to  be  supported  by  at 
least one representative of each constituent people in order to have legal effect. As a result, 
the  relevant  provisions  in  the  area  of  State  aid,  even  if  aligned  with  the  acquis,  could 
potentially fail to be implemented in practice. The State Aid Council needs to demonstrate its 
independence from  aid-granting institutions, in  particular ministries, and  to  establish a solid 
record of enforcement, including on the implementation of large projects between Bosnia and 
Herzegovina and other countries.  

Under the Law on State aid system, the State aid grantor must notify all state aid measures to 
the  State  Aid  Council  before  the  aid  measures  may  be  granted.  The  State  Aid  Council  can 
order the recovery of illegal aid, with interest if the non-notified aid is deemed incompatible 
with  State  aid  rules.  It  can  launch  ex-officio  investigations  and  carry  out  subsequent 

101 

 
assessments  of  State  aid  granted  if  there  are  sufficient  indications  that  the  aid  had  been 
illegally granted.   

The  enforcement  capacity  of  the  State  Aid  Council  is  insufficient.  With  only  seven  staff 
members, its secretariat is not in a position to fulfil its tasks. The Republika Srpska entity is 
not paying its full contribution to the financing of the Council, despite a court judgement. In 
the  recent  years,  the  State  Aid  Council  has  issued  very  few  decisions;  all  were  positive  or 
found  no  State  aid  element.  This  raises  significant  concerns  on  its  enforcement  capacity.  A 
significant majority of State aid measures are put in place by granting authorities before they 
are  notified  to  and  approved  by  the  State  Aid  Council.  The  alignment  of  existing  State  aid 
schemes with obligations arising from the SAA and EU State aid rules is at a very early stage. 
Bosnia and Herzegovina needs to ensure the transparency of all State aid measures granted.  

Concerning  liberalisation,  the  Law  on  Competition  and  the  Law  on  State  aid  system  are 
applicable to public undertakings and undertakings with special or exclusive rights. The rules 
on financing of services of general economic interest are not fully aligned with the acquis. 

Bosnia and Herzegovina has some level of preparation in the area of competition policy. 

Bosnia and Herzegovina should continue to further align its legislative framework in the area 
of competition and State aid with the relevant parts of the acquis. 

In  order  to  ensure  the  effective  functioning  of  the  Competition  Council,  Bosnia  and 
Herzegovina  needs  to  revise  its  decision-making  procedures,  removing  ethnic  vetoes,  and 
amend  the  procedural  deadlines  to  allow  sufficient  time  for  adopting  decisions.  The 
procedures  for  appointing  the  members  of  the  Council  need  to  be  simplified.  Similarly,  the 
decision-making  procedures  of  the  State  Aid  Council  need  to  be  revised  to  remove  ethnic 
vetoes. Special attention needs to be paid to ensuring consistent enforcement of State aid rules 
throughout  the  country.  The  State  Aid  Council  needs  to  demonstrate  its  operational 
independence  and  build  a  solid  track  record  of  enforced  decisions.  To  this  end,  the  country 
should significantly strengthen the administrative capacity of the State Aid Council and step 
up efforts to raise awareness about State aid rules at all levels.  

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

  improve  the  enforcement  record  of  the  State  Aid  Council  by  ensuring  that  State  aid 

measures are notified ex ante by granting authorities; 
  align the existing aid schemes with the SAA provisions; 
  ensure  that  the  State  Aid  Council  is  operationally  independent  and  obtains  adequate 

financing, including outstanding contributions from the Republika Srpska entity. 

Chapter 9: Financial services 

EU  rules  aim  to  ensure  fair  competition  and  the  stability  of  financial  institutions,  namely 
banking, insurance, supplementary pensions, investment services and securities markets. They 
include rules on the authorisation, operation and supervision of these institutions. 

The  SAA  stipulates  that  the  Parties  must  cooperate  with  the  aim  of  establishing  and 
developing a suitable framework for encouraging the banking, insurance and other financial 
services sectors in Bosnia and Herzegovina.  

According  to  the  constitutional  and  legal  framework  the  competences  for  financial  services 
rest  predominantly  with  the  two  entities  and  Brčko  District.  The  state  level  exercises  a 
coordination  and  legal  harmonisation  role  and  represents  and  commits  the  country  at 
international level.  

102 

 
 
The main bodies at state level are the Ministry of Finance and Treasury, the Central Bank, the 
Agency for  Insurance  and the Deposit  Insurance  Agency as well as the Fiscal  Council. The 
bodies responsible at the level of entities are the Ministries of Finance, Banking and Insurance 
Agencies  and  the  Security  Commissions.  Brčko  District  has  its  own  Securities  Commission 
while the banking and insurance markets are supervised by respective entities’ institutions in 
line with entity-level legislation. 

As  regards  banks  and  financial  conglomerates,  banks,  microcredit  organisations,  leasing 
providers, factoring companies in the Federation entity and savings and credit organisations in 
the  Republika  Srpska  entity  are  forming  the  banking  system.  Foreign  credit  institutions  can 
establish a bank in Bosnia and Herzegovina, and only the banks that are locally established as 
legal entities can obtain a licence to operate in the country. Once established, i.e. licensed by 
one of the banking agencies at entity level, both domestically- and foreign-owned banks can 
operate under the same conditions. The minimum equity capital required by law is BAM 15 
million  (EUR  7.67  million).  Additional  requirements,  such  as  approval  of  the  competent 
banking agency, need to be met if a bank registered in one entity wants to open a branch in 
another entity. Upon accession, these laws will need to be repealed. Reliance on home country 
control  for  foreign  banks  varies  according  to  several  factors,  in  line  with  a  number  of 
memorandum of understanding that entity banking agencies have signed with supervisors in 
countries of residence of foreign credit institutions that have established ‘subsidiary banks’ in 
Bosnia  and  Herzegovina.  Once  part  of  the  European  Union,  the  country  will  need  to  align 
with the ‘single passport’ principles.   

As regards capital adequacy and supervision, Bosnia and Herzegovina implements the Basel I 
requirements.  Provisions  relating  to  prudential  ratios  are  defined  at  the  entity  level  by  the 
banking  agency  of  the  Federation  entity  and  the  banking  agency  of  the  Republika  Srpska 
entity.  The  sector’s  overall  capital  adequacy  ratio  is  well  above  the  country’s  minimum  of 
12%  (by  the  end  of  2018,  it  stood  at  15.5%)  and  has  never  fallen  below  14.86%  since 
monitoring began in 2004. Banks have to maintain average ten-day minimum liquidity in cash 
up to at least 10% of short -term sources. The financial leverage ratio is set at a minimum of 
6%. Strategies on fully implementing Basel III are in place in both entities under which banks 
must gradually improve their ability to apply Basel III. Implementing of Basel III reforms will 
help  bring  the  country  into  line  with  the  acquis  in  that  area.  As  part  of  their  strategies,  the 
Banking  Agency  of  the  Republika  Srpska  entity  and  the  Federation  entity  Banking  Agency 
have  adopted  a  number  of  measures  aimed  at  aligning  with  the  Capital  Requirements 
Directive (CRD  IV) and the Capital  Requirements  Regulation  (CRR).  Implementation  work 
needs to continue in order to meet the capital requirements of the acquis.  

The  system  of  deposit  insurance  is  based  on  the  respective  law  at  the  state  level  and  is 
operationalised through the Deposit Insurance Agency. The eligible deposits are insured up to 
the amount of EUR  25.500. Bosnia and Herzegovina needs to increase the coverage to EUR  
100  000  to  comply  with  EU  acquis  requirements.  Current  legislation  does  not  provide  for 
automatic membership in the deposit insurance scheme. 23 banks currently licensed are part 
of  the  deposit  insurance  scheme.  In  the  future,  Bosnia  and  Herzegovina  will  need  to  align 
legislation with the Deposit Guarantee Scheme Directive. 

The  Central  Bank  of  Bosnia  and  Herzegovina  is  in  charge  of  coordinating  the  activities  of 
entity  agencies  responsible  for  licensing  and  supervising  entities’  banks.  Coordination  is 
implemented  through  monthly  meetings,  regular  exchange  of  information  and  joint  on-site 
inspections of systemically important banks. The principles of bank supervision coordination 
and  mutual  cooperation  are  defined  in  a  memorandum  signed  by  these  institutions  in  2008. 
The  standing  committee  for  financial  stability  chaired  by  the  Central  Bank  governor  deals 
with the broader issues of financial stability and financial crisis management. This committee 

103 

 
may  not  order  institutions  to  implement  any  measures  but  can  produce  non-binding 
recommendations. As supervisory authorities, entity banking agencies issue operating licenses 
to banks if various requirements are met, including minimum amount of founding capital and 
adequate  system  for  management  of  risks.  The  supervisory  authorities  carry  out  on-site 
inspections  and  publish  annual  reports.  Entity  legislation  provides  for  the  operational  and 
financial  independence  of  supervisory  authorities  and  lays  down  fees  for  licenses.  The 
operations of supervisory authorities are monitored by legislative authorities in both entities. 
Supervision  over  operation  of  banks  in  the  Brčko  District  is  conducted  by  the  entities’ 
banking agencies, on the basis of the headquarter of the mother bank. 

Harmonised  entity  banking  laws  and  laws  on  their  respective  banking  agencies  are  in  place 
and  provide  at  this  stage  of  development  for  a  largely  adequate  legal  and  regulatory 
environment of the banking sector, though the new resolution framework is incomplete. The 
number of banks is high in relation to the market size, even after the Republika Srpska entity 
bankrupted two banks in 2017 in agreement with the IMF. The ratio of non-performing loans 
is  relatively  high (8.8%  in  the fourth  quarter 2018). All  banks have completed asset quality 
reviews,  based  on  which  banking  agencies  have  approved  plans  to  address  identified 
weaknesses,  including  risk  management  and  supervisory  practices.  Bosnia  and  Herzegovina 
should strengthen the financial sector by addressing non-performing loans as a priority.  

A state-level Law on Deposit Insurance in Banks needs to be adopted to enable the use of the 
deposit  insurance  fund  for  resolution  purposes.  This  is  an  essential  feature  of  the  new 
resolution framework. Reforms to align with the EU Bank Recovery and Resolution Directive 
are needed to attain the required level of conformity. In addition, the authorities have to adopt 
a common methodology for determining systemically important banks. Altogether, the entity 
banking laws and laws on their respective banking agencies and, once adopted, the state-level 
Law  on  Deposit  Insurance  in  Banks  should  strengthen  supervisors’  corrective  and 
enforcement powers, introduce consolidated supervision of banking groups across the entities, 
and establish a single banking resolution framework for the country. To improve cooperation 
and  information  sharing  in  the  areas  of  bank  supervision,  crisis  preparedness  and 
management, and systemic risk oversight, a comprehensive Financial Stability Memorandum 
of Understanding should be signed. Entity legislation on bankruptcy and liquidation applies to 
all legal entities, including banks and financial institutions.  

There  is  no  explicit  legislation  at  any  level,  which  governs  financial  conglomerates.  
Consequently,  there  are  no  supervising  activities  in  this  area.  However,  the  entity  banking 
legislation contains provisions on banking groups and, the supervision of banking groups on a 
consolidated basis, and defines measures that a competent banking agency can take towards a 
member of a banking group.  

As  regards  insurance  and  occupational  pensions,  Bosnia  and  Herzegovina  established  a 
countrywide  institutional  framework  for  legal  harmonisation  to  ensure  equal  conditions  for 
insurance  companies  within  the  country  and  for  the  cross-border  supply  of  services.  The 
insurance sector accounts for 2.1% of the country’s GDP and for 5.57% of its financial sector 
assets.  The  amount  of  premiums  in  2017  was  EUR    349  million  (mainly  non-life  and 
compulsory traffic insurance).  

The  main  competences  in  this  area  are  defined  in  the  entity-level  legislation  on  insurance 
companies, intermediation and on compulsory traffic insurance. This legislation lays down the 
rights for establishment and operation of insurance companies, their branches in another entity 
and  for  the  cross-border  supply  of  services.  The  2004  Law  on  Insurance  Agency  of  Bosnia 
and  Herzegovina  provide  for  the  legal  harmonisation,  supervisory  cooperation  between  the 
entities and representation in the international relations.   

104 

 
Entity-level  agencies  are  in  charge  of  supervising  insurance  companies.  The  agency 
responsible is determined according to the head office location of the subject of supervision. 
These  authorities  are  required  by  law  to  be  operationally  and  financially  independent.  The 
supervisors  are  accountable  to  the  government  in  the  Federation  entity  and  to  the  National 
Assembly in the case of the Republika Srpska entity. They must issue regular reports on the 
insurance market. Entity legislation stipulates that they must be autonomous and independent. 
Supervisory coordination between the entities is entrusted to the Insurance Agency of Bosnia 
and  Herzegovina,  which  is  responsible  for  acquis  alignment.  This  Agency’s  competences, 
staffing  and  resources  are  inadequate  for  ensuring  that  entities  consistently  incorporate  its 
recommendations in their draft legislation. This must be addressed in order for the Agency to 
effectively coordinating reforms in the insurance sector.  

Under  entity  laws  on  insurance,  as  amended  in  2017,  insurance  companies  must  be  granted 
licences to  perform  insurance  activities under equal  conditions  throughout  the country. This 
applies both to domestically- and foreign-owned companies. An insurance company seated in 
one  entity  may  operate  through  a  branch  office  in  another  entity,  but  its  operations  are 
supervised  by  the  head  office’s  entity  regulator.  Cross-border  services  are  allowed  only  to 
insure  against  risks  that  cannot  be  contracted  in  Bosnia  and  Herzegovina,  and  direct 
reinsurance with a foreign company is possible only in the Republika Srpska entity.  

The  insurance  market  is  not  liberalised  for  compulsory  traffic  insurance.  The  state-level 
insurance  agency’s  management  board  adopted  guidelines  for  the  gradual  liberalisation  of 
premiums  throughout  the  country.  These  guidelines  need  to  be  implemented  by  entity 
insurance agencies. 

Financial  supervision  over  occupational  pension  funds  and  voluntary  pension  funds  is 
assigned  to  the  entities’  insurance  agencies  and  to  the  Securities  Commission  in  the 
Federation  entity  for  the  fund’s  accumulation  phase.  In  the  Federation  entity,  the  Securities 
Commission  and  the  Insurance  Supervision  Agency  share  responsibilities  and  are  the 
competent authorities, as regulated by the Law on Voluntary Pension Funds. In the Republika 
Srpska entity, the Insurance Agency supervises voluntary pension funds. 

Financial  market  infrastructure,  is  the  responsibility  of  the  entity  ministries  of  finance. 
Entity securities commissions are established under relevant entity legislation, which entrusts 
them  with  licensing,  as  well  as  oversight  and  supervision  of  securities  issuing  and  trading. 
Brčko District also has its own legislation and securities commission that acts as the capital 
market 
respective  entity/district 
parliament/assembly. The legislation at any level is not in line with the EU acquis, including 
the Settlement Finality Directive. 

regulator.  Regulators  are  accountable 

their 

to 

As far as securities markets and investment services are concerned, securities commissions 
at  entities  and  Brčko  District  levels  are  designated  supervisors.  The  law  defines  their 
operational  independence.  Entities  have  established  corresponding  registers  of  securities, 
while the Brčko District Securities Commission also uses entity registers. Overall, Bosnia and 
Herzegovina needs to ensure the efficiency, resilience and transparency of securities markets. 
This involves improving coordination between the entities to ensure consistent alignment with 
key areas of the EU securities market acquis, such as market manipulation and market abuse 
rules and includes alignment with the requirements under the markets in financial instruments 
legislation (MIFID II and MiFIR). 

Regarding investment funds, both entities and Brčko District have legislation in place about 
investment  funds,  designating  the  respective  securities  commissions  as  regulators  and 
supervisors  of  the  activities  of  investment  funds.  Investment  fund  management  activities 
require  prior  consent  of  the  respective  securities  commissions.  The  definition  of  investment 

105 

 
services in the legislation in force is not in line with the acquis, but recognises broker-dealer 
companies,  established  as  joint-stock  companies,  that  perform  securities  operations  as 
permitted  by  the  respective  securities  commission.  Banks  can  also  perform  securities 
operations  under  specific  conditions  stipulated  in  relevant  legislation.  Prudential  ratios  are 
defined  implicitly  in  the  Federation  entity  and  the  Brčko  District,  and  explicitly  in  the 
Republika Srpska entity. Neither entities nor Brčko District have investor protection schemes 
in place. 

Bosnia and Herzegovina has some level of preparation/is moderately prepared in the area 
of financial services.  

The financial sector is broadly stable,  but the market  and supervision of it are hampered by 
fragmentation.  Bosnia  and  Herzegovina  should  pay  particular  attention  to  coordinating  the 
alignment of entity legislation with the acquis, including in banking, securities market and the 
insurance  sector.  It  should  also  pay  attention  to  improving  coordination,  cooperation  and 
information exchange among various financial sector authorities to safeguard financial sector 
responsibility.  The adherence to the ‘single passport’ principle requires further liberalisation 
of  the  banking  sector  to  allow  the  establishment  of  foreign  banks’  branch  offices  and/or 
cross-border service provision. A plan for coordinated alignment of entity legislation with the 
acquis is needed in this area. The overall level of preparedness is low in the securities market. 
The  country  needs  to  amend  legislation  on  compulsory  traffic  insurance  to  liberalise  its 
insurance market. Bosnia and Herzegovina should strengthen the capacities of the insurance 
agency and develop a consolidated plan for alignment with the acquis in the insurance sector. 

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

  adopt a law on deposit insurance in order to  complete the bank resolution framework in 
line with the Deposit Guarantee Scheme Directive and the Bank Recovery and Resolution 
Directive; 

  sign a Financial Stability Memorandum of Understanding; 
  demonstrate  improvements  in  the  corrective  and  enforcement  powers  of  supervisory 

bodies (including banking agencies).  

Chapter 10: Information society and media 

for  electronic 
The  EU  supports 
communications, electronic commerce and audio-visual services. The rules protect consumers 
and support universal availability of modern services. 

internal  market 

functioning  of 

the  smooth 

the 

The SAA provides that Bosnia and Herzegovina and EU Member States shall cooperate with 
a view to further developing the information society, including preparing society as a whole 
for  digitalisation,  attracting  investments  and  ensuring  the  interoperability  of  networks  and 
services.  

According  to  the  constitutional  and  legal  framework,  the  competences  in  the  area  of 
information  society  and  media  rest  predominantly  with  the  state  level,  which  adopts 
legislation  on  inter  alia  the  public  broadcasting  system,  communications  e-signature, 
e-Commerce. The two entities and Brčko District  also  have  competences on certain  matters 
covered  by  this  chapter,  while  the  cantonal  competences  are  limited  to  local  broadcasting, 
cinematography and film heritage. 

The main actors at the state level are the Ministry of Communication and Transport with its 
Office  of  Supervision  and  Accreditation  of  Certifiers  and  the  Communications  Regulatory 
Agency.  At  entity  level,  certain  matters  falling  outside  the  scope  of  the  state-level 

106 

 
 
competences  are  dealt  with  by  the  Ministry  of  Transport  and  Communications  in  the 
Federation entity, and by the Ministry of Transport and Communications and the Ministry of 
Scientific-Technological  Development,  Higher  Education  and  Information  Society  in  the 
Republika Srpska entity.  

The  Republika  Srpska  entity  contests  the  competence  of  the  state  level  to  legislate 
countrywide  and  execute  necessary  functions  in  the  area  of  information  society  services, 
including  on  matters  related  to  ensuring  an  interoperable  e-signature  system  and  the 
state-level  authority  carrying  out  the  necessary  supervision  and  accreditation  of  the 
countrywide use of e-signature. 

Regarding electronic communications and information and communication technology, a 
Law  on  Communications  was  adopted  in  2003.  The  SAA  sets  Bosnia  and  Herzegovina’s 
objective to adopt a new law on electronic communications and electronic media aligned with 
the  EU  acquis  in  this  sector  one  year  after  the  entry  into  force.  Legislation  enabling  the 
liberalisation  of  the  telecommunications  and  electronic  media  sector  is  not  in  place.  The 
European emergency number 112, which should be operational throughout the country, is not 
in place.  

In the field of the telecommunications market, 3 incumbent operators provide both fixed and 
mobile  telephony,  11  alternative  operators  provide  voice  services  in  fixed  telephony  and  5 
provide  mobile  services.  The  coverage  of  fixed  telephony  is  21.5%.  For  mobile  telephony, 
there are 3 licensed incumbent operators and 5 providers of mobile services. The  number of 
users  of  mobile  services  is  3,404,085  (97.42%  penetration  rate).  There  are  70  internet 
providers  and  3,064,072  internet  users  (86.77%  penetration  rate).  The  penetration  of 
broadband  internet  is  19.83%.  As  regards  roaming  tariff  policies,  the  Communications 
Regulatory Agency has implemented the regional roaming agreement since 2014, which has 
resulted  in  roaming  charges  falling  by  up  to  30%.  Bosnia  and  Herzegovina  signed  the  new 
regional roaming agreement in Belgrade in April 2019, enabling Roam like at Home (RLAH) 
as of July 2021.  

A  policy  on  the  electronic  communication  sectors  for  2017-2021  and  the  accompanying 
implementation action plan are in place. This policy is a prerequisite for the development of 
the regulatory framework in the area of radio frequency. The basic technical requirements for 
implementing  the  long-term  evolution  system  in  all  envisaged  European  plans  intended  for 
networks of mobile operators are  also  in  place.  The country has introduced the 4G network 
but does not have a broadband strategy.  

In  the  field  of  information  society  services,  the  2017-2021  policy  for  development  of  the 
information  society  of  Bosnia  and  Herzegovina  is  in  place.  The  policy  is  aligned  with  the 
strategic pillars of the information  and communication technologies from the digital  agenda 
for  Europe.  Efforts  should  be  made  to  further  align  this  policy  with  the  EU  digital  single 
market  strategy  as  well  as  the  Digital  Agenda  for  the  Western  Balkans.  Bosnia  and 
Herzegovina  does  not  have  a  countrywide  strategy  or  action  plan  for  the  development  of 
information society.   

In  order  to  monitor  the progress  made  towards  the  compliance  with  EU  rules  for  electronic 
communications  and  information  society  services  and  the  convergence  with  the  internal 
market, as well as the alignment with the Digital Agenda for the Western Balkans, the country 
need  to  improve  the  collection  of  statistical  data  on  digital  performance  and  digital 
competitiveness.  

The state-level Law on electronic legal and business traffic (e-commerce law) is in place, and 
is  aligned  to  a  great  extent  with  the  Electronic  Commerce  Directive.  The  Inspectors  Office 

107 

 
established within the Ministry of Communications and Transport of Bosnia and Herzegovina 
is in charge of supervising its implementation. No inspector has been nominated to carry on 
the  inspection  and  supervision  since  the  law  is  not  being  implemented  in  the  absence  of  a 
framework for the electronic signature. 

The  Office  for  Supervision  and  Accreditation  of  Certifiers  has  been  established  within  the 
Ministry of Communication and Transport of Bosnia and Herzegovina. The country needs to 
adopt  legislation  on  electronic  identification  and  trust  services  for  electronic  transactions  in 
compliance with the acquis. Bosnia and Herzegovina has to adopt a national strategy on the 
security of networks and information systems and to designate a countrywide single point of 
contact  responsible  for  coordination  and  cross-border  cooperation.  The  country  needs  to 
establish  Computer  Security  Incident  Response  Teams  (CSIRT)  network  that  will  facilitate 
strategic cooperation and the exchange of information. 

As regards the interoperability of networks and services, the legal framework required for the 
interoperability and ensuring the foundation of interoperable networks and services between 
public administration institutions is in place. The country has to enable provision of electronic 
services,  which  is  preconditioned  with  the  introduction  of  interoperable  e-signature  system 
throughout  the  country.  Public  registries,  though  existent  in  some  areas,  are  not  necessarily 
interoperable. With regard to audio-visual policy, the Law on Communication establishes the 
Communications  Regulatory  Agency  (CRA)  as  the  regulator  of  the  market  for  audio-visual 
media  services  and  broadcasting.  The  Agency  licenses  and  monitors  radio  and  television 
broadcasting,  including  networks  and  has  the  power  to  regulate  the  media  market.  The 
Agency  enjoys  political  and  institutional  independence.  Its  financial  independence  has  been 
improved but is not yet fully ensured. Its director is appointed by the Council of Ministers and 
its  seven-member  Council  by  the  Parliamentary  assembly,  with  consideration  of  ethnic  and 
gender balance. The members of the CRA Council are currently all men. The CRA Council 
decides  by  consensus  or  by  simple  majority  with  a  quorum  of  four  members  present  and 
voting.  Bosnia  and  Herzegovina  needs  to  improve  the  procedure  to  appoint  the  CRA 
management  to  ensure  its  transparency  and  openness,  and  to  provide  sufficient  safeguards 
against any political and economic interference.  

Bosnia  and  Herzegovina  needs  to  adopt  a  law  of  electronic  communications  and  electronic 
media in line with the Audio-Visual Media Services Directive, as well as legislation on media 
ownership transparency, including a register to enable insight into ownership structures. The 
2003 Law on the public broadcasting system is only partially implemented, and entity laws on 
broadcasting legislation are not in line with it. Therefore, the three public service broadcasters 
are exposed to political influence, in particular through politically controlled steering boards, 
with a worrying trend of self-censorship.  

The entities collect the radio and TV fees differently (directly and via post in the  Republika 
Srpska  entity,  and  via  electricity  bills  in  some  areas  of  the  Federation  entity);  the  legal 
provisions requiring that fees are collected in a single account are not respected. Entity-level 
broadcasters also have substantial unpaid debts towards the state-level broadcaster, which are 
subject to long court cases. These issues threaten the financial independence and sustainability 
of the public broadcasting system. A sustainable solution needs to be found.  

The  law  provides  for  a  public  broadcasting  system  corporation  as  a  joint  body  for  all  three 
public broadcasters. This corporation would work as  network operator  tasked with  ensuring 
coordination in using and managing technical resources of the transmission and broadcasting 
infrastructure. Such a corporation has never been established.   

Bosnia  and  Herzegovina  operates  exclusively  through  analogue  technology.  The  country 
missed  the  June  2015  international  deadline  for  the  digital  switchover  set  by  the  Geneva 

108 

 
agreement GE-06. Only the first phase of the digitalisation process has been completed, out of 
three.  The  lack  of  digital  switchover  jeopardises  the  operation  of  certain  radio  frequency 
transmitter both locally and regionally. 

The  country  does  not  have  a  list  of  important  events  to  be  transmitted  by  the  public 
broadcasting system. The financing of local public broadcasters from the public budget also 
needs  to  be  brought  into  line  with  the  acquis  as  it  amounts  to  State  aid  and  provides 
opportunities for political pressure and influence. (see also Chapter 23, Fundamental Rights) 

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparations  in  the  area  of  information 
society and media. The legislative and strategic framework are incomplete. 

Bosnia and Herzegovina is not meeting its obligations under the SAA, as the  legislation in 
the  area  is  not  in  place  and  aligned  with  the  acquis.  Bosnia  and  Herzegovina  needs  to 
introduce  the  European  emergency  number  112,  the  e-signature  system,  and  a  network  of 
Computer Security Incident Response Teams. Public institutions have to establish registers to 
provide  electronic  services.  The  financial  independence  of  the  Communication  Regulatory 
Agency  and  the  procedure  to  appoint  its  management  have  to  be  improved.  Bosnia  and 
Herzegovina needs to fully implement the law on the public broadcasting system, strengthen 
the  political  and  financial  independence  of  public  broadcasters,  and  proceed  with  the 
digitalisation process. 

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

  adopt a Law on electronic communications and electronic media in line with the acquis; 
  finalise the digital broadcasting switchover; 
  adopt a framework strategy for access to the broadband network.   

Chapter 11: Agriculture and rural development 

The  common  agricultural  policy  supports  farmers  and  rural  development.  This  requires 
strong management and control systems. There are also common EU rules for quality policy 
and organic farming. 

Bosnia  and  Herzegovina  and  the  EU  gradually  liberalised  their  mutual  trade  in  agricultural 
products following the entry into force of the Interim Agreement in 2008, and of the SAA in 
2015, including its adaptation in 2017 to take into account the accession of Croatia to the EU. 
The  SAA  also  includes  provisions  on  cooperation  in  agriculture  and  in  the  veterinary  and 
phytosanitary  fields  with  the  aim  of  modernising  and  restructuring  the  agriculture  and 
agro-industrial sector. 

According to the constitutional and legal framework, the competences on agriculture and rural 
development rest predominantly with the two entities and the Brčko District. The state level 
exercises  its  competences  in  accordance  with  the  Law  on  Agriculture,  Food  and  Rural 
Development.  It  also  defines  policies  and  basic  principles  and  coordinates  internally  the 
activities  of  the  entities  and  Brčko  District  to  represent  and  commit  the  country  at 
international level.  The  two  entities,  the  cantons  and  Brčko  District  issue  secondary 
legislation and regulate and manage direct payments for agricultural production.  

There is no specific ministry of agriculture at state level. The Ministry of Foreign Trade and 
Economic Relations is  responsible for this area  and fulfils  a coordination role.  Both  entities 
have their own Ministry of Agriculture, Forestry and Water Management, whereas at cantonal 
level  the  respective  ministries  are  responsible.  At  state  level,  the  Ministry  of  Foreign  Trade 
and  Economic  Relations,  has  an  Office  for  harmonisation  and  coordination  of  payment 
systems  in  agriculture,  food  and  rural  development.  The  Republika  Srpska  entity  has  an 

109 

 
 
agency for agricultural payments while in the Federation entity this function is performed at 
Federation  government  level  and  by  the  respective  cantonal  ministries.  Brčko  District  has  a 
Department  of  Agriculture,  Forestry  and  Water  Management  in  charge  of  legislation  and 
payments. 

The  Republika  Srpska  entity  claims  that  the  state  level  has  no  competence  to  establish  a 
paying agency, including for the pre-accession funding from the EU side. It also claims that 
there is an overlap of competences on quality policy between the state-level institutions that 
regulate  this  area,  i.e.  the  Institute  for  Intellectual  Property  Rights  and  the  Food  Safety 
Agency.  For  this  reason  the  Republika  Srpska  entity  contests  the  existing  state-level 
legislation. 

Agriculture is  one of the most important  economic activities in  Bosnia and Herzegovina.  In 
2016,  the  country  had  2  200  000  hectares  of  agricultural  land  of  which  1  600  000  hectares 
were arable land and 600 000 hectares were pastures. The total mine-suspected area in Bosnia 
and  Herzegovina  covers  1  145  km2  (2.3%  of  the  entire  area  of  the  country)  with  its  largest 
share being agricultural land. Small farms and plot fragmentation predominate in Bosnia and 
Herzegovina’s agriculture. In 2016, the number of farms in the country was 90 092, whereas 
the average farm size was 2.96 hectares. Agriculture generated 7.6% of total gross domestic 
value  in  2016.  The  share  of  agricultural  activity  in  total  employment  was  approx.  19%  in 
2016, with the total number of people employed in agriculture at 144 000. On average, in the 
last 10 years, approx. 162 000 people engaged in agricultural activity, approx. 61% of which 
are men and 39% women.  Total support for agriculture and rural development amounted to 
EUR  87.95  million  in  2017.  The  largest  amount  of  funds  allocated  (88.7%)  was  realised 
through direct production support measures. (See also Chapter 18 statistics) 

Exports  of  agricultural  products  amounted  to  almost  EUR  555  million  in  2017.  The  EU  is 
Bosnia  and  Herzegovina’s  key  trading  partner  for  agricultural  goods.  In  2017,  exports  of 
agricultural  products  to  the EU made up 35% of  total  agricultural  exports, while imports of 
agricultural products from the EU accounted for 52% of total agricultural imports.  

Bosnia  and  Herzegovina’s  agricultural  policy  is  based  on  the  2008  state-level  Law  on 
agriculture,  food  and  rural  development,  which  sets  out  the  scope,  overall  objectives  and 
overall policy measures in agriculture and rural development, as well as strategic documents 
at  different  levels  of  government.  Bosnia  and  Herzegovina  needs  to  ensure  proper 
implementation  of  the  2008  law  on  agriculture  and  acceleration  of  acquis  alignment.  The 
country  also  needs  to  adopt  other  state-level  laws  in  the  sector,  such  as  on  wine  and  on 
organic  production.  Bosnia  and  Herzegovina  has  a  2018-2021  strategic  plan  for  rural 
development  in  place  as  a  framework  policy  document.  To  implement  the  plan  effectively, 
harmonised rural development programmes need to be put in place at the different levels of 
government in the country.  

On administrative capacity, institutional structures at different levels of government (entities, 
cantons,  and  Brčko  District)  are  in  charge  of  policy  implementation  and  payments  in 
agriculture and rural development, as regulated by the respective legislation. Upon accession, 
Bosnia  and  Herzegovina  will  have  to  fully  align  with  the  acquis  and  establish  adequate 
administrative structures. 

Concerning horizontal issues, Bosnia and Herzegovina needs to establish the administrative 
structures  required  for  the  common  agricultural  policy.  This  includes  establishing  a  paying 
agency  and  Integrated  Administration  and  Control  System  (IACS),  including  a  Land  Parcel 
Identification  System  (LPIS),  as  well  as  setting  up  key  elements  for  the  management  and 
control  of  EU  funds  under  the  Common  Agricultural  Policy  (CAP).  This  involves  a  very 
demanding planning and preparation, and requires investment to build institutional capacities 

110 

 
well  in  advance  of  accession.  Bosnia  and  Herzegovina  will  also  need  to  establish  a  Farm 
Accountancy  Data  Network  (FADN)  in  line  with  the  acquis.  The  farm  advisory  systems  in 
Bosnia  and  Herzegovina  are  weak,  insufficiently  and  unevenly  developed  across  different 
levels of government and their regulatory framework is not harmonised across the country. 

Direct  payments  to  agricultural  producers  in  Bosnia  and  Herzegovina  are  performed  at  the 
levels of the two entities, cantons, and Brčko District. The laws regulating direct payments at 
these  levels  need  to  be  harmonised  countrywide.  Total  allocations  for  direct  payments 
including payments based on input, direct payments per head of cattle/hectare and other direct 
payments  were  EUR  61,691,195.7  (BAM  120,661,403)  in  the  2011-2015  period,  for  a  total 
number of 42,174 beneficiaries per each direct support programme. Direct payments included 
payments based on input as various types of premiums for production, mainly for milk, direct 
payments  per  head  of  cattle/hectare  and  other  direct  payments.  Support  measures  are  not 
harmonised  nor  implemented  at  an  even  pace  across  the  country.  Their  effectiveness  and 
compliance  with  the  acquis  is  insufficient  to  increase  the  sector  productivity  and 
competitiveness.  Direct  payments  need  to  be  gradually  brought  into  line  with  EU  rules, 
decoupling direct aid payments from production. 

On  State  aid,  Bosnia  and  Herzegovina  applies  a  number  of  market-related  subsidies  and 
additional  measures  at  different  levels  of  government.  The  country  will  need  to  gradually 
bring  all  its  State  aid  measures  into  line  with  EU  rules  and  guidelines  adopted  in  this  area. 
Bosnia  and  Herzegovina  also  needs  to  ensure  a  gradual  alignment  of  direct  payment  rules 
with EU requirements, by decoupling direct aid payments from production. 

Common market organisation does not exist in Bosnia and Herzegovina. The country needs 
to advance in establishing a common market organisation as part of its work to strengthen the 
administrative capacity and prepare the regulatory framework in line with the acquis.  

With regard to arable crops, cereals accounted for the highest share (approx. 60%) in the total 
area sown in 2017, followed by forage plants (24%), vegetables (13%), industrial crops (2%), 
strawberries  and  raspberries  (1%),  while  0.2%  of  the  area  is  sown  with  aromatic,  spice  and 
medicinal  herbs.  The  share  of  livestock  production  in  the  total  value  of  agriculture  in  2016 
was around 37%, which is lower than in most European countries, with declining trends in the 
number  of  herds.  Milk  production  in  Bosnia  and  Herzegovina  in  2017  amounted  to  684 
million  litres,  of  which  almost  all  cow  milk  (97%),  followed  by  sheep  and  goat  milk. 
Production  of  specialised  crops,  fruit  and  vegetables  totalled  285,610  tonnes  of  major 
vegetable crops and 164,132 tonnes of fruit in 2017.  

There  are  no  producers’  organisations  of  fruits  and  vegetables  in  Bosnia  and  Herzegovina 
similar to those that exist in the EU, nor is there any relevant legal basis for their formation. 
There  are  a  number  of  voluntary  associations  of  producers  and  cooperatives  which  may 
constitute  a  basis  for  a  gradual  transformation  into  EU-aligned  producers’  organisations. 
Bosnia  and  Herzegovina  should  intensify  efforts  to  gradually  establish  such  EU-compliant 
structures.  

Regarding  the  wine  sector,  Bosnia  and  Herzegovina  does  not  have  a  register  of  grape  and 
wine  producers  or  vineyard  cadastre.  There  is  no  official  data  or  available  statistics  on  the 
number or size of households and farms producing grapes. The country  needs to step up its 
efforts to ensure reliable countrywide statistics and increase the quality of produced wine, also 
enhancing  sustainable  measures  for  climate  change  mitigation.  The  fragmented  structure  of 
farms and small-scale production is a challenge also affecting wine production. 

The framework policy document on rural development policy is the Strategic Plan for Rural 
Development of Bosnia and Herzegovina 2018–2021, which guides rural development plans 

111 

 
and programmes at all levels of government. The state-level law on agriculture, food and rural 
development  provides  for  general  policy  objectives  and  measures,  as  well  as  for  the 
administrative  structures  and  information  systems  for  implementing  agriculture  policy  and 
rural development programme similar to those in the EU. The country needs to fully align its 
legislation in this field with the acquis and strengthen administrative capacity at all levels.  

The  contestation  of  state-level  competences  on  agriculture  by  the  Republika  Srpska  entity 
impedes  the  country  to  prepare  establishing  the  institutional  structures  necessary  to  benefit 
from  the  indirect  management  of  the  Instrument  for  Pre-accession  Assistance  for  Rural 
Development (IPARD), in particular a paying agency at state level. 

Following  a  ruling  of  the  Constitutional  Court  annulling  the  entity  Law  on  Forestry,  the 
forestry  sector  in  the  Federation  entity  is  not  duly  regulated.  The  entity  needs  to  adopt  a 
revised  law  to  replace  the  temporary  regulations.  Nine  cantons  adopted  their  own  forestry 
regulations  not  in  compliance  with  constitutional  provisions  on  ownership  and  spending  of 
funds for the use, protection and maintenance of forests. The Republika Srpska entity has laid 
down rules for the forestry sector via several laws and secondary legislation on timber sales 
and forest management. 

As regards the quality policy, legislation is in place at state level regulating the protection of 
designations of origin, geographical identifications and traditional names across the country. 
State-level  law  and  implementing  regulations  on  food  have  been  in  force  since  2004.  The 
institutions dealing with quality policy are the Institute for Intellectual Property and the Food 
Safety Agency, both  established at state level. The legal  framework in this area needs to be 
improved and harmonised in order to ensure clearer distribution of competences between the 
two institutions. Bosnia and Herzegovina needs fully functional institutional arrangements to 
implement and control quality schemes. This includes the registration of agricultural products 
and foodstuffs as protected designations of origin and geographical indications, as well as the 
labelling  of  foodstuffs  as  traditional  specialties  guaranteed  in  the  country  by  the  competent 
authority.  

Accreditation and certification systems are in place with regard to organic farming, but there 
is no state-level legislation as required by the acquis. Regulatory frameworks across different 
levels  of  government  need  to  be  harmonised.  Support  measures  are  unevenly  implemented 
across the country. 

Impact  

Bosnia  and  Herzegovina’s  accession  to  the  EU  is  expected  to  have  a  limited  impact  on  the 
Common  Agricultural  Policy,  as  it  would  add  2  200  000  hectares  of  agricultural  land.  This 
corresponds  to  1.2%  of  the  utilised  arable  area  in  the  EU-28.  Overall,  Bosnia  and 
Herzegovina’s membership of the EU would therefore be expected to have a limited impact 
on the Common Agricultural Policy.  

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  in  the  area  of  agriculture  and 
rural development. 

Bosnia and Herzegovina needs to significantly improve its administrative capacity in this area 
and  establish  the  fundamental  instruments  and  institutions  for  participating  in  the  Common 
Agricultural  Policy  (CAP).  The  country  needs  to  ensure  that  its  legislation  is  harmonised 
across the country and aligned with the EU acquis. Agricultural information systems have to 
be set up in line with the EU framework. The country also needs to start preparing for a new 
post-2021 strategic plan for rural development. 

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

112 

 
  effectively implement the 2018-2021 strategic plan for rural development, in particular by 
harmonising rural development programmes and support measures across the country;  

  adopt state-level laws on organic production and wine; 
  harmonise across the country the laws on quality policy, including protected designations 

of origin, geographical indications and traditional specialities guaranteed.  

Chapter 12: Food safety, veterinary and phytosanitary policy 

EU hygiene rules for  foodstuff  production ensure a high  level  of  food  safety. Animal health 
and welfare and the safety of food of animal origin are safeguarded together with quality of 
seeds, plant protection material, protection against harmful organisms and animal nutrition. 

The  SAA  includes  provisions  on  cooperation  in  the  field  of  veterinary  and  phytosanitary 
policy,  in  particular  to  meet  the  respective  EU  requirements  and  to  support  the  progressive 
approximation  of  the  legislation  and  practices  of  Bosnia  and  Herzegovina  to  EU  rules  and 
standards. 

According  to  the  constitutional  and  legal  framework  the  competences  in  the  area  of  food 
safety,  veterinary  and  phytosanitary  policy  are  exercised  by  the  state  level,  two  entities,  the 
cantons and Brčko District. The state level has adopted legislation in all subareas covered by 
the  chapter  (food  safety,  veterinary  and  phytosanitary  issues).  The  state-level  legislation  is 
applied  in  the  entities,  cantons  and  Brčko  District,  in  addition  to  their  own  legislation 
regulating certain issues under this chapter.  

At state level the main competent authorities are the Ministry of Foreign Trade and Economic 
Relations, the Veterinary Office and the Plant Health Protection Administration (the latter two 
being administrative organisation within the Ministry) and the Food Safety Agency. At entity, 
cantonal and Brčko District level, the ministries and the Department in charge of agriculture 
are  dealing  with  the  issues  covered  under  this  chapter.  The  responsibility  for  inspection 
controls rests with all levels of authority. 

The  Republika  Srpska  entity  contests  certain  state-level  competences  and  legislation  in  the 
area of food safety, veterinary and phytosanitary issues. For this reason, no further alignment 
of the state-level legislation with the acquis has been achieved in recent years. 

The  legal  framework  consists  of  the  state-level  Laws  on  food  (2004),  genetically  modified 
organisms  (2009),  veterinary  medicine  (2002),  animal  protection  and  welfare  (2009),  plant 
health  protection  (2003),  phytopharmaceutical  products  (2004),  seeds  and  seedlings  of 
agricultural  plants  (2005)  and  protection  of  new  varieties  of  plants  (2010  as  amended  in 
2013).  In  addition,  the  entities  and  some  cantons  have  their  own  legislation  laying  down 
policies  and  means  of  implementation.  Bosnia  and  Herzegovina  has  to  improve  its  legal 
harmonisation  across 
the  country  and  avoid  overlapping  competences.  Institutional 
arrangements and the central competent authorities’ functions and responsibilities, in the food 
safety, veterinary and phytosanitary area, have to be further strengthened in order to ensure a 
fully functional chain of command, coordination and exchange of information, in particular in 
official controls, risk assessment and crisis management.  

testing 

The country has authorised laboratories to perform the official laboratory testing for sanitary 
and  phytosanitary  controls.  The  Institute  for  Accreditation  of  Bosnia  and  Herzegovina 
accredits 
the  physical,  chemical,  biological  and 
microbiological analysis of water, food and feed. The capacity of laboratories and the number 
of  accredited  laboratory  methods  for  diagnostics  is  generally  satisfactory,  but  it  needs  to  be 
strengthened. There is  no national  reference laboratories system in  Bosnia and Herzegovina 
providing  for  hygiene,  veterinary,  phytosanitary  controls,  food  and  feedstuff  analysis  as  per 

laboratories  working  on 

113 

 
 
acquis  requirements.  The  country  needs  to  ensure  that  such  a  system  is  fully  in  place.  A 
state-level strategy for laboratory testing of samples, as required by the official food and feed 
controls system, needs to be adopted.  

In the area of general food safety, food safety rules and specific rules for feed, Bosnia and 
Herzegovina increased its export of a number of commodities to the  EU by complying with 
EU  rules  and  requirements.  The  country  exports  fish,  honey,  potatoes  and  milk  and  dairy 
products, as well as equinae (sports horses for competition races) to the EU. In addition, it is 
allowed  to transit beef meat and products through the EU when exporting it to third countries. 
Bosnia and Herzegovina aims to gradually align with EU requirements for the export of other 
commodities, like poultry and eggs, and other categories of meat, such as bovine meat, ovine 
meat and caprine meat.  

The regulatory framework for veterinary policy consists of the state-level Law on veterinary 
medicine (2002) and the law on animal protection and welfare (2009). The country has to step 
up  its  efforts  to  further  align  with  the  acquis,  in  particular  with  EU  legislation  on  animal 
health and on animal by-product management. A countrywide strategy for animal by-products 
management needs to be enforced and implemented. 

Bosnia and Herzegovina carries out activities to control, prevent and eradicate communicable 
animal  diseases.  It  implemented  animal  control  measures,  including  against  lumpy  skin 
disease,  rabies,  brucellosis  and  tuberculosis  in  cattle.  There  have  been  no  registered  rabies 
cases in the country since 2015. No new case of lumpy skin disease was reported. Multiannual 
operational programmes to control and eradicate rabies and brucellosis until are planned until 
2022.  Their  effective  implementation  should  be  ensured.  The  country  needs  to  step  up  its 
efforts to ensure sustainable resources for animal disease controls measures in the long run. Its 
animal  disease  notification  and  outbreak  information  management  system  requires  upgrades 
to  become  fully  functional.  Laboratory  capacity,  including  staffing  and  equipment  are 
generally  satisfactory,  as  is  the  accredited  number  of  laboratories  methods  for  diagnosing 
animal  diseases.  In  general,  two  reference  veterinary  laboratories  for  certain  types  of 
laboratory  tests  to  diagnose  contagious  and  parasitic  diseases  of  animals  in  the  country,  the 
Sarajevo  Veterinary  Faculty and the  Banja  Luka Veterinary  Institute, perform  their services 
properly, but their capacities need to be strengthened.  

A  residue  monitoring  plan  is  in  place  and  being  implemented.  The  animal  identification, 
registration  and  in  particular  the  movement  control  system,  including  the  central  database, 
need  to  be  improved  in  order  to  ensure  more  efficient  planning  and  implementation  of 
relevant  animal  health  measures.  The  central  database  on  registration  and  identification  of 
bovine  animals  is  generally  satisfactory;  but  needs  further  improvement,  notably  on  the 
double notification of movements and reporting of all animal slaughters. The country does not 
have  a  system  of  registration  and  identification of  sheep,  goat  and  pigs,  as  well  as  equinae. 
Official  controls  of  implementation  of  animal  registration  and  identification,  including 
controls of cattle markets, have to be improved. Inspection capacities need to be upgraded and 
their  operating  procedures  have  to  be  harmonised  countrywide  and  in  line  with  the  EU 
legislation in order to improve both internal market and border controls.  

With  regard  to  the  placing  on  the  market  of  food,  feed  and  animal  by-products,  the 
country’s official food and feed controls system is yet to be fully aligned with the acquis and 
duly implemented. Administrative capacities at all levels are adequate but they are insufficient 
with regard to inspection services and need to be improved particularly on professionalisation 
of  the  staff  and  improvement  of  quality  of  the  inspection  service’s  work  by  introducing 
inter-laboratory  comparative  tests.  The  state-level  Laws  on  food  (2004)  and  on  veterinary 
medicine  (2002)  and  relevant  amendments  to  the  state-level  Law  on  agriculture,  food  and 

114 

 
rural  development  need  to  be  aligned  with  the  acquis.  The  country  needs  to  ensure  full 
implementation of the hygiene package in a harmonised way across the country.  

Food business operators need training on specific EU safety and quality requirements. Bosnia 
and  Herzegovina  implements  its  food  safety  monitoring  plan  in  a  satisfactory  manner.  The 
country’s  crisis  management  plan  and  operative  emergency  measures  need  to  be  improved; 
the risk assessment system needs strengthening, and the maintenance of food safety databases 
should  be  harmonised  across  the  country.  Bosnia  and  Herzegovina  fully  participates  in  the 
European  Commission’s  rapid  alert  system  for  food  and  feed  (RASFF),  implementing 
appropriate inspections and reporting back to the Commission on the results.  

The legal framework regulating the phytosanitary policy consists of the ratified International 
Plant Protection Convention (2003) and  International  Convention for the  Protection of New 
Varieties  of  Plants 
(2003), 
phyto-pharmaceutical  products  (2004), seeds and seedlings of agricultural plants  (2005) and 
protection of new varieties of plants (2010).  

the  Laws  on  plant  health  protection 

(2017),  and 

The  registration  of  relevant  producers,  importers,  exporters  and  distributors  in  a  single 
phyto-registry  functions  properly,  but  the  issuing  of  plant  passports  needs  to  start.  A 
programme  of  special  surveillance  of  harmful  organisms  on  potatoes  is  in  place  and  the 
registration of new varieties in the country’s variety list is functional, but the country has not 
adopted  the  OECD  seed  scheme.  The  work  of  official  diagnostic  laboratories  and  official 
controls  of  imports  needs  to  be  aligned  with  the  acquis.  The  number  of  phytosanitary 
inspectors should be increased and their administrative capacities strengthened. The principles 
of  integrated  pest  management  have  to  be  implemented  in  a  harmonised  manner  across  the 
country.  Agricultural  producers  need  training  on  EU  requirements  and  standards  for  using 
plant protection products and applying maximum residue limits.   

As regards genetically modified  organisms, the  Law on GMOs (2009) provides for shared 
competences  at  the  state,  entity,  Brčko  District  and  canton  levels.  The  Law  and  its 
implementing  acts  lay  down  the  procedure  and  conditions  for  contained  use,  cross-border 
transfer,  deliberate  release  into  the  environment  and  placing  on  the  market  of  GMO  and 
products  consisting  of,  containing  or  originating  from  GMOs.  Inspection  activities  are 
performed at entity, Brčko District, and cantonal level and within the administrative units of 
local self-governance.  

Bosnia  and  Herzegovina  has  a  council  for  GMOs  that  acts  in  advisory  and  monitoring 
capacity. Based on the signed Protocol, the Istituto Zooprofilattico Sperimentale delle Regioni 
Lazio  e  Toscana  from  Rome,  Italy,  serves  as  a  reference  laboratory  for  Bosnia  and 
Herzegovina, as the country does not have its reference or authorised laboratory for testing, 
controlling and monitoring of presence of GMO in food and feed.  

Bosnia  and  Herzegovina  needs  to:  (i)  align  its  legislation  with  the  acquis  and  ensure  legal 
harmonisation across the country; (ii) improve its institutional arrangements in order to avoid 
overlapping of competences; and (iii) strengthen its control and coordination chain.  

Bosnia and Herzegovina has some level of preparation in the area of food safety, veterinary 
and phytosanitary policy. 

In  the  medium-term,  the  country  should  further  harmonise  its  official  veterinary  and 
phytosanitary control systems with EU rules, improve its institutional arrangements in order 
to avoid overlapping competences and strengthen its control and coordination chain. 

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

115 

 
  introduce  inter-laboratory  comparative  tests,  to  increase  their  administrative  capacity,  in 

particular inspection services and laboratories;   

  speed  up  preparations  for  national  reference  laboratories,  notably  by  increasing  the 
accreditation  of  laboratory  methods    used  in  hygiene,  veterinary  and  phytosanitary 
controls, food and feedstuff analysis;  

  adopt the OECD seed schemes, notably for agricultural seeds and forestry material; 
  maintain the vaccination until rabies is considered eradicated.  

Chapter 13: Fisheries 

The  common  fisheries  policy  lays  down  rules  on  fisheries  management,  protects  living 
resources  of  the  sea  and  limits  the  environmental  impact  of  fisheries.  This  includes  setting 
catch  quotas,  managing  fleet  capacity,  rules  on  markets  and  aquaculture  and  support  for 
fisheries and coastal communities.  

Bosnia  and  Herzegovina  and  the  EU  gradually  liberalised  their  mutual  trade  in  fish  and 
fishery products following the entry into force of the Interim Agreement in 2008, and of the 
SAA in 2015, including its adaptation in 2017 to take into account the accession of Croatia to 
the  EU.  The  SAA  identifies  mutually  beneficial  areas  of  common  interest  in  the  fisheries 
sector and cooperation related to the acquis, including the respect of international obligations 
concerning  international  and  regional  fisheries  organisation  rules  of  management  and 
conservation of fishery resources.  

According  to  the  constitutional  and  legal  framework,  the  competences  for  fisheries  rest 
predominantly  with  the  two  entities,  the  cantons  and  Brčko  District.  The  State  has  a 
coordinating  role  and  represents  and  commits  the  country  at  international  level.  Laws  on 
inland  fisheries  exist  in  the  entities,  Brčko  District  and  three  cantons,  while  law  on  marine 
fisheries only exists in the Herzegovina-Neretva Canton due to its geographical location. At 
the state level, there is no framework policy or legislation in this area.  

At the state level, the Ministry of Foreign Trade and Economic Relations has a coordinating 
role,  while  entities,  cantons  and  Brčko  District  have  competent  ministries/a  department 
dealing  with  fisheries.  Competent  inspection  authorities  are  also  in  place  at  all  governance 
levels. 

Sea fishing  is  mainly carried out  in  small own-account  boats.  The  yearly landing of marine 
wild fish is around 200 tons.  

Freshwater fisheries are exclusively related to fishing on rivers, notably sport-recreational and 
commercial fishing on the Sava River. They are an important economic activity in the country 
due to high potential for fish exploitation and production. Capacities for production of all fish 
species are  estimated at  around 13,000 tonnes. Facilities for fish  exploitation  in  the country 
cover  140,800  m2  in  case  of  trout,  2,190  hectares  of  carp  fish  farming  and  approximately 
77,810 m3 for fish cage cultivation. Considering the trends over the last  10 years, table fish 
production  is  above  4,000  tonnes  of  which  approximately  80%  is  trout  production,  14% 
relates to carp production and 6% to other fish species. Bosnia and Herzegovina has approval 
to export fish and fishery products to the EU.  

The  basic  types  of  aquaculture  breeding  systems  are  the  basin,  reservoir  and  cage  systems. 
The most important fish species in Bosnia and Herzegovina’s aquaculture sector are salmonid, 
cyprinid, sea bass, sea bream and dentex, and molluscs. Freshwater aquaculture dominates in 
the basins of Neretva, Una, Sana and Vrbas rivers. Marine culture covers the coastline in the 
area of Herzegovina Neretva Canton. The sea coast is 24 km long, with a sea area of 1,400 
hectares. There are two farms dealing with sea fish and shellfish farming.  

116 

 
 
As  for  the  legislative  framework,  Bosnia  and  Herzegovina  does  not  have  state-level 
legislation on inland and marine fisheries. Legislation in the two entities, Brčko District and 
cantons  in  the  Federation  entity  governs  the  area,  mainly  focuses  on  inland  fisheries.  A 
canton-level  Law  on  marine  fisheries  (in  the  Herzegovina-Neretva  canton)  lays  down 
measures  for  the  proper  management  and  protection  of  renewable  sea  resources,  including 
administrative and inspection supervision. There is no countrywide strategy for the fisheries 
sector and rules are not harmonised. 

Measures  regarding  resource  and  fleet  management  are  lacking  and  the  administrative 
capacity to implement  such measures is  weak.   Data  collection on  catches and landings per 
type of fishery needs to be improved and harmonised across the country.  

Bosnia and Herzegovina has no specific structural actions for fisheries. A limited number 
of  State  aid  measures  exist  for  inland  fishing  and  aquaculture  at  entity,  cantons  and  Brčko 
District level.  

Concerning market policy, marketing standards for fish products are in place on hygiene for 
food  and  products  of  animal  origin,  on  quality  requirements  and  on  veterinary  and  health 
conditions  that  must  be  met  in  production  and  marketing.  Fish  are  placed  on  the  market 
according to the origin, type and weight classification. 

Regarding  international  agreements,  Bosnia  and  Herzegovina  cooperates  on  sea  fisheries 
with  the  General  Fisheries  Commission  for  the  Mediterranean  (GFCM)  and  the  UN’s  Food 
and  Agriculture  Organization  (FAO).  Bosnia  and  Herzegovina  is  a  party  to  the  Malta 
MedFish4Ever  Declaration,  having  expressed  its  interest  in  the  protection  and  sustainable 
management of Mediterranean aquaculture and fish stocks and its readiness to take action in 
this area. 

Bosnia and Herzegovina is at an early stage of preparation in the area of fisheries. 

Bosnia  and  Herzegovina  has  to  develop  a  harmonised  fisheries  policy  document  and 
implement it effectively across the country in line with the acquis. Administrative structures 
have  to  be  improved  and  institutional  capacities  must  be  strengthened  for  management  and 
control  of  fishing  activities  in  line  with  the  EU’s  common  fishery  policy  obligations.  The 
country should also establish and manage a fleet register. 

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

  adopt  a  countrywide  strategy  on  fisheries  and  aquaculture,  in  view  of  aligning  the 

legislation with the acquis; 

  harmonise  across  the  country  the  methodology  for  data  collection  for  fish  and  fishery 

products and establish relevant statistics. 

Chapter 14: Transport policy 

The EU has common rules for technical and safety standards, security, social standards, State 
aid  and  market  liberalisation  in  road  transport,  railways,  inland  waterways,  combined 
transport, aviation and maritime transport.  

The SAA  provides for progressive liberalisation of the supply of transport  services between 
the  EU  and  Bosnia  and  Herzegovina  in  the  areas  of  land  transport  (road,  rail  and  inland 
waterways as specified in Protocol No 3 to the SAA) and maritime transport. The SAA  also 
provides  for  progressive  harmonisation  of  related  transport  legislation  with  that  of  the  EU. 
The  gradual  integration  of  Bosnia  and  Herzegovina  into  the  EU  internal  aviation  market  is 
governed by the European Common Aviation Area (ECAA) Agreement. The SAA also aims 
to  enhance  cooperation  on  certain  priority  areas  in  the  field  of  transport,  such  as  the 
restructuring  and  modernisation  of  transport  modes,  enhancing  access  to  transport  markets 

117 

 
and  facilities  including  ports  and  airports,  the  development  of  trans-European  networks  and 
improving protection of the environment in transport. Since 2018 Bosnia and Herzegovina is 
part  of  the  Transport  Community  Treaty  the  aim  of  which  is  the  creation  of  a  Transport 
Community in the field  of road, rail, inland waterway and maritime transport as well as the 
development  of  the  transport  network  between  the  European  Union  and  the  South  East 
European Parties. 

According to the constitutional and legal framework the competences in the transport sector 
are  exercised  by  the  state  level,  the  two  entities,  the  cantons  as  well  as  Brčko  district.  The 
state level is in charge of international and inter-entity transport, including the fundamentals 
of road traffic safety, and regulatory functions in civil aviation area and railway sector; it also 
has  a  coordination  and  countrywide  planning  function  as  well  as  the  constitutional 
responsibility  to  represent  and  commit  the  country  at  international  level.  The  two  entities, 
cantons  and  Brčko  District  are  in  charge  of  other  legislative  and  executive  issues  in  the 
transport sector.  

At state level the Ministry of Transport and Communications is responsible for international 
and inter-entity transport, including agreements, relations with international organizations and 
preparation  of  strategic  and  planning  documents;  other  key  bodies  at  this  level  are  the 
Directorate  of  Civil  Aviation,  the  Air  Navigation  Services  Agency,  the  Railway  Regulatory 
Board and the Railways Public Corporation.  

At  entity  level  responsibility  lies  with  the  ministries  of  transport  and  communications, 
whereas  at  cantonal  level  the  respective  ministries  also  deal  with  transport  issues.  The 
Republika  Srpska  entity  has  its  own  Traffic  Safety  Agency.  In  Brčko  District  the  Public 
Affairs Department is responsible for various transport issues including inland navigation.  

Transport in  Bosnia and Herzegovina is  insufficiently developed and the  speed of structural 
adjustment  is  slow.  It  faces  challenges  due  to:  (i)large-scale  war  damages;  (ii)  in-adequate 
infrastructure maintenance; (iii)  changes to the institutional set-up; (iv) low funding resources 
despite the need for substantial investment and an economy that is not sufficiently developed 
to generate the required financing; and (v) the consequences of major flooding in 2014. The 
necessary investment is delayed by the absence of a single or harmonised legal and regulatory 
framework,  insufficient  administrative  capacities,  poor  implementation  and  coordination, 
cooperation between government levels and delays in securing agreed external financing. 

A 2015 framework transport policy and a 2016 framework transport strategy and action plan 
for  2016  –  2030  are  in  place.  The  strategies  of  both  entities  and  Brčko  District  are  integral 
parts of the overall strategy. Compliance with the EU acquis on transport varies substantially 
between the different transport modes.  

On  road  transport,  Bosnia  and  Herzegovina  has  aligned  with  certain  requirements  of  the 
SAA and its Protocol No 3 on Land Transport by granting unrestricted access to EU transit 
traffic passing across its territory.  

Bosnia and Herzegovina has no countrywide road safety strategy or action plan. The area of 
road safety is regulated by the state-level Law on Fundamentals of the Traffic Safety on the 
Roads  in  Bosnia  and  Herzegovina  and  implementing  legislation,  which  are  both  subject  to 
continuous alignment with the EU acquis. The Law establishes inter alia the basic principles 
of  mutual  relations  and  behaviour  of  road  users  and  other  entities  in  transport,  the  basic 
requirements  for  roads  with  regard  to  road  safety,  the  maintenance  of  a  central  register  of 
drivers and vehicles, road traffic rules, obligations in case of traffic accidents, driver training, 
driver’s licence eligibility requirements and tests, requirements for devices and equipment of 
vehicles,  weights  and  dimensions  and  the  operation  of  professional  organisations  in  Bosnia 

118 

 
and Herzegovina. The country records a very high number of road accidents, with the average 
number  of  road  traffic  fatalities  far  above  the  EU  average  (WHO  2018:  157  fatalities  per 
million inhabitants compared to 49 in the EU). More efforts are needed on the collection of 
reliable  accident  data  through  establishing  a  countrywide  system  for  continuous  road  crash 
data  collection.  This  forms  also  part  of  the  connectivity  reform  measures  Bosnia  and 
Herzegovina has committed to. Better implementation of the road safety legislation combined 
with safer, well maintained infrastructure and vehicles, effective enforcement and continuous 
education  and  awareness-raising  may  lead  to  a  substantial  improvement  of  safety  on  the 
roads.   

A  state-level  Law  on  International  and  Inter-Entity  Road  Transport  has  been  in  place  since 
2016.  It  regulates  access  to  the  international  road  market  and  to  the  occupation  of  road 
transport  operator,  including  a  functional  licensing  system.  Similar  regulations  for  domestic 
road  transport  exist  at  entity  and  Brčko  District  levels.  The  cantons  apply  the  Federation 
entity’s laws. A 2006 Law on Internal Road Transport is in place in the Federation entity. The 
Republika Srpska entity’s corresponding Law on Transport in Road Traffic has been in force 
since 2008. Both entity laws are partially aligned with the EU acquis.  

As for the EU social acquis in road transport, Bosnia and Herzegovina’s state-level  Law on 
Working Hours, Compulsory Breaks of Mobile Workers and Devices for Data Recording in 
Road Transport, as amended in 2016, is in line with the European Agreement Concerning the 
Work of Crews of Vehicles Engaged in International Road Transport (AETR).  

Technical vehicle inspection and control are regulated by the repeatedly amended 2006 Law 
on Fundamentals of Road Traffic Safety in Bosnia and Herzegovina and the 2007 Rulebook 
on Technical  Inspections of Vehicles. These laws are partly aligned with the EU acquis but 
are  not  applied  effectively  in  the  entities,  Brčko  District  and  the  cantons.  Organisational 
arrangements  for  roadworthiness  testing  are  in  place.  Inspection  of  vehicles  at  the  roadside 
needs to be regulated.  

The countrywide limits on the maximum weights and dimensions as well as maximum axle 
weights for road vehicles are in line with the EU acquis and are in force countrywide.  

Legislation on bus and coach passengers’ rights exist at entity and Brčko District level and is 
partly aligned with the EU acquis.  

Bosnia and Herzegovina needs to  strengthen its mechanisms for monitoring implementation 
of the relevant international rules and EU legislation on road safety and regarding social and 
technical rules, including those on transportable pressurised equipment.  

Rail  transport  is  regulated  by  the  2005  Law  on  Railways  of  Bosnia  and  Herzegovina,  in 
regulations  and  instructions  promoted  by  the  Railway  Regulatory  Board,  and  in  laws  and 
secondary  legislation  at  entity  and  Brčko  District  level.  The  Law  is  aligned  with  the  EU 
railway  acquis  to  a  large  extent,  particularly  with  regard  to  the  first,  second  and  third  EU 
railway  package,  but  need  further  revision  following  the  entry  into  force  of  the  fourth  EU 
railway  package  in  2016.  Directives  and  technical  specifications  on  interoperability  are 
transposed  into  railway  regulations  promoted  by  the  Railways  Regulatory  Board  of  Bosnia 
and  Herzegovina.  Bosnia  and  Herzegovina  needs  to  align  with  the  EU  acquis  on  rail 
passenger rights. 

The  Bosnia  and  Herzegovina  Railway  Regulatory  Board  operates  as  an  administrative 
organisation within the state-level  Ministry of Communications and Transport.  It  is  the sole 
authority in Bosnia and Herzegovina responsible for general oversight, licensing, security and 
safety  certificates.  It  also  acts  as  an  appeal  body  for  railway  operators.  The  two  historical 
vertically integrated railway companies, the public enterprise railways of the Federation entity 

119 

 
and of the Republika Srpska entity, need to complete the process of separating infrastructure 
management from railway operation to ensure full independence. Both railway undertakings 
have no valid safety certificates, which under EU laws on railway safety  are mandatory for 
access  to  railway  infrastructure.  At  present,  network  statements  are  prepared  but  not 
published. The Accident Investigation Body has weak capacity and is not independent in its 
organisation, structure and decision-making from the Railways Regulatory Board, as required 
by the EU legislation on railway safety acquis. 

The Bosnia and Herzegovina Railways Public Corporation is an inter-entity body. It is tasked 
with  establishing  an  institutionalised  cooperation  between  the  entities,  facilitating  decision-
making,  and  with  coordinating  railway  operations  and  infrastructure  rehabilitation  and 
construction in the country. 

Bosnia  and  Herzegovina  is  prepared  to  launch  negotiations  on  protocols  concerning  the 
railway border crossing procedures with Croatia.  

Bosnia  and  Herzegovina  has  to  gradually  open  its  railway  market,  which  is  hampered  by 
unsafe,  outdated  and  unreliable  railway  infrastructures  on  at  least  half  of  the  core  railway 
network  and  practically  on  most  railway  sections  outside  this  network.  Only  the  railway 
sections between Sarajevo and Čapljina and between Banja Luka and Srpska Kostajnica are in 
a  state  that  would  enable  the  railway  market  to  be  opened.  However,  these  sections  are 
isolated, and cannot enable adequate international connections to the network. 

Bosnia and Herzegovina has an Adriatic coastline of about 27 km at Neum. The country has 
no  relevant  maritime  transport  activities.  Bosnia  and  Herzegovina  is  party  to  the  United 
Nations  Convention  on  the  Law  of  the  Sea  and  is  a  member  of  the  International  Maritime 
Organization (IMO).  It  is  also  party to  a number of other maritime conventions such as the 
Tonnage  Convention,  the  Convention  on  the  International  Maritime  Satellite  Organisation 
(INMARSAT) and the Convention and Protocol for the Suppression of Unlawful Acts against 
the Safety of Maritime  Navigation.  For import  and export of  goods via  the sea, Bosnia and 
Herzegovina historically relies on the port of Ploče in Croatia. Bosnia and Herzegovina has to 
align with the entire maritime transport acquis. 

Inland  waterway  transport  is  regulated  by  the  Sava  River  Commission  and  at  entity  and 
Brčko  District  level.  Currently  in  force  are  a  2005  Federation  entity  Law  on  Inland  and 
Maritime Navigation is  in  place, a 2001  Republika Srpska entity  Law on  Inland Navigation 
and  a  2008  Brčko  District  Law  on  Inland  Navigation.  The  legislative,  regulatory  and 
administrative  framework  is  insufficiently  developed  and  needs  to  be  aligned  with  the  EU 
acquis. The few vessels and boats, under the flag of Bosnia and Herzegovina are registered, 
certified and inspected at entity and Brčko District level. Inland navigation safety and security 
matters  on  the  Sava  River  are  laid  down  in  the  navigation  rules  as  part  of  the  Framework 
Agreement on the Sava River Basin. They partially regulate the issues of water pollution and 
waste  removal  from  vessels.  The  Sava  River  Information  System  is  in  line  with  EU 
requirements, but its applicability is limited due to lack of maintenance of the navigation route 
on the Sava River. The cross-border coordination of inland waterways and inland navigation 
is  achieved  through  the  Sava  River  Commission,  a  regional  coordinative  body  for  inland 
navigation. Bosnia and Herzegovina needs to align with the EU acquis on passenger transport 
by sea or inland waterways. 

There  is  no  state-level  law  on  transport  of  dangerous  goods  by  road,  rail  and  inland 
waterways. Some legislation exists at entity and Brčko District levels and in several cantons, 
which  require  further  alignment  with  the  EU  acquis  in  line  with  the  relevant  international 
agreements 

120 

 
Civil  aviation  and  air  navigation  is  a  state-level  competence  under  the  Constitution.  The 
Bosnia  and  Herzegovina  Directorate  for  Civil  Aviation  is  an  administrative  organisation 
within the state-level Ministry for Transport and Communications performing regulatory and 
oversight functions as well as issuing permits, confirmation and certificates in the area of civil 
aviation.  The  independent  Bosnia  and  Herzegovina  Air  Navigation  Services  Agency 
(BHANSA)  is  responsible  for  air  traffic  management  and  control.  Both  institutions  lack 
sufficient administrative resources.   

Bosnia and Herzegovina is  a  Member State of the  International  Civil  Aviation Organisation 
(ICAO)  and  signatory  to  the  Chicago  Convention  and  the  European  Civil  Aviation 
Conference  (ECAC).  It  is  a  full  member  of  the  Joint  Aviation  Authorities  (JAA)  and 
European  Organisation  for  the  Safety  of  Air  Navigation  (EUROCONTROL),  and  holds 
observer  status  at  the  European  Aviation  Safety  Agency  (EASA).  Bosnia  and  Herzegovina 
has ratified the European Common Aviation Area (ECAA) Agreement and signed a working 
arrangement  with  EASA  thus  accepting  the  obligation  to  implement  regulations  on  civil 
aviation. 

Bosnia and Herzegovina declared having achieved a good level of alignment with the acquis 
in  the area of  aviation.  A 2009 Aviation  Law is  in  place.  Bosnia  and Herzegovina declared 
having  almost  completed  the  implementation  of  the  first  transitional  phase  of  the  ECAA 
Agreement. Bosnia and Herzegovina is encouraged to call for an assessment by Commission 
services of the progress made, as required by the ECAA agreement. BHANSA established at 
the end of 2018 an Airspace Management Cell as an important step towards the ultimate goal 
of providing full airspace control service in the Bosnia and Herzegovina airspace. Bosnia and 
Herzegovina does not have an independent air accident investigation body, as required by the 
acquis.  Bosnia  and  Herzegovina  has  partially  aligned  with  the  EU  Regulation  on  passenger 
rights.  The  country needs to  advance its adoption of rules on the protection  of the rights  of 
disabled persons and persons with reduced mobility in accordance with the EU regulation. 

Bosnia  and  Herzegovina  needs  to  develop  its  policy  and  institutions  in  the  area  of 
multimodal  and  combined  transport  on  the  basis  of  the  existing  framework  transport 
strategy.  The  low  level  of  priority  of  this  sub-sector  is  caused  by  physical  infrastructural 
bottlenecks  at  the  Ivan  tunnel  and  the  Bradina  ramp  on  the  railway  in  Corridor  V,  which 
prevents shipment of 40ft standard and high cube containers, and by piggy-back shipment of 
trucks along this railway corridor. 

Bosnia  and  Herzegovina  has  reached  some  level  of  preparation  in  the  area  of  transport 
policy.  In  2018  Bosnia  and  Herzegovina  ratified  the  Transport  Community  Treaty.  The 
country  needs  to  further  align  with  and  implement  effectively  the  acquis  in  all  areas  of 
transport and at  all levels  of government.  On road safety, Bosnia and Herzegovina needs to 
enhance  its  administrative  capacity,  in  particular  through  developing  concrete  action  plans 
and  launching  awareness-raising  campaigns  to  reduce  the  high  number  of  accidents  and 
facilities. It also has to finalise and adopt its laws on the transport of dangerous goods in full 
alignment  with  the  acquis  and  the  relevant  international  agreements,  and  establish  the 
appropriate administrative structures.  

Administrative capacity needs to be strengthened to ensure implementation of the legislation 
and regulations, in particular as regards enforcement, inspection and investigation bodies for 
road transport, railways, inland waterways and aviation.  

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

  urgently develop enforcement capacity to reduce road traffic fatalities, and make progress 

on establishing of a national system for continuous road crash data collection;  

121 

 
  reinforce  the  independence,  strengthen  the  capacity  and  ensure  sufficient  funding  of 

regulatory bodies in the field of transport 

  draw up the strategic framework, adopt relevant legislation and ensure sufficient capacity 
and  resources  for  implementing  the  intelligent  transport  system  (ITS)  on  the  core 
networks. 

Chapter 15: Energy 

EU  energy  policy  covers  energy  supply,  infrastructure,  the  internal  energy  market, 
consumers,  renewable  energy,  energy  efficiency,  nuclear  energy  and  nuclear  safety  and 
radiation protection. 

The SAA calls for cooperation in meeting the priorities from the EU acquis relevant for the 
energy sector, including nuclear safety. Bosnia and Herzegovina is since 2006 member of the 
Energy Community which aims to create an integrated pan-European energy market. The key 
objective of the Energy Community Treaty is to extend the EU internal energy market rules 
and  principles  to  the  contracting  parties  in  South  East  Europe,  the  Black  Sea  region  and 
beyond  on  the  basis  of  a  legally  binding  framework.  By  signing  the  Energy  Community 
Treaty,  the  Contracting  Parties  committed  to  transposing  and  implementing  key  EU  energy 
law,  develop  an  adequate  regulatory  framework  and  liberalise  their  energy  markets  in  line 
with  the  Treaty  acquis  within  a  fixed  timeframe.  The  Energy  Community  acquis  comprises 
legal acts in the following areas: electricity, gas, renewable energy, energy efficiency, climate, 
environment, competition, statistics, infrastructure and oil. 

According to  the constitutional  and legal  framework, the competences in  the area of energy 
rest predominantly with the two entities and Brčko District. The state level is responsible for 
the  legislative  framework  for  electricity  which  includes  the  Law  on  transmission  of  electric 
power,  regulator and system Operator of  Bosnia  and Herzegovina, the  Law establishing the 
company  for  the  transmission  of  electric  power  in  Bosnia  and  Herzegovina  and  the  law 
establishing  an  independent  system  operator  for  the  transmission  system  of  Bosnia  and 
Herzegovina. The state level has also passed legislation in the field of radiation, nuclear safety 
and nuclear waste. 

The entities have their own legislation for energy sub-sectors (electricity, natural gas, energy 
efficiency,  renewable  energy,  oil  and  oil  products  etc.).  Brčko  District  has  only  legislation 
governing the electricity sector, while regulatory competences are executed by the state-level 
regulator.  

The  key  bodies  at  the  state  level  in  this  sector  are  the  Ministry  of  Foreign  Trade  and 
Economic  Relations,  which  is  responsible  for  defining  policies  and  basic  principles  and  for 
the  coordinating  activities  and  harmonisation  of  entity  level  plans  relevant  for  international 
relations, the State Electricity Regulatory Commission  and the State Regulatory Agency for 
Radiation  and  Nuclear  Safety.  Both  entities  have  ministries  covering  the  energy  sector:  the 
Ministry of Energy, Mining and  Industry in the Federation and the Ministry for Energy and 
Mining of Republika Srpska and there are also Regulatory Commissions for Energy. In Brčko 
District the Department of Communal Affairs is in charge of energy related issues.  

The  State  Electricity  Regulatory  Commission  (SERC)  is  exclusively  in  charge  of  electricity 
transmission on state level only without any jurisdiction over the gas sector. This legal set-up 
does not comply with the requirements of the Directive for a single regulatory authority for 
electricity  and  gas  at  national  level  and  is  subject  to  an  ongoing  infringement  action  by  the 
Energy  Community.  SERC  is  composed  of  three  Commissioners  representing  the  three 

122 

 
 
constituent peoples which constitutes a discrimination against the “Others” Its effectiveness is 
undermined by the need for unanimous decision-making.  

The Republika Srpska entity  contests  the state-level  competence to  develop policy, legislate 
and  regulate  in  most  of  the  energy  sub-sectors,  particularly  for  natural  gas.  This  includes 
contesting  the  adoption  of  legislation  at  state  level  or  the  establishment  of  state-level  gas 
regulator. 

Bosnia and Herzegovina’s energy balance is made up of coal, oil, gas, firewood, hydroelectric 
power and other renewable energy sources. There is currently no nuclear energy production. 
In  2016,  the  major  energy  sources  for  gross  inland  consumption  were  coal  (61.2%),  oil 
(36.5%) and hydro (10.2%) whereas natural gas only accounts for 3.9%. Domestic production 
is  71%  of  the  total  gross  inland  consumption.  Bosnia  and  Herzegovina’s  energy  sector 
accounts  for  nearly  6%  of  its  GDP.  The  country’s  electricity  interconnections  with 
neighbouring  countries  are  mostly  sufficient  and  there  is  no  serious  congestion.  As  for  gas, 
the  sole  network  interconnection  with  Serbia  is  in  a  poor  state  of  repair  and  the  country’s 
inland gas network is often overloaded in winter months. 

A  2018  countrywide  framework  energy  strategy  up  to  2035  is  in  place,  with  the  strategic 
documents at entity and Brčko District level as integral parts. The strategy prioritises the key 
energy  strategic  guidelines  of  Bosnia  and  Herzegovina  with  objectives  and  implementation 
priorities  to  be  reached  in  the  years  to  come.  This  contributes  to  the  country’s  ability  to 
address  issues  related  to  security  of  supply.  Different  production  mix  scenarios  outlined  in 
the  strategy  make  provision  for  an  increase  in  security  of  supply  but  leave  the  choice  and 
implementation  of a particular scenario to  future action plans.  Most of the scenarios lead to 
increasing  the  share  of  fossil  energy  in  the  total  consumption  and  therefore  further 
carbonisation, contrary to the climate change commitments. The document identifies planned 
new investments in electricity generation from domestic resources, including renewables, but 
with a clear focus on coal. This is confirmed by the current and planned investments into coal-
fired power plants in Tuzla, Banovici and Ugljevik. The extension of Tuzla Block 7 will be 
financed through a Chinese loan which has received a guarantee by the Federation entity in 
spring  2019,  raising  some  concerns  by  the  Energy  Community  Secretariat  in  regard  to 
violation  of  EU  state  aid  rules.  Future  investments  into  energy  infrastructure,  including 
thermal  and  hydro  power  plants,  need  to  be  implemented  in  compliance  with  Bosnia  and 
Herzegovina’s obligations under the Stabilisation and Association Agreement and the Energy 
Community Treaty. These include in particular EU standards on public procurement, state aid 
and environmental impact assessment. The level of security of electricity supply is sufficient. 
Bosnia and Herzegovina is a member of the Security Coordination Centre, a Belgrade-based 
company of system operators of Bosnia and Herzegovina, Montenegro and Serbia.  

Bosnia  and  Herzegovina  does  not  have  a  legislative  framework  aligned  with  the  EU  acquis 
relevant for oil stocks. The operational and financial system necessary for the establishment 
of obligatory oil stocks is not in place. In line with the Energy Community Treaty, the country 
is committed to meeting EU oil stock requirements equivalent to 90 days of average daily net 
imports or 61 days of daily inland consumption, whatever is greater, by 2021. However, the 
country  is  experiencing  a  number  of  difficulties  in  establishing  the  institutional  and  legal 
framework  on  collection  of  relevant  data  needed  to  calculate  obligatory  stocks  and  for 
reporting in line with the EU acquis. The existing entity level legislation relevant for the oil 
sector  and  the  oil  reserves  is  not  harmonised  between  the  entities  and  prevents  the 
establishment of a state-level body for compulsory oil stocks and petroleum products. In the 
Federation entity there are storage capacities of 81,250 m³ while additional available storage 
capacities  of  117,000  m³  are  currently  inoperable.  In  the  Republika  Srpska  entity  there  are 
currently  no  oil  stock  reserves.  In  order  to  meet  the  requirements  of  the  EU  acquis, 

123 

 
considerable funds must be invested in the purchase of petroleum products, the rehabilitation 
of existing storage capacities and the construction of new ones. Bosnia and Herzegovina is not 
compliant  with  the  Regulation  concerning  measures  to  safeguard  security  of  natural  gas 
supply.  

Bosnia  and  Herzegovina  is  a  member  of  the  European  Network  of  Transmission  System 
Operators  (ENTSO)  for  electricity,  in  which  it  is  represented  by  its  Independent  System 
Operator. In 2018 BH Gas, a public enterprise for the production and transport of gas on the 
territory of the Federation entity, became an observer in the ENTSO for gas.   

The  long-term  transmission  network  development  plan  for  2018-2027  identifies  priority 
electricity  transmission  interconnections  with  neighbouring  countries.  The  country  has  four 
electricity transmission interconnections included on the list of projects of Energy Community 
interest  (PECI)  and  projects  of  mutual  interests  (PMI).  It  also  has  three  projects  for  gas 
interconnections on PECI/PMI lists connecting its infrastructure with the Croatian natural gas 
system. The country is completely dependent on imports of Russian natural gas via one route 
through  Ukraine,  Hungary  and  Serbia.  Russian  companies  also  control  the  country’s  two 
refineries, both located in Republika Srpska entity. The development of project documentation 
for  the  Zagvozd–Posusje–Travnik  southern  gas  pipeline  interconnection  is  advancing, 
although it is currently being challenged by the government of the Republika Srpska entity. A 
project  for  a  north-south  Brod-Zenica  gas  pipeline  interconnection  which  would  provide 
Bosnia and Herzegovina with access to an alternative source of supply is blocked due to lack 
of political consensus.  

Although  Bosnia  and  Herzegovina  is  a  net  exporter  of  electricity,  the  development  of  its 
power  market  with  its  neighbours  is  hampered  by  the  absence  of  a  fully  aligned  and 
harmonised  legislative  framework.  The  country  also  needs  to  establish  a  power  exchange. 
Although  the  roadmap  for  regional  day-ahead  market  integration  in  the  Western  Balkans 
indicated  the  prospects  for  market  coupling,  the  country  has  not  decided  on  any  market 
coupling  activity.  The  existing  2002  state  Law  on  Electricity  Transmission,  Regulator  and 
System  Operator  includes  basic  requirements  from  the  third  energy  package.  Secondary 
legislation  approved  by  the  State  Electricity  Regulatory  Commission  allow  for  third-party 
access.  The  existing  legislation  does  not  prevent  the  obtaining  of  balancing  services  across 
borders,  and  market  rules  from  2015  allow  for  market-based  procurement  of  balancing 
capacity  and  balancing  energy.  Transmission  lines  connecting  the  country  with  Croatia  and 
Montenegro  are  allocated  on  a  yearly,  monthly  and  daily  basis  through  the  Coordinated 
Auction  Office  in  South  Eastern  Europe,  while  bilateral  allocation  is  applied  on  the  border 
with Serbia and intraday allocation on all borders.  

Bosnia and Herzegovina should ensure as a matter of urgency alignment with the third energy 
package  in  order  to  establish  a  functioning  internal  energy  market  for  electricity  and  gas. 
This  would  remove  the  major  legal  obstacles  to  the  implementation  of  a  day-ahead  and 
balancing market  in Bosnia and Herzegovina and its integration into the regional electricity 
market as part of the WB6 connectivity agenda and related reform measures. Within the limits 
of current electricity legislative framework some market actors have been identified, but the 
fragmented  and  non-compliant  legislation  in  the  gas  sector  does  not  allow  for  adequate 
identification and consistent status of market actors. The current model of legal and functional 
unbundling of the electricity transmission company from generation and supply is not in line 
with any of the unbundling models under the EU acquis and needs to be aligned accordingly. 
The independent system operator for transmission and the transmission company are legally 
unbundled  but  remain  under  the  control  of  entity  governments,  which  are  responsible  for 
operation  of  public  utilities  for  generation  and  supply.  Both  entities  and  the  Brčko  District 
need to legally unbundle electricity supply from distribution companies.  

124 

 
Bosnia  and  Herzegovina  has  no  single  or  harmonised  legal  and  regulatory  framework  for 
tendering new generation capacity. The country’s regulatory framework relevant for building 
new projects  is  cumbersome, costly  and overall  unfavourable. Electricity market  opening in 
Bosnia  and  Herzegovina  took  place  in  2015,  meaning  that  all  consumers  are  eligible. 
Procedures for supply switching are in place but the regulatory frameworks allow households 
and  consumers  to  access  regulated  universal  service  tariffs  under  the  category  of  ‘other 
consumption’  without  taking  into  account  the  electricity  market  price,  which  results  in 
exceptionally  limited  switching  of  suppliers.  The  latest  reports  indicate  that  in  the  total 
consumption  of  end  users,  43.87%  is  by  consumers  whose  price  is  not  regulated.  In  2017, 
only 56 consumers are supplied by suppliers other than the incumbent electricity utilities that 
traditionally  operate  only  within  their  respective  service  territory.  A  countrywide  retail 
electricity market needs to be established and running properly.  

Generation  prices  on  the  territory  of  the  Republika  Srpska  entity  are  regulated,  which  is  in 
breach  of  Energy  Community  law.  Tariff  methodologies  applied  by  the  three  respective 
regulatory  commissions  in  Bosnia  and  Herzegovina  are  cost-based  and  using  cost-plus 
methodology.  The  increased  regulatory  independence  should  be  reflected  in  increased 
transparency  and  cost-related  tariffs.  Cross-subsidies  exist  and  are  particularly  notable  in 
pricing  structures  for  households  and  for  customers  in  the  ‘other’  category  with  the  same 
consumption  characteristics.  There  are  no  measures  envisaged  to  phase  out  existing  cross-
subsidies.  

There is no countrywide harmonised approach to protecting of vulnerable electricity and gas 
customers.    In  the  Federation  entity,  there  is  an  annual  plan  but  the  government  allocates 
different levels of subsidies for customers depending on which electricity utility serves them. 
In  Brčko  District,  the  government  allocates  some  budget  funds  to  protect  vulnerable 
customers, covering an exceptionally high number, equivalent to about 33% of all customers. 
In  the  Republika  Srpska  entity  there  is  no  programme  or  plan  for  vulnerable  customers. 
Bosnia and Herzegovina needs to define the concept of ‘vulnerable customer’ which under the 
Energy Community acquis was already due in 2015.  

Due  to  the  ongoing  lack  of  alignment  with  the  acquis  in  the  gas  sector,  Bosnia  and 
Herzegovina is in serious and persistent breach of its commitments as an Energy Community 
Treaty  signatory.  The  current  regime  in  place  is  not  in  line  with  the  acquis,  including  the 
governing  of  the  third-party  access  to  the  gas  pipeline.  While  the  Federation  entity  is  not 
willing  to  move  ahead  in  adopting  entity  legislation  without  a  consensus  at  state  level,  the 
Republika Srpska entity adopted a completely autonomous gas law based on the third energy 
package,  hampering  the  adoption  of  a  state-level  law  that  would  ensure  the  required 
compliance with the third energy package. All natural gas consumers in the Federation entity 
are supplied by their respective incumbent at regulated prices. In the Republika Srpska entity, 
there  are  different  suppliers,  with  regulated  prices  only  for  household  customers. 
Nevertheless, the markets in the country must be considered highly closed to competition.  

In  terms  of  eligibility,  all  customers  in  the  Federation  entity  are  captive, whereas  the 
Republika  Srpska  entity  correctly  transposed  the  eligibility  criteria  of  the  Directive  on  an 
internal market in natural gas. The existing legislation is uneven and prevents the sound and 
secure  operation  of  a  countrywide  system.  In  addition,  it  does  not  allow  for  market-based 
operation  and  prevents  the  proper  regulation  and  supervision  of  the  system.  Political 
consensus needs to be reached in order to align legislative and regulatory framework with the 
third energy package as a matter of urgency.  

Bosnia  and  Herzegovina  has  three  regulatory  authorities  at  state  and  entity  level,  with  a 
distribution of competences in line with the national legislative framework. These authorities 

125 

 
are  adequately  staffed  and  financed  but  are  exposed  to  political  pressures,  particularly 
regarding  the  selection  of  new  board  members.  There  are  documented  cases  where 
representatives  of  regulated  companies  are  nominated  to  selection  panels  for  members  of 
regulatory authorities, which represents a conflict of interest.  

At the state level and in the Federation entity, there are no rules on prospection, exploration 
and  production,  as  required  under  the  EU  acquis  on  hydrocarbons.  In  the  Republika  Srpska 
entity, the 2013 Law on Geological Surveys includes rules that are partially aligned with the 
acquis.  In  Bosnia  and  Herzegovina  there  is  no  legal  framework  in  place  transposing  the 
Directive on safety of offshore oil and gas installations.  

The  country  submitted  to  the  Energy  Community  Secretariat  its  national  renewable  energy 
action plan in 2016. The national target is 40% of renewable energy sources (RES) in final 
energy  consumption  and  an  energy  share  from  RES  in  transport  of  10%  by  2020.  The 
implementation measures, including the renewable energy technology objectives, are lagging 
behind.  According  to  the  latest  statistical  data,  Bosnia  and  Herzegovina  reached  a  25.33% 
share  of  energy  from  renewable  sources  in  2016.  The  country  should  establish  a  legal 
framework at  state level which clearly coordinates and defines respective responsibilities of 
national, regional and local administrative bodies for authorisation, certification and licensing 
procedures on renewable energy. The legislation at entity level is partially compliant with the 
Renewable  Energy  Directive;  further  changes  are  required  in  order  to  allow  for  renewable 
energy  support  schemes.  Brčko  District  has  no  legislation  in  place  in  this  respect.  Human 
resources  in  respective  ministries  at  state  and  entity  level  need  to  be  increased,  but  are 
adequate in regulatory authorities. Both entities have legislation in place on support schemes 
for different renewable energy technologies in the form of feed-in tariffs. 

A number of renewable energy projects are licensed in the country. More efficient investment 
planning at different levels of authorities and registration of projects is needed to strengthen 
coordination  among  institutions  when  authorising  small,  dispersed  renewable  energy 
producers.  The  investment  framework  is  hampered  by  heavy  administrative  procedures  for 
permitting  authorisation  and  licensing.  The  authorities  should  take  measures  to  simplify 
procedures  and  create  a  more  favourable  environment  for  RES  investments.  Integration  of 
renewable sources into the grid is treated differently at the state and entities level. This needs 
to  be  rectified.  A  state-level  piece  of  secondary  legislation  enforces  priority  or  guaranteed 
access  but  the  priority  dispatch  is  not  in  place.  Meanwhile,  entity-level  legislation  includes 
priority dispatch and guaranteed priority to connection, but not priority or guaranteed access. 
The  transmission  grid  capacity  for  connection  of  renewable  energy  facility  is  at  present 
evaluated as mostly sufficient by the responsible bodies in Bosnia and Herzegovina.  

Hydropower  planning  is  carried  out  at  entity  level.  The  existing  legal  framework  requires 
environmental impact assessments to be drawn up but in practice this is not always properly 
applied  and  often  challenged  by  civil  society  and  subject  to  legal  challenges  through  the 
courts. The legislation needs to be adapted to deal with the lack of a system at state level for 
delivering certificates of origin  and to  deal  with  the non-compliance of  entity-level  systems 
with  the  EU  acquis.  Bosnia  and  Herzegovina  needs  to  ensure  that  the  share  or  quantity  of 
electricity  produced  from  renewable  sources  can  be  guaranteed  to  customers  in  compliance 
with the Directive on the promotion of the use of energy from renewable sources.  

A  2017  national  energy  efficiency  action  plan  is  in  place  and  is  in  line  with  Energy 
Community Treaty requirements. Energy efficiency action plans for each entity provide for a 
final energy consumption savings target of 9% for 2018. The assessment of the current plan 
based on 2015 data indicates that Bosnia and Herzegovina only achieved a saving of 3.77%. 
There  is  no  state-level  legislation  on  energy  efficiency.  The  Republika  Srpska  entity  has 

126 

 
partially transposed the energy efficiency acquis through a 2013 law on energy efficiency and 
the  Federation  entity  followed  in  2017.  Additional  transposition  is  urgently  required  in  line 
with the obligations from the Directive on energy end-use efficiency and energy services as 
part of the Energy Community  acquis. The Energy Community has opened an infringement 
case  on  this  due  to  failure  of  Bosnia  and  Herzegovina  to  fulfil  its  obligations.  The  Brčko 
District  does  not  have  a  legislative  framework  on  energy  efficiency.  The  EU  acquis  on  the 
energy performance of buildings is mainly transposed through entity-level legislation. Further 
alignment in secondary legislation is necessary to ensure compliance. The Brčko District still 
needs  to  carry  out  the  necessary  activities  in  this  field.  Bosnia  and  Herzegovina  should 
proceed with the training of designated authorities for buildings efficiency certification.  

On  nuclear  energy,  nuclear  safety  and  radiation  protection,  the  country  has  no  nuclear 
sites in its territory nor plans to build any. Nuclear safety is addressed in general terms in the 
state-level  Law  on  Radiation  and  Nuclear  Safety  in  Bosnia  and  Herzegovina.  The  Law 
established the State Regulatory Agency for Radiation and Nuclear Safety. The Agency has 
acknowledged  some  of  the  remaining  shortcomings  deficiencies  and  is  committed  to 
rectifying  them,  particularly  those  concerning  the  Euratom  Directive  on  nuclear  safety  of 
nuclear  installations.  Provisions  from  the  Euratom  Directive  on  responsible  and  safe 
management  of  spent  fuel  and  radioactive  waste  are  taken  into  account  to  the  necessary 
extent. Bosnia and Herzegovina has ratified most of the international treaties, conventions and 
protocols in this area. In terms of meeting international commitments on data submission, the 
infrastructure  available  to  the  Agency  needs  to  be  improved,  and  the  coordination  and 
reporting  from  all  relevant  parties  needs  to  be  enhanced.  Bosnia  and  Herzegovina  is  not  a 
member  of  the  European  Community  Urgent  Radiological  Information  Exchange  system 
(ECURIE)  but  it  conducts  activities  to  enable  data  exchange  through  the  European 
Radiological Data Exchange Platform (EURDEP). Radon monitoring is carried out only on an 
ad hoc basis, and data collection is neither systematic nor centralised. The country participates 
in  the  activities  of  International  Atomic  Energy  Agency  concerning  radon  regulation  in 
residential  buildings.  The  State  Regulatory  Agency  for  Radiation  and  Nuclear  Safety  is  an 
independent agency operating under the indirect  supervision of the Bosnia and Herzegovina 
Council  of  Ministers.  Bosnia  and  Herzegovina  should  increase  the  Agency’s  capacity  as 
regards staffing and financial resources. 

Bosnia and Herzegovina is at an early stage of preparations in the sector of energy.  

The country needs to reinforce cooperation and coordination within the sector. A fragmented, 
inconsistent  and  uneven  legislative  framework  between  different  levels  of  government  is 
hampering overall progress. Bosnia and Herzegovina needs to step up its efforts towards the 
establishment of functional internal markets and its integration into the regional market. As a 
matter of urgency, Bosnia and Herzegovina needs to adopt state-level legislation aligned with 
the third energy package in the field of both electricity and gas, which should be followed by 
compliant entity-level legislation. Overall, the country is lagging behind in implementing its 
obligations  stemming  from  the  Energy  Community  Treaty.  The  sector  is  hampered  by 
political  interference,  resulting  in  an  unfavourable  investment  climate  and  insufficient 
regulatory independence. The country needs to increase and implement measures relevant for 
both  energy  efficiency  and  renewable  energy  sources.  In  order  to  ensure  consistent  and 
comprehensive development of the energy sector, authorities need to draw up concrete action 
plans  to  streamline  implementation  of  the  country’s  framework  energy  strategy  in  line  with 
climate change commitments. 

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

  adopt gas and electricity legal frameworks compliant with the third energy package; 

127 

 
  intensify its efforts to implement connectivity reform measures to support the functional 

operation of the regional market ; 

  adopt state- and entity-level legislation on renewable energy and energy efficiency in line 

with obligations stemming from the Energy Community Treaty. 

Chapter 16: Taxation 

EU rules on taxation cover value added tax and excise duties as well as aspects of corporate 
taxation.  They  also  deal  with  cooperation  between  tax  administrations,  including  the 
exchange of information to prevent tax evasion. 

The  SAA  prohibits  fiscal  discrimination  of  products  exported  by  the  other  party.  It  also 
establishes cooperation between the EU and Bosnia and Herzegovina in the area of taxation, 
the aims being to align with the acquis, further reform Bosnia and Herzegovina’s tax system, 
ensure effective tax collection and fighting tax fraud. 

According to  the constitutional  and legal  framework competences for taxation are exercised 
by the state level being competent for indirect taxation and the two entities as well as Brčko 
District  for  all  other  taxes.  As  for  direct  taxation,  the  Federation  entity  has  exclusive 
responsibility  to  legislate  on  fiscal  policy  while  the  cantons  exercise  all  competences  not 
expressly assigned to the Federation entity, in particular the powers to draw on taxation as a 
means to finance activities of cantonal authorities. 

Indirect  taxes  are  administered  by  the  Indirect  Taxation  Authority  (ITA),  a  state-level 
institution  responsible  for  collecting  and  distributing  indirect  taxes.  For  other  taxes  such  as 
corporate  tax,  income  tax  and  contributions  the  competent  institutions  are  the  entities’ 
Ministries  of  Finance,  the cantonal  Ministries  of  Finance  as  well  as  the  Brčko  District 
Directorate  of  Finance.  The  tax  administrations  of  the  entities  and  Brčko  District  operate 
within the respective Ministries of Finance and Brčko District Directorate of Finance and are 
responsible for administering taxes.  

The Bosnia and Herzegovina 2003 Law on indirect taxation system provides the legal basis 
for  the  ITA.  The  ITA  is  an  autonomous  administrative  organisation  answering  through  its 
Governing Board, to the Council of Ministers of Bosnia and Herzegovina. The ITA proposes 
and implements legislation in the field of VAT and excise duties. 

The  legislative  framework  in  the  field  of  indirect  taxation  (value-added  tax  (VAT)  and 
excise duties) was introduced in 2004, and is partially aligned with the acquis. The legislation 
includes the Law on value added tax, Law on excise duties, Law on indirect taxation system 
in Bosnia and Herzegovina, Law on the indirect taxation authority, Law on indirect taxation 
procedure, Law on the procedure of forced collection of indirect taxes, Law on payments to 
single account and allocation of revenues.   

The  VAT  law  introduces  all  the  basic  principles  and  follows  the  structure  of  the  respective 
EU legislation. It provides for a single tax rate of 17%. Bosnia and Herzegovina needs to fully 
align  certain  aspects  of  its  law  on  VAT  with  the  acquis,  such  as  the  VAT  scheme  in 
construction, the transfer of business assets, and exemptions for international agreements.  

A  Law  on  excise  duties  is  in  force  since  January  2005.  Bosnia  and  Herzegovina  applies 
excise duties on tobacco, alcohol, non-alcoholic beverages other than natural juices and water, 
fuel  and  coffee.  The  law  provides  for  equal  treatment  of  domestic  and  imported  goods  in 
terms of the excise tax rates applicable. Considerable discrepancies from the acquis exist for 
excisable goods as regards scope, classification of the goods, exemptions, structures and the 

128 

 
 
minimum  rates.  Bosnia  and  Herzegovina  needs  to  align  its  law  on  excise  tax  fully  with  the 
acquis. 

The  legislative  framework  on  direct  taxation  regulates  corporate  tax,  property  tax,  income 
tax and contributions. In 2016, the two entities adopted harmonised corporate income tax laws 
to  foster  consistency,  avoid  double  taxation  between  the  entities,  reduce  tax  incentives  and 
clarify  the  tax  treatment  of  loan  loss  provisioning  in  line  with  International  Monetary  Fund 
(IMF)  recommendation.  The  laws  eliminate  exemptions  for  exporters  while  increasing 
incentives for investment,  and clarify the tax treatment  of depreciation  and banks’ loan loss 
provisioning. 

With regard to administrative cooperation and mutual assistance, Bosnia and Herzegovina 
joined the Global Forum on Transparency and Exchange of Information  for Tax purposes in 
July 2018. The country needs to join the Inclusive Framework of OECD BEPS (Base Erosion 
and  Profit  Shifting)  and  to  sign  and  ratify  the  Multilateral  Convention  on  Mutual 
Administrative Assistance by the end of 2019. 

Agreements  on  cooperation  and  mutual  assistance  are  signed  by  the  ITA  for  the  area  of 
indirect  taxation  (e.g.  with  Serbia,  Bulgaria,  Montenegro).  There  is  also  a  Memorandum  of 
Understanding  between  the  four  tax  administrations  in  Bosnia  and  Herzegovina  on  mutual 
cooperation and data exchange in the area of indirect and direct taxation.  

Concerning  operational  capacity and computerisation, electronic submission  of VAT and 
excise duties declaration is  in place since 2018 on a voluntary basis and is  mandatory as of  
2019. As electronic submission of declarations has only been in place for a short time, it is not 
possible  to  assess  how  well  it  is  working.  Nevertheless,  coordination,  cooperation  and  data 
exchange  between  the  different  tax  administrations  of  the  country  need  to  be  further 
improved, including the harmonisation of the e-signature countrywide. 

Bosnia and Herzegovina has some level of preparation in the area of taxation.  

The country needs to improve the cooperation between the Indirect Taxation Authority (ITA) 
and the tax administrations of the entities and Brčko District, including through joint audits, 
as cooperation between the state level, entities and Brčko District is key in this area. Bosnia 
and Herzegovina also needs to continue the process of alignment with VAT legislation. 

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

  bring the legislation on excise duties in line with the acquis, notably on excise duties on 

beer; 

  eliminate  interoperability  burdens  in  areas  such  as  e-signature  in  order  to  have  a 

harmonised countrywide system; 

  ensure that by end 2019 it has joined OECD’s Inclusive Framework on Base Erosion and 
Profit Shifting and has signed and ratified the OECD Multilateral Convention on Mutual 
Administrative Assistance in Tax Matters. 
Chapter 17: Economic and monetary policy 

EU rules require the independence of central banks and prohibit them from directly financing 
the public sector. Member States coordinate their economic policies and are subject to fiscal 
economic and financial surveillance. 

The  SAA  includes  provisions  on  cooperation  and  exchange  of  information,  which  among 
others allows  Bosnia and Herzegovina to  gradually approximate its policies to  the stability-
oriented policies of the European Economic and Monetary Union. 

129 

 
According to the constitutional and legal framework the competences are exclusively at state 
level as far as monetary policy is concerned, while for economic policy they are exercised at 
state level, by the two entities and by Brčko District.  

At state level the sole authority for issuing currency and defining and implementing monetary 
policy is the Central Bank of Bosnia and Herzegovina (CBBiH). As regards economic policy, 
at  state  level  the  main  actors  are  the  Ministry  of  Finance  and  Treasury,  the  Directorate  for 
Economic  Planning  (a  permanent  body  of  the  Council  of  Ministers  responsible  for 
administrative coordination and monitoring) and the Fiscal Council tasked with coordinating 
fiscal policy in Bosnia and Herzegovina to ensure macroeconomic and fiscal sustainability of 
the State, the entities and Brčko District. The Fiscal Council is mandated to adopt the global 
framework  of  fiscal  balance  and  policies  which  contains  macroeconomic  projections  and 
fiscal targets for various levels of government, to monitor implementation of fiscal targets and 
to  undertake  corrective  measures.  For  the  Republika  Srpska  entity,  economic  policy  is  the 
responsibility  of  the  Ministry  of  Finance,  while  other  ministries  are  in  charge  of  particular 
aspects of the economy. In the Federation entity, the Institute for Development Programming 
is in charge of preparing of economic policy, while the Ministry of Finance is responsible for 
fiscal policy; in the Brčko District, the responsible body is the Directorate of Finance. 

Banking  supervision  is  exercised  by  the  respective  entity  agencies  whilst  the  Central  Bank 
coordinates their activities; both entities have also tripartite Economic-Social Councils for the 
dialogue  with  the  social  partners.  The  Brčko  District  government  sets  direct  taxation  policy 
and  rates  of  administrative  and  court  fees,  charges  and  fines  collected  by  Brčko  District 
institutions.  The  Republika  Srpska  entity  contests  the  role  of  the  state  level  to  coordinate 
economic policies countrywide.  

The  formulation,  adoption,  control  and  execution  of  monetary  policy  is  the  competence  of 
the Central Bank. The country uses the konvertibilna marka (convertible mark, KM/BAM) as 
sole legal tender. All financial obligations arising from transactions concluded in Bosnia and 
Herzegovina are denominated in convertible marks. Bosnia and Herzegovina runs a currency 
board arrangement, with the convertible mark pegged to the euro at an exchange rate fixed by 
the Central Bank Law at 1.96. The instruments of the Central Bank for conducting monetary 
policy  are  restricted  to  the  management  of  required  reserves,  while  the  bank  is  prohibited 
from extending loans to governments or commercial banks (i.e. the Central Bank cannot act 
as  a  lender  of  last  resort,  or  provide  emergency  liquidity  or  solvency  assistance)  or  from 
conducting open market operations. The Law on the Central Bank is not fully aligned with the 
acquis as regards the prohibition on monetary financing. 

In terms of functional independence, the objective of the Central Bank as laid down in the law 
consists in achieving and maintaining the stability of the domestic currency. This is in contrast 
with the price stability objective that is a primary objective of monetary policy in the EU. The 
Central  Bank  is  equipped  with  regulatory  powers,  including  to  implement  its  basic  task  of 
monetary policy.  

As regards the Central Bank’s institutional independence, the Law on the Central Bank refers 
to  it  as  an  independent  legal  person.  Although  the  law  places  an  explicit  prohibition  on  the 
Central Bank receiving any kind of instructions from any government body, organisation or a 
person, there is no general or unconditional prohibition on giving instructions to the Central 
Bank or directly  influencing  a member of the bank’s management  body.  Moreover, the law 
does not prohibit members of its decision-making bodies from seeking or taking instructions. 
In addition, the law imposes on the bank a duty to report to the Parliamentary Assembly on its 
audited annual financial statements for parliamentary scrutiny and to report to the Presidency 
on  the  preliminary  financial  reports.  This  latter  requirement  could  impinge  on  the 

130 

 
independence of the Central Bank. The Presidency also appoints an external auditor to audit 
its accounts and records, upon proposal of the Governing Board of the Central Bank.  

In  terms  of  personal  independence,  the  members  of  the  Central  Bank’s  Governing  Board, 
including the Governor, are appointed and removed by decision of the Presidency. Legislative 
provisions governing removals of the Governing Board members are not fully in line with the 
acquis.  Besides  providing  more  widely  defined  grounds  for  obligatory  dismissal,  the  law 
allows  also  for  ‘discretionary  grounds  for  dismissal’.  The  law  also  stipulates  that  a 
‘replacement  member’  of  the  Governing  Board,  i.e.  one  that  fills  a  vacant  position  in  the 
board due to dismissal or resignation of the previous member, can stay in office only until the 
end of the mandate of his/her predecessor (possibly less than 5 years). 

As  regards  financial  independence,  the  Central  Bank  is  legally  entitled  to  have  its  capital 
position restored by the Ministry of Finance and Treasury in case of losses. It can also acquire 
and  dispose  of  movable  and  immovable  property.  According  to  the  law,  the  Central  Bank 
allocates  part  of  its  profit  to  general  reserve  to  maintain  the  amount  of  share  capital  and 
general  reserves  at  the  level  of  5%  of  the  monetary  liabilities,  while  the  rest  is  divided 
between  the  Central  Bank  (40%)  and  the  state  budget  (60%).  The  Central  Bank  may  only 
create special reserves after receiving the Presidency’s prior approval on the accounts of the 
bank.  Finally,  cases  have  been  reported  in  which  the  Presidency  issued  instructions  that 
directly impacted the financial operations of the Central Bank, e.g. in terms of setting wage 
levels of staff, although on the basis of the law it is the Central Bank itself which is in charge 
of setting the conditions of employment of its staff.  

As  regards  financial  supervision,  the  Central  Bank  has  a  coordinating  role,  while  the 
supervisory  powers  lie  with  the  two  entities’  banking  agencies.  The  efficiency  of  banking 
sector supervision is impeded by fragmented competences and insufficient coordination. 

Regarding  economic  policy,  Bosnia  and  Herzegovina  has  taken  part  since  2006  in  the  EU 
multilateral  surveillance  exercise,  which  among  others  aims  to  prepare  candidate  countries 
and potential candidates for their eventual participation in the economic policy coordination 
and  budgetary  surveillance  mechanism  in  the  EU.  In  this  context,  Bosnia  and  Herzegovina 
submits  every  year  to  the  Commission  a  medium-term  economic  reform  programme  setting 
out  plans  to  strengthen  macro-fiscal  stability  and  tackle  structural  obstacles  to  growth. 
However, largely as a result of insufficient cooperation among key stakeholders, such as the 
two  entities  but  also  the  Central  Bank,  the  quality  of  the  programme  is  low  and  the 
implementation of the jointly adopted policy guidance, which is a central part of the process, 
is  limited.  Capacities  to  design,  implement  and  monitor  structural  reforms  to  meet  the 
requirements of the European Semester will need to be significantly enhanced, both in terms 
of  establishing  a  coherent  and  countrywide  medium  term  reform  programme  as  well  as 
regarding coordination of and among various governmental bodies. 

Alignment  with  the  requirements  for  reporting  public  sector  data  in  line  with  the  European 
System of National and Regional Accounts (ESA 2010) and for participating in the excessive 
deficit  procedure  is  very  limited.  Furthermore,  the  alignment  of  the  underlying  statistical 
framework with ESA 2010 requirements and definitions is also very low. Data provision and 
transparency  is  severely  hampered  by  a  lack  of  cooperation  between  the  main  statistical 
bodies.  Countrywide  forecasts  are  provided  on  a  regular  base,  although  macroeconomic 
modelling  is  still  weak.  Fiscal  rules  are  established  only  at  entity  level  and  there  is  no 
independent  fiscal  institution  to  monitor  and  enforce  compliance  with  countrywide  fiscal 
rules. The medium-term budgetary framework is underdeveloped and not sufficiently used as 
a policy-guiding instrument. 

Bosnia and Herzegovina is at an early stage of preparation on economic and monetary policy. 

131 

 
There is a need to introduce significant amendments to the Law on the Central Bank in order 
to bring it in line with EU law. The independence of the Central Bank must be ensured and 
preserved.  Although  monetary  policy  has  so  far  supported  economic  stability,  substantial 
additional  efforts  are  required  to  advance  preparations  for  participation  in  the  third  stage  of 
the Economic and Monetary Union as a Member State with derogation. On economic policy, 
substantial efforts are required to (i) produce timely and good quality countrywide economic 
statistics  in  line  with  EU  standards  (ii)  strengthen  capacities  and  improve  the  level  of 
cooperation among key stakeholders needed for participation in EU economic policy-making 
(iii)  develop  countrywide  numerical  fiscal  rules  (iv)  establish  an  independent  institution  to 
monitor  their  implementation  (v)  enhance  macroeconomic  forecasting  and  strengthen  the 
medium-term budgetary framework.  

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

  strengthen  political  ownership  on  economic  policy  essentials  and  reforms  and  the 
cooperation  and  coordination  among  different  levels  of  government,  possibly  by 
strengthening and expanding the role of the Bosnia and Herzegovina Fiscal Council; 
  ensure consistent political support, high visibility, countrywide ownership and coherence 
of  the  Economic  Reform  Programme;  enhance  administrative  capacity  to  design, 
implement and monitor reforms; 

  improve  the  ERPs  medium-term  macro-fiscal  framework  with  a  view  to  presenting  a 

consistent and consolidated countrywide analysis and policy document. 

Chapter 18: Statistics 

EU  rules  require  that  Member  States  are  able  to  produce  statistics  based  on  professional 
independence,  impartiality,  reliability,  transparency  and  confidentiality.  Common  rules  are 
provided for the methodology, production and dissemination of statistical information. 

The  SAA  establishes  that  cooperation  between  the  Parties  must  be  aimed  in  particular  at 
developing  efficient  and  sustainable  statistical  systems  capable  of  providing  comparable, 
reliable, objective and accurate data needed to plan and monitor the process of transition and 
reform in Bosnia and Herzegovina.  

According to  the constitutional  and legal  framework the competences for statistics rest  with 
the State and the two entities. The state-level competences include collecting, processing and 
disseminating  statistical  data  on  a  countrywide  basis,  based  on  data  collected  by  state-level 
authorities or provided by entity institutions. The latter are required to provide the state-level 
agency with data necessary to compile countrywide statistics.   

In economic and financial matters, the Central Bank compiles and disseminates the following 
statistics:  government  finance  statistics,  financial  accounts  statistics,  balance  of  payments, 
foreign  direct  investment,  international  trade  in  services,  and  monetary  and  financial 
indicators.  It  also  cooperates  with  responsible  institutions  of  other  states  and  international 
organisations.  

The state-level institutions relevant to this chapter are the Agency for Statistics of Bosnia and 
Herzegovina and the Central Bank; the relevant institutions at entity level are the Institute for 
Statistics of the Federation entity and the Republika Srpska Institute of Statistics. The Agency 
for Statistics of Bosnia and Herzegovina is not provided by the entity statistical agencies with 
the full range of statistics as required by law. The Republika Srpska entity contests a number 
of actions carried out by the Agency for Statistics of Bosnia and Herzegovina.  

132 

 
 
As  regards  statistical  infrastructure,  a  Law  on  Statistics  of  Bosnia  and  Herzegovina  is  in 
place. It needs to be aligned with the principles of the European Statistics Code of Practice. 
The structural set up of the statistical system causes challenges regarding the coordination and 
efficiency  of  the  production  of  statistics.  Statistics  are  only  to  some  extent  timely,  relevant 
and  reliable.  In  general,  resources  are  adequate  to  meet  current  statistical  needs  for 
implementation  of  the  acquis.  The  Agency  for  Statistics  of  Bosnia  and  Herzegovina  is 
partially using Eurostat’s Electronic Data-flow Administration and Management Information 
System (EDAMIS) to send data to Eurostat.  

The Director General of the Agency for Statistics of Bosnia and Herzegovina has a four-year 
mandate  with  the  possibility  for  one  additional  mandate  with  maximum  duration  of  four 
years. The procedure for appointment is regulated by the Law on the Civil Service in Bosnia 
and  Herzegovina.  Legislation  provides  for  the  independence  of  the  Agency  for  Statistics  of 
Bosnia  and  Herzegovina  from  political  and  other  external  influences.  Data  and  information 
relevant  to  statistics  are  obtained  using  statistical  methods  and  techniques  and  processed  in 
accordance with scientific principles. Access to new statistical data is given at the same time 
to all users. In the process of drafting the programme documents, consultations with users and 
the general public are carried out through the Agency’s website and through the government 
web platform ‘e-Consultations’. All programing documents are published after they have been 
issued.  Coordination  in  the  national  statistical  system  between  the  Agency  for  Statistics  of 
Bosnia and Herzegovina and other producers needs to be strengthened as well, as cooperation 
with  statistics  providers  and  cooperation  between  the  Agency  for  Statistics  of  Bosnia  and 
Herzegovina  and  the  entities’  offices.  These  issues  are  of  particular  relevance  in  order  for 
European methodology to be applied in a harmonised manner.  

The  use  of  administrative  data  is  not  sufficient.  In  order  to  produce  official  statistics,  the 
Agency for Statistics of Bosnia and Herzegovina needs to obtain access to administrative data 
other than that of ITA.   

A  population  and  housing  census  was  held  in  October  2013  and  the  official  results  were 
published  in  June  2016.  The International  Monitoring  Operation  led  by  the  European 
Commission (EUROSTAT) had confirmed that the census was conducted in compliance with 
international  standards  and  recommendations.  Notwithstanding  this,  the  Republika  Srpska 
entity is contesting the official census results as it does not accept the unified methodology of 
the  Agency  for  Statistics  of  Bosnia  and  Herzegovina  for  data  processing  in  terms  of  its 
content  in  particular  concerning  the  determining  of  resident  status.  This  methodological 
disagreement  is  currently  blocking  the  submission  of  various  statistics  to  the  EU 
including GDP per capita figures harmonised at NUTS II level as required by the SAA. 

On registers, the Agency for Statistics of Bosnia and Herzegovina manages and maintains the 
data  consistency  of  the  Statistical  Business  Register  in  cooperation  with  entity  statistical 
institutes.  However,  it  requires  further  development,  as  data  received  from  relevant 
administrative sources is insufficient. Business demography data is not submitted to Eurostat. 
The  Address  List  of  Agricultural  Holdings  has  been  established  based  on  the  results  of  the 
2013 population, households and dwellings census in Bosnia and Herzegovina. The Agency 
for  Statistics  of  Bosnia  and  Herzegovina  produces  a  single  register  of  spatial  units  in  the 
country but there is no regular update.  

The country  needs to  provide per  capita GDP figures harmonised at  statistical  regions  level 
(equivalent to NUTS II level), in line with the provisions of the SAA. A provisional NUTS II 
level has been defined, consisting of the Federation entity, the Republika Srpska entity and the 
Brčko District, while NUTS III is not defined.  

133 

 
The classification of business activities in Bosnia and Herzegovina is harmonised with the EU 
NACE Rev 2. The ‘Classification of Products by Activities Bosnia and Herzegovina 2010’ is 
fully compliant with CPA 2008. GEONOM (Geonomenclature) is in place. The classification 
of occupations is aligned with the International Standard Classification of Occupations (ISCO 
08).  Data  for  all  levels  of  education  is  collected,  processed  and  published  according  to  the 
International  Standard  Classification  of 
individual 
consumption  by  purpose  (COICOP)  is  only  compliant  with  SNA  93  and  ESA  95.  Other 
classifications need to be aligned with EU standards. 

ISCED  2011.  Classification  of 

On  macroeconomic  statistics,  the  organisation  of  the  production  of  national  accounts  and 
responsibility for them is not in line with the EU acquis. A master plan for the development of 
national  accounts  needs  to  be  adopted  as  common  and  coordinated  work  to  develop  an 
appropriate  national  accounts  system  is  not  in  place.  Annual  accounts  are  compiled  using 
production, expenditure and income approaches, while quarterly accounts are compiled only 
according to the production and expenditure approach. Supply and use tables and input-output 
tables  are  not  compiled  regularly.  Annual  sector  accounts  and  quarterly  sector  accounts  are 
not produced.  

The Agency for Statistics of Bosnia and Herzegovina reports GDP figures for the country to 
Eurostat.  Regarding  the  transition  to  ESA  2010  methodology,  the  sector  classification  was 
completed  but  without  an  agreement  on  sub-sectors  of  the  general  government  sector.  The 
lack of such an agreement hinders full application of ESA 2010. Data on general government 
is currently not compiled by sub-sectors. Moreover, the question about the responsibility for 
practical  implementation  has  not  been  clarified.  Regional  accounts  are  not  produced  in 
accordance with Eurostat methodology. The ESA 2010 transmission table is not followed. As 
regards  fiscal  notifications,  the  Central  Bank  sent  the  excessive  deficit  procedure  tables  for 
2016  and  2017  to  Eurostat  for  review.  Balance  of  payments  statistics  are  methodologically 
harmonised  with  international  statistical  standards  established  by  the  sixth  edition  of  the 
Balance  of  Payments  and  International  Investment  Position  Manual.  The  methodology  used 
for  the  statistics  of  international  trade  in  goods  is  based  on  the  recommendations  of  the 
European Commission; currently Bosnia and Herzegovina sends to Eurostat two sets of data 
out of the three requested. 

The  Central  Bank  of  Bosnia  and  Herzegovina  uses  the  international  Governance  Finance 
Statistics  Manual  2014  for  the  compilation  of  government  finance  statistics  (GFS)  on  the 
sector  of  general  government.  The  Central  Bank  of  Bosnia  and  Herzegovina  reports  to 
Eurostat  ESA  2010  based  GFS  that  are  not  yet  fully  aligned  with  ESA  methodology.  As  is 
currently the case with expenditure, revenues should also be recorded on the basis of accrual 
accounting rather than on cash basis.  

Financial intermediation services indirectly measured data need to be calculated according to 
EU regulations. Harmonised indices of consumer prices (HICP) need to be produced.  

On business statistics, some figures are produced in line with the EU acquis. The coverage of 
structural  business  statistics  (SBS)  has  been  extended  using  a  combined  method  of  full 
coverage (for enterprises with 20 or more employees) and the sampling method for remaining 
(not 
enterprises.  Currently, 
entrepreneurs)  from  activities  that  are  required  for  Annexes  I-IV  of  the  SBS  Regulation. 
Indicators  and  definitions  in  short-term  construction  statistics  comply  with  the  EU 
recommendations.  Short-term  statistics  for  industry,  construction  and  services  are  not 
available and will need to be established as per acquis requirements. The PRODCOM survey 
of industrial production is conducted and sent to Eurostat on an annual basis.  

regular  survey  covers  all  companies/corporations 

the 

134 

 
Foreign affiliates’ statistics (FATS) are produced by the Agency for Statistics of Bosnia and 
Herzegovina  for  inward  statistics  and  by  the  Central  Bank  of  Bosnia  and  Herzegovina  for 
outward statistics. Full compliance with FATS regulations needs to be ensured. On tourism, 
Bosnia  and  Herzegovina  is  currently  only  producing  accommodation  statistics.  The  data 
collection  methodology  does  not  comply  with  the  EU  methodology  for  road  transport  of 
goods. Rail and air transport statistics are reported to Eurostat via a simplified questionnaire. 
Research  and  development  statistics  are  compiled  for  four  sectors  -  business,  government, 
higher education and NGOs - and are published annually. The Community Innovation Survey 
is  conducted  on  a  regular  basis.  The  information  and  communication  technology  survey  for 
households, individuals and enterprises is conducted but the level of compliance with the EU 
regulations  is  not  assessed.  The  survey  on  innovative  activities  of  enterprises  is  fully 
compliant with the biennial Community Innovation Survey conducted in the EU. The survey 
on  the  use  of  ICT  is  fully  compliant  with  Eurostat’s  methodology  and  covers  a  broad 
spectrum  of  topics,  such  as  computer  use,  internet  use,  e-commerce  in  enterprises,  for  both 
enterprises and households. 

On  social  statistics,  results  of  the  2013  population  and  housing  census  have  been  available 
since June 2016. Preparations for the 2020/2021 population  and housing census  round have 
not  started.  The  preparation  of  a  new  master  sample  frame  is  necessary,  not  only  for  the 
household survey, but also for the upcoming surveys, such as the Labour Force Survey (LFS), 
a  full-scale  survey  of  Income  and  Living  Conditions  (EU-SILC)  and  the  Multiple  Indicator 
Cluster Survey (MICS). The Labour Force Survey is implemented annually but not quarterly. 
To comply with the EU requirements in terms of implementation frequency, the preparations 
for the continuous LFS began in 2016, but a new sampling frame needs to be created from the 
database of the 2013 population census. The Labour Cost Survey will have to be harmonised 
with Eurostat recommendations. The calculation of the labour cost index and the introduction 
of the Structure of Earnings Survey are not implemented. Since 2011, Job Vacancy Statistics 
data have been collected regularly. Social protection statistics (ESSPROS) were submitted to 
Eurostat on six social protection schemes in 2018 based on a full-scale survey. National health 
accounts  were  submitted  to  Eurostat  for  the  years  2009-2014.  Cooperation  with  the 
institutions competent for monitoring migration flows has to be intensified in order to obtain 
complete data on external migration. In education statistics, all levels of education are covered 
and  published  on  an  annual  basis.  Culture  statistics  include  15  cultural  domains;  their 
coverage needs to be adjusted to Eurostat requirements. Data on crime statistics is collected 
on a monthly basis and submitted annually for the UNODC questionnaire.  

The  lack  of  a  recent  agricultural  census  –  the  last  one  took  place  in  1960  –  is  a  major 
limitation  for  agricultural  statistics  and  limits  the  availability  of  reliable  data  to  design 
agriculture  and  rural  development  policy.  Relevant  legislation  and  methodology  need  to  be 
adopted, and consequently, a statistical framework to conduct statistical surveys and analysis 
in agriculture is not in place. A very limited number of statistical indicators are produced for 
agriculture, including some experimental estimates. Supply balance sheets are not  available. 
Statistics on crops, vineyards, orchards, animal production and milk and dairy are not in line 
with the acquis and the same goes for slaughter statistics. 

Annual  energy  statistics  on  electricity  and  heat,  coal,  coke,  natural  gas  and  oil/petroleum 
products  are  available.  An  overall  statistical  energy  balance  for  the  reference  years  2014  to 
2016  was  published.  Short-term  energy  statistics  were  established  in  2012  and  the 
methodology  for  collecting  monthly  data  is  harmonised  with  international  standards  of 
Eurostat.  Data  on  municipal  waste  are  collected  through  annual  statistical  surveys.  Public 
utility enterprises and other waste collection and disposal enterprises submit annual reports, as 
do enterprises managing the landfills.  The Agency for Statistics of Bosnia and Herzegovina 

135 

 
regularly reports to Eurostat with data on municipal waste, and submits a quality report. Data 
from annual water statistics surveys is regularly published. Further work is needed to improve 
data quality in line with EU requirements, in particular as regards annual data on renewable 
energy source and basic monthly data on oil. 

Regarding  environmental  statistics,  the  Agency  for  Statistics  of  Bosnia  and  Herzegovina 
regularly publishes data from the annual statistical surveys on climate change, greenhouse gas 
emissions  from  agriculture  and  from  waste  disposal,  in  accordance  with  the  Revised  1996 
IPCC  Guidelines  for  National  GHG  Inventories  and  the  IPCC  Tier  1  methods.  A  survey  is 
conducted  with  a  basic  set  of  tables  for  environmental  protection  expenditure.  Physical 
environmental accounts were introduced in 2016 covering domestic material consumption and 
resource productivity. The Agency for Statistics of Bosnia and Herzegovina is not reporting to 
Eurostat on monetary environmental  accounts;  this is  needed to improve  the quality  of data 
and  modes  of  their  collection,  for  the  purpose  of  better  coverage  and  comparability.  BHAS 
regularly publishes and reports to Eurostat data on domestic material consumption. 

Preparations in the area of statistics are at an early stage of preparations. 

Capacity  constraints  of  the  statistical  offices  are  exacerbated  by  increasing  demands  for 
statistics,  as  Bosnia  and  Herzegovina  further  progresses  on  its  EU  integration  path.  Special 
attention  needs  to  be  paid  to  (i)  improving  cooperation,  coordination  and  decision-making 
processes  to  develop  the  national  statistical  system;  and  to  (ii)  increasing  the  use  of 
administrative  data  sources  and  registers  for  statistical  production.  Data  exchange  between 
entities  and  the  Agency  for  Statistics  of  Bosnia  and  Herzegovina  needs  to  be  improved,  in 
particular to ensure sufficient quality of the data received. Bosnia and Herzegovina needs to 
implement  a  full  and  consistent  system  of  national  accounts  and  to  apply  the  European 
System of National and Regional Accounts (ESA) 2010, methodology, in particular regarding 
government  finance  statistics.  Revenues  need  to  be  recorded  on  the  basis  of  accrual 
accounting. Bosnia and Herzegovina will need to define its NUTS III regions and prepare for 
the next population census. 

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

  adopt a master plan for production of National Accounts for Bosnia and Herzegovina 
  implement a Labour Force Survey on a quarterly basis 
  adopt a methodology, responsibilities and budgetary aspects of a future agricultural census 

and adopt a roadmap for preparation of the next population census in 2020/2021. 

Chapter 19: Social policy and employment 

EU rules in the social field include minimum standards for labour law, equality, health and 
safety at work and non-discrimination. They also promote social dialogue at European level. 

Under  the  SAA  Bosnia  and  Herzegovina  and  EU  Member  States  shall  cooperate  for  the 
development of social policy and employment policy, with a view to ensuring equity of access 
and  effective  support  to  all  vulnerable  people  and  to  supporting  Bosnia  and  Herzegovina’s 
alignment with the EU acquis. 

According  to  the  constitutional  and  legal  framework  the  competences  on  social  policy  and 
employment  rest   predominantly  with  the  two  entities  and  Brčko  District;  in  the  Federation 
entity  competences  are  shared  with  the  cantons.  The  state-level  competence  is  primarily 
exercised  through  internal  coordination,  based  on  the  constitutional  responsibilities  to 
represent and commit the country at international level. 

136 

 
 
Ministries in charge of social policy and employment are in place at entity and cantonal level 
as well as in the Brčko District. At state level, there is no specific Ministry of Social Policy 
and  Employment,  but  the  Ministry  of  Civil  Affairs  is  responsible  for:  (i)  defining  basic 
principles  of  coordination  of  activities,  (ii)  harmonising  plans  of  the  Entity  authorities,  (iii) 
defining a strategy at the international level in the fields of health and social care, pensions, 
labour  and  employment.  The  legislation  at  state  level  regulates  solely  the  labour  status  of 
employees and civil servants in state institutions. 

Regarding  labour  law,  competences  rest  with  the  entities,  the  cantons  and  Brčko  District, 
whereas the state level regulates labour relations of employees  and civil servants working in 
the  institutions  of  Bosnia  and  Herzegovina.  Labour  laws  are  in  place  at  entities’  and  Brčko 
District level.  

The  labour  laws  are  applied  to  all  employees,  apart  from  civil  servants,  and  guarantee  a 
minimum level of protection of employees’ rights and regulate issues such as the conclusion 
and termination of labour contracts, prohibition of discrimination, maximum working hours, 
minimum  annual  leave,  salaries,  and  the  conclusion  of  collective  agreements  and  peaceful 
settlement  of  collective  labour  disputes.  In  order  to  fully  meet  EU  standards  in  this  area, 
additional  improvements  of  the  legal  framework  are  needed,  especially  when  it  comes  to 
protection of workers, including protection against discrimination.   

The  implementation  of  the  labour  laws  is  inadequate,  especially  when  it  comes  to  social 
dialogue,  protection  for  workers  and  enforcement  of  labour  inspection.  Labour  law  only 
provides for specific conditions for work for minors above 15 years of age, while child labour 
exploitation falls under the criminal law. The institutional mechanisms for the enforcement of 
laws  and  regulations  tackling  child  labour  exist,  but  there  are  gaps  that  may  hinder  their 
adequate  enforcement.  The  legal  framework  lacks  provisions  to  adequately  protect  children 
from child labour as the minimum age protections in the labour laws do not apply to children 
who  are  self-employed  or  working  outside  of  formal  employment  relationships  (e.g.  forced 
begging  cases,  engagement  in  military  recruitment  by  non-state  armed  groups).  In  addition, 
the  Anti-Trafficking  Strike  Force  lacks  coordination  between  government  and  criminal  law 
enforcement  members,  and  labour  inspectors  do  not  have  jurisdiction  to  investigate  forced 
begging cases.  

On  occupational  safety  and  health  at  work,  laws  on  occupational  health  and  safety  are  in 
place at entity and Brčko District level. The level of harmonisation with the acquis is uneven 
across the country, whereas their enforcement and implementation is partial, especially when 
it comes to inspection capacities, proper prevention of injuries at work, investment in safety 
and relevant trainings or proper risk control.  

The  country  has  ratified  a  number  of  the  International  Labour  Organization’s  conventions 
including all fundamental conventions and Protocol 29 on forced labour, and regularly reports 
on their implementation. In the Federation entity, a Law on occupational health and safety is 
in force, but not aligned with EU legislation. Laws on occupational and safety at work are in 
place in the Republika Srpska entity and the Brčko District.  

The employment  relations of employees  working in  the state-level  institutions are regulated 
by the Law on the Civil Service and the Labour Law. In line with this legislation, employers 
are  required  to  provide  the  necessary  work  protection  conditions  ensuring  protection  of  life 
and health of employees. 

Enforcement  of  the  occupational  health  and  safety  legislation  rests  with  the  competent 
inspection  authorities  at  entities  and  cantonal  levels  and  is  done  by  the  relevant  labour 
the  employer  are 
inspections.  At  state 

the  Administration  Inspectorate  and 

level, 

137 

 
predominately in charge of ensuring occupational safety and health for state employees. The 
number of reported workplace accidents in 2017 was 2,374, out of which 16 fatalities, with an 
increasing trend of accidents and fatalities. The most affected sectors were civil construction, 
mining, forestry, metal and wood industry. 

On  the  issue  of  social  dialogue,  labour  laws  in  the  country  provide  a  basis  for  concluding 
both the general collective agreements which are applicable to all employees, as well as the 
branch  collective  agreements.  Economic  and  Social  Councils  operate  at  the  entities’  level, 
whereas a State Council has not been established. General collective agreements have expired 
in both entities, but a number of branch agreements are in place. Social dialogue is weak at all 
levels. 

The right to strike is regulated by the labour laws and laws on striking that are in place in both 
entities  and  in  Brčko  District,  while  the  state-level  Law  on  striking  is  applicable  only  to 
employees in the institutions of Bosnia and Herzegovina. Legislation on amicable settlement 
of labour disputes exists only in the Republika Srpska entity. 

As for employment policy, there is no countrywide strategy in place. The Republika Srpska 
entity has an employment strategy for 2016-2020 in place, with a 2018 action plan. Although 
there is no employment strategy in the Federation entity, several employment programmes are 
currently  implemented.  To  provide  a  credible  and  relevant  reform  on  employment  policy,  a 
countrywide  strategy  is  required  as  well  as  an  effective  institutional  coordination  on 
implementation  and monitoring of the strategy. 

According to the Labour Force Survey 2018, the unemployment rate is 18.4% (17.2% men; 
20.3% women). At 38.8%, the unemployment rate is the highest among young people aged 15 
to 24 years (35.4% men; 45.5% women). The activity and employment rates are 54.2% and 
44%.  Both  rates  are  higher  for  men  (66.4%  and  54.7%)  than  for  women  (41.8%  and  33%). 
The activity and the employment rates are by far the highest in the 25 to 49 age group years 
(73%  and  58.9%).  Youth  activity  and  employment  rates  represent  32.3%  and  19.7% 
respectively. 

The  Labour  and  Employment  Agency  of  Bosnia  and  Herzegovina  is  responsible  for 
international  employment  related  obligations  in  coordination  with  the  Ministry  of  Civil 
Affairs, while cooperating with the responsible entity employment institutes in the entities and 
of the Brčko District. 

The public employment services are organised at entities and Brčko District level, and in case 
of  the  Federation  entity  further  decentralised  at  cantonal  level.  The  employment  institute  of 
the  Federation  entity  coordinates  the  activity  of  cantonal  Public  Employment  Services  and 
local  offices.  The  Employment  Institute  of  the  Republika  Srspka  entity  coordinates  the 
activities of regional and local offices. The employment institutes at entity level are involved 
in  the  overall  coordination  and  methodological  development,  while  local  offices  are  mainly 
responsible  for  implementing  active  and  passive  labour  market  policies.  The  Brčko  District 
has an employment institute and a local employment office in place. 

Labour  market  institutions  in  Bosnia  and  Herzegovina  are  undergoing  reform  aiming  at  the 
transition from mainly administrative work to a client focused approach based on consultative 
services  to  improve  job  mediation.  Their  work  has  so  far  been  characterised  by  the 
predominance  of  passive  labour  market  policies  caused  by  the  lack  of  administrative  and 
financial  capacities  of  the  public  employment  services  to  implement  active  labour  market 
policies.  Both  lack  of  human  resources  and  lack  of  finance  prevent  the  public  employment 
services from the implementation of comprehensive active labour market policies.  

138 

 
The level of informal economy in Bosnia and Herzegovina is estimated at 25.5% of the GDP 
and  about  30%  of  all  workers  are  in  informal  employment.  As  regards  labour  statistics, 
Bosnia  and  Herzegovina  uses  the  International  Labour  Organisation’s  methodology  for 
collection and processing of survey-based data. The annual labour force survey frequency is 
insufficient  and  regular  data  submission  to  Eurostat  is  incomplete.  Bosnia  and  Herzegovina 
needs  to  submit  a  comprehensive  quarterly  labour  force  survey  to  Eurostat  and  reinforce 
administrative capacity to that end. 

In  Bosnia  and  Herzegovina,  the  preparation  for  using  the  European  Social  Fund  has  not 
started and there are no administrative structures established for the operation of this fund.   

On social inclusion and protection, there are no countrywide strategies on poverty reduction, 
social  inclusion  and  protection  or  a  system  at  countrywide  level  for  monitoring  policy 
implementation.  In  relation  to  persons  with  disabilities,  institutional  care  is  still  prevalent. 
Services within the community that enable independent living are not adequately supported, 
and there is no comprehensive strategy of deinstitutionalisation. At entity level there is a wide 
range  of  strategies  and  laws  related  to  social  inclusion  and  protection  and  their 
implementation systems. However, these are not enforced due to a lack of funding, inadequate 
procedures, standards and referral practices and a general lack of coordination. The household 
budget survey of 2015 is the most recent  assessment on poverty in the country. 

There are three databases that contain specific indicators of social exclusion: the Household 
Budget Survey, the Labour Force Survey and the Multiple Indicator Cluster Survey. In 2011, 
the multiple indicator cluster survey was conducted for Roma households with children. The 
state of social exclusion, and the frequency of conducting the surveys and the lack of data on 
income  poverty  and  income  inequality  is  problematic.  Bosnia  and  Herzegovina  needs  to 
participate  in  the  exercise  of  the  new  multiple  indicator  cluster  survey,  which  is  under 
consultations with UNICEF.  

Almost  a  third  (31.6%)  of  children  aged  5  to  15  are  at  risk  of  poverty.  Children  in 
female-headed  households  and  children  in  families  with  two  or  more  children  are 
substantially more likely to  be poor. 4% of children are simultaneously  poor and materially 
and housing deprived. 

Despite the high poverty and poverty-related social challenges, the social protection system is 
underdeveloped,  while  the  effectiveness  of  social  transfers  is  limited.  Social  benefits  are 
extremely  low,  and  insufficient  to  fulfil  basic  needs  and  targeting  of  social  transfers  is 
inadequate, making their effects on poverty reduction very limited. Only about one quarter of 
social  assistance  benefits  are  granted  based  on  needs  assessment,  while  the  other  three-
quarters are status-based benefits, mainly to war-related categories of beneficiaries.  

Social assistance is neither well targeted, nor needs-based, as there is no adequate system for 
data  collection.  Cooperation  between  the  social  service  centres  and  employment  bureaus  is 
not well established. The transformation of institutions for social protection and, in particular, 
those for children without parental care is ongoing. 

According to the latest available official government statistics (dating from 2015), the number 
of children without parental care in  Bosnia and  Herzegovina was 2,435  (0.35% of the child 
population).  According  to  the  analysis  conducted  in  2016  by  UNICEF,  estimates  put  the 
figure  at  1,640  children  without  parental  care.  Among  all  children  without  parental  care, 
17.7% were children with  disabilities. Bosnia and Herzegovina is  working on strengthening 
models of alternative, community-based social care for children without parental care and for 
children and adults with disabilities including persons with mental health problems. There are 
no systematic measures to improve the situation of older persons. 

139 

 
As  regards  equality  between  women  and  men  in  employment  and  social  policy  on  the 
grounds of sex is regulated by the laws on gender equality and antidiscrimination, and by the 
entity-level labour laws. These laws contain provisions on gender equality covering different 
areas (employment, education, training and professional qualification, etc.) but in practice the 
enforcement of non-discrimination legislation is extremely low.  

Bosnia  and  Herzegovina  is  a  signatory  of  81  conventions  of  the  International  Labour 
Organization. Data from the Bosnia and Herzegovina Statistics Agency shows obvious gender 
gaps in employment – the current employment rate of women (15-64 years old) is 33% and of 
men  is  54.7%.  Bosnia  and  Herzegovina  has  the  second  highest  level  of  inactivity  in  the 
region.  Two  out  of  three  inactive  persons  are  women,  and  almost  60%  of  the  working  age 
women are inactive. No sex-disaggregated data is provided on occupational segregation in the 
labour market and gender pay gap. Estimates are that women earn around 78% to 85% of a 
men’s  salary  for  the  same  position.  The  provision  of  maternity  leave  and  related 
compensation  are  inconsistent  across  the  country,  with  inequalities  in  the  provision  of 
maternity rights. Women and men have equal property rights, as well as equal legal status in 
relation  to  access  to  financing  and  services.  Work-life  balance  for  working  parents  is 
addressed by the relevant labour laws. 

Labour laws within the country also address the issue of non-discrimination at work, there are 
no  targeted  strategies  or  action  plans  in  place  that  were  developed  specifically  for 
employment-related discrimination. The Human Rights Ombudsman institution is the body in 
charge  of  protection  from  discrimination.  In  2017,  the  Ombudsman  dealt  with  a  couple  of 
cases of employment-related discrimination in which the complaints pointed to a violation of 
gender  equality,  and  in  particular,  to  the  fact  that  pregnant  women  had  their  employment 
contracts cancelled or were not offered the extensions of a labour contract  of limited duration 
time.  

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  field  of  social  policy  and 
employment. 

There are serious challenges to be addressed in employment, social inclusion and protection 
and in poverty reduction, especially related to coordination among the responsible institutions 
across the country. The informal economy has a high share in the Bosnia and Herzegovina’s 
economy. Social dialogue is weak and scattered across different administrative levels. Passive 
labour market measures prevail over active measures while social inclusion and protection are 
weak  and  not  coordinated.  Gender  equality  and  anti-discrimination  legislation  is  not  being 
fully implemented. Measures need to be taken to ensure a better coordination of active labour 
market  policies  with  the  social  assistance  programmes  to  ensure  smooth  inclusion  of 
beneficiaries'  to  labour  market.  Also,  special  measures  are  needed  to  modernise  and 
harmonise occupational  health and safety laws throughout  the country to bring  them in  line 
with the EU acquis.  

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

  adopt  the  employment  strategy  at  Federation  level  and  the  countrywide  strategy  on 
employment  as  a  policy  framework  while  providing  for  additional  capacities  for 
implementation and monitoring; 

  introduce a uniform minimum level of maternity leave benefits and protection throughout 
the  country,  starting  by  harmonising  the  definitions  of  maternity,  paternity  and  parental 
leave;  

  promote social dialogue at all levels and conclusion of general collective agreements. 

140 

 
Chapter 20: Enterprise and industrial policy 

industrial  policy  strengthens  competitiveness, 

EU 
facilitates  structural  change  and 
encourages  a  business-friendly  environment  that  stimulates  small  and  medium-sized 
enterprises (SMEs). 

The SAA establishes cooperation to promote modernisation and restructuring of industry and 
individual  sectors  and  to  develop  and  strengthen  SMEs.  The  SAA  also  covers  industrial 
cooperation  between  economic  operators,  with  the  objective  of  strengthening  the  private 
sector  while  ensuring  environmental  protection.  Initiatives  include  a  suitable  framework  for 
businesses, and for improving of management and know-how and the business environment. 
Cooperation  also  needs  to  include  strengthening  private  sector  small  and  medium-sized 
enterprises. 

According  to  the  constitutional  and  legal  framework  the  competences  for  enterprise  and 
industrial policy rest with the two entities, the cantons and Brčko District. The state level has 
a coordination role and represents and commits the country internationally. 

At state level, the main actors are the Ministry of Foreign Trade and Economic Relations and 
the  Directorate  for  Economic  Planning,  which  have  a  coordination  role.  At  the  Federation 
entity level, the Ministry of Energy, Mining and Industry deals with industrial policy, while 
the  Ministry  of  Development,  Entrepreneurship  and  Crafts 
for 
entrepreneurship-related issues. In the Republika Srpska entity, the Ministry of Economy and 
Entrepreneurship  has  the  lead  responsibility.  Various  other  entity  ministries  are  responsible 
for implementation of industrial development policies. In the Brčko District, industrial policy 
is under the competence of the Department for Economic Development, Sports and Culture. 
At the cantonal level, ministries in charge of industrial development and entrepreneurship are 
also in place. 

responsible 

is 

The Republika Srpska entity contests the competence of the state level to coordinate policies 
countrywide. 

This decentralised institutional set-up is reflected in businesses’ negative perception of public 
administration  in  the  institutions  component  of  the  Global  Competitiveness  Index  2018, 
where it contributes to the country being ranked in 111th place, the lowest ranking in Europe.  

As  regards  enterprise  and  industrial  policy  principles,  Bosnia  and  Herzegovina  lacks  a 
countrywide  industrial  development  strategy  and  there  is  no  state-level  body  promoting 
consistency  between  industrial  strategies  or  with  other  policies  affecting  industrial 
competitiveness.  The  Republika  Srpska  entity  has  a  strategy,  including  an  action  plan  for 
industrial  development  until  2020.  The  Federation  entity  uses  an  action  plan,  whose  latest 
amendment  runs  until  2019.  The  actions  fall  into  several  policy  areas,  partly  unrelated  to 
industry.  Brčko  District  covers  industrial  aspects  in  its  2008-2017  development  strategy 
which  is  currently  being  renewed,  while  support  to  SMEs  is  limited  to  a  legislation  on 
incentives. 

The informal economy continues to be significant, causing unfair competition. The rule of law 
needs  to  be  strengthened  in  areas  affecting  industrial  cooperation.  Reduction  of  regulatory 
uncertainty through regulatory impact assessment is carried out in the Republika Srpska entity 
and  to  some  extent  in  the  Federation  entity;  enforcement  is  weak.  The  application  of  a 
regulatory  guillotine  in  both  entities  has  led  to  some  simplification  of  business  permits. 
Despite improvements, the simplification of business-related legislation is carried out  on an 
ad  hoc  basis  and  is  not  harmonised  throughout  the  country,  e.g.  as  regards  additional 
administrative and compliance requirements between entities.  

141 

 
 
The  World  Bank’s  Doing  Business  2019  index  (the  report  investigates  the  regulations  that 
enhance business activity and those that constrain it) puts Bosnia and Herzegovina 89th out of 
190  countries  –  the  lowest  ranking  country  in  the  region.  The  most  pressing  issue  is  the 
reduction of barriers to starting a business, although business registration reform is underway 
in both entities (e.g. one stop shops, online registration), albeit at different pace. Other issues 
of contributing to the country’s very low ranking are - dealing with construction permits, the 
administrative burden to pay taxes and getting electricity. 

The  complex  regulatory  and  business  environment  impinges  on  both  domestic  and  foreign 
investment.  This  effect  is  compounded  by  the  low  share  of  public  investment  and  its  poor 
management, particularly for infrastructure and innovation. Business investment in innovation 
activities  is  very  low  and  interactions  within  the  innovation  system  are  underdeveloped. 
Innovation policy is dealt with at entity level, the Federation entity having decentralised it to 
the cantons. Brčko District has no such policy. Strengthening the link between business and 
research  is  part  of  the  science  strategy  of  the  Republika  Srpska  entity.  The  low  investment 
affects crucial areas of innovation, above all digitalisation, which in general is at a very low 
level in the country. In spite of the significance of digitalisation for the entire industry and the 
construction  sector,  it  is  absent  from  the  industrial  policy  documents.  The  significance  of 
another  key  area  of  industrial  policy,  namely  resource  efficiency  and  circular  economy  is 
acknowledged by references in the entities’ industrial policy documents. However, the same 
does  not  hold  for  decarbonisation,  including  its  implication  for  energy-intensive  industries. 
The  potential  opportunities 
that  eco-innovation  offers  for  competitiveness  remains 
unrecognised. 

A countrywide strategic framework to encouraging foreign direct investments (FDI) is not in 
place.  A  state  law  and  entity  legislation  on  FDI  exists,  including  legislation  on  foreign 
investments adopted in the Republika Srpska entity in 2018 to implement its earlier adopted 
strategy.  In  spite  of  some  regulatory  improvements,  FDI  is  by  far  the  lowest  in  the  region. 
Aftercare  support  to  increase  prospects  for  FDI  inflows  is  insufficient.  There  are  no 
comprehensive  programmes  to  better  connect  foreign  investors  and  domestic  firms, 
particularly SMEs, to enhance the impact of FDI. The industrial action plans contain export 
enhancing  support  measures,  but  these  lack  linkages  to  innovation  or  a  sectoral  focus.  The 
participation  of  enterprises  in  global  value  chains  is  lower  than  in  comparable  economies, 
even though several sectors, such as wood processing, have a relative comparative advantage. 
Conformity with EU product standards is a significant constraint. 

The  capacity  of  enterprises  to  find  new  information,  recognise  its  value  and  apply  it  to 
business ends is limited. This limits the ability to make the most of potential for investment, 
innovation  and foreign trade. Staff in  companies, including managers and employees, needs 
advice and training that is both company and job specific. Industrial policy documents cover 
items on skills that are limited to specific short-term needs. The continuous development of 
skills depends on having a policy to structurally improve the delivery of services that enhance 
company  specific  know-how.  Such  a  policy  will  have  to  be  designed  in  consultation  with 
enterprises  and  should  include  evaluation  of  the  effectiveness  of  the  advice  and  training 
provided.  

The  governance  of  public  enterprises  needs  reform.  Public  enterprises  maintain  a  strong 
position  in  sectors  crucial  for  technological  modernisation,  e.g.  in  energy  and,  in  the 
Federation  entity,  in  telecommunications.  Plans  for  privatisation  are  set  out  in  the  entities’ 
plans which are managed by the privatisation agencies, including cantonal ones. Privatisation 
has been completed in Brčko District. The Federation entity disposed of its minority stakes in 
its  major  pharmaceutical  and  tobacco  companies  in  2016  and  has  taken  steps  to  put  its 
telecom sector on a path to sustainability. Privatisation of utilities is ongoing in the Republika 

142 

 
Srpska  entity  and  has  taken  place  in  some  cantons.  The  Republika  Srpska  entity  is  also 
restructuring  its  railways.  The  banking  sector  is  almost  fully  privatised  in  the  country  and 
there are no plans for re-nationalisation at any level of authority. Major obstacles to industrial 
privatisation are legal uncertainty, corruption and the unfavourable business environment. 

The  EU’s  2008  Small  Business  Act  (SBA)  constitutes  a  reference  for  policy  on  small  and 
medium sized enterprises (SME) in Bosnia and Herzegovina. An institutional framework is in 
place,  including  state-level  coordination  for  entrepreneurship  promotion.  Reporting  on  the 
SBA  principles  is  assigned  to  the  state-level  Ministry  for  Foreign  Trade  and  Economic 
Relations. Competence for dealing with SMEs in the Federation entity is shared with cantons. 
The Republika Srpska entity has an agency for implementing SME policies. However, there is 
no  countrywide  framework  for  SME  policy.  SME  strategies  and  legislation  exist  at  entity 
level  and  partly  at  cantonal  level,  not  though  in  Brčko  District.  The  Herzegovina-Neretva 
Canton and Sarajevo canton both have strategic documents in  this area, while other cantons 
have addressed the issue of SME development as part of their development strategies.  

Support to business infrastructure is based on the entities’ SME strategies as well as on some 
cantonal  development  strategies.  Some  incubators  are  operational,  but  not  fully  developed. 
Basic business support services for SMEs and start-ups are in place, but technology extension 
services  (advisory  and  support  services  for  technology  adoption  and  diffusion)  are 
non-existent. SME strategies refer to clusters, i.e. the agglomeration of enterprises, either as a 
tool for export promotion (in the Republika Srpska entity) or for production efficiency (in the 
Federation entity). Small-scale donor-supported schemes are available for innovative SMEs. 
Bosnia  and  Herzegovina’s  level  of  assistance  to  innovation  by  SMEs  is  the  lowest  in  the 
region.  SME  skills  programmes  are  supported  mainly  by  international  donors  and 
implemented  by  the  chambers  of  commerce  and  development  agencies  across  the  country. 
Bank  lending  is  the  dominant  source  of  SME  finance.  Financial  instruments  for  innovative 
start-ups and high-growth enterprises are almost absent.  

Evaluations  of  planned  measures  in  the  area  of  enterprise  and  industrial  policy  lack  budget 
and systematic integration in action plans. Monitoring of outputs is envisaged, but evaluation 
of impact on objectives is absent. 

As  regards  enterprise  and  industrial  policy  instruments,  both  entities  have  in  place 
legislation on financial transactions to combat late payment in commercial transactions which 
is partly aligned with the acquis. Brčko District should adopt such legislation as well. 

Data to describe the structure and dynamics of industry, including construction, is insufficient 
as a basis for effective formulation and evaluation of strategies. SME definitions used (among 
other  things)  for  reporting  and  incentive  allocation  are  neither  harmonised  throughout  the 
country,  nor  aligned  with  the  EU  Recommendation  on  the  definition  of  micro,  small  and 
medium-sized enterprises. 

Bosnia  and  Herzegovina  participates  since  2017  in  the  EU’s  COSME  programme  on  the 
competitiveness  of  enterprises  and  small  and  medium-sized  enterprises.  It  has  entity-based 
European Enterprise Network consortia (leaving Brčko District uncovered by the programme) 
and  uses  the  Loan  Guarantee  Facility  that  lent  almost  EUR  14  million  to  132  beneficiaries 
through  a  sole  intermediary.  Some  13  exchanges  have  taken  place  through  the  Erasmus  for 
Young Entrepreneurs programme. 

The potential of COSME to assist SMEs  in accessing markets is not fully used. Bosnia and 
Herzegovina  is  not  participating  in  the  Enterprise  Innovation  Fund  (ENIF)  of  the  Western 
Balkans Development and Innovation Facility, as it has not paid its financial contribution - a 
precondition to be allowed to use the funds. 

143 

 
Bosnia  and  Herzegovina  is  associated  with  Horizon  2020,  where  it  participates  in  the 
activities more directly related to industry mainly with providers of support services and not 
in the SME Instrument. The country is not associated with the EU’s LIFE programme for the 
environment and climate action that encompasses themes relevant for industrial applications 
in resource efficiency and circular economy.  

As  regards  sectoral  policies,  the  industry  action  plans  in  Bosnia  and  Herzegovina  do  not 
prioritise specific sectors. The manufacturing sector of processed agricultural products is not 
covered  by  the  action  plans,  nor  are  mining  and  construction  sectors.  The  Federation  entity 
has  development  strategies  or  action  plans,  for  a  few  manufacturing  sectors.  Industrial 
policies  do  not  recognise  linkages  between  manufacturing  sectors  and  specific  business 
services that add a significant share to the value of manufactured goods.  

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  in  the  area  of  enterprise  and 
industrial policy.  

Special  attention  needs  to  be  paid  to  ensure  more  effective  policy  formulation  and 
implementation by stronger institutional capacities. The complex business environment in the 
country  results  from  its  fragmented  administrative  structure  and  puts  an  added  burden  on 
businesses through excessive regulation, lengthy and complex administrative procedures, red 
tape,  taxes  and  local  fees.  Bosnia  and  Herzegovina  should  draw  up  a  countrywide  policy 
framework  for  industrial  and  SMEs  competitiveness  and  for  encouraging  foreign  direct 
investment.  Programmes  which  link  domestic  businesses  with  foreign  investors  should  be 
enhanced. Bosnia and Herzegovina should reduce the institutional and regulatory barriers and 
address the lack of a single economic space by harmonising key business-related legislation 
and by improving coordination and cooperation between different levels of government.  

In the coming year, the country should in particular: 

  simplify  and  harmonise    business  registration  in  both  entities  in  order  to  reduce  the 
administrative  burden  on  entrepreneurs,  by  centralising  company  registration  and 
licensing under one-stop-shops and by broadening online registration;  

  update  the  industrial  policy  strategies  and  action  plans  at  various  levels  of  government, 
ensuring coordination and involvement of industrial enterprises in policy formulation and 
implementation; 

  assess the current needs of businesses, particularly SMEs, when it comes to modernising 

skills. 

Chapter 21: Trans-European Networks 

The  EU  promotes 
transport, 
telecommunications  and  energy  to  strengthen  the  internal  market  and  contribute  to  growth 
and employment. 

trans-European  networks 

the  areas  of 

(TEN) 

in 

The SAA requires the Parties to focus on cooperation in priority areas of transport, including 
supporting the development of multimodal infrastructures in connection with the main trans-
European networks. This is specified for transport in the Transport Community Treaty which 
supports  the  development  and  implementation  of  the  indicative  TEN-T  extension  of  the 
comprehensive  and  core  networks  to  the  Western  Balkans,  and  for  energy  in  the  Energy 
Community Treaty which obliges the parties to align with the EU Regulation on Guidelines 
for trans-European Energy networks covering the timely development and interoperability of 
projects of Energy Community interest.  

144 

 
 
According  to  the  constitutional  and  legal  framework,  competences  on  trans-European 
networks are exercised at state level, by the two entities and by Brčko District. The state level 
is  responsible  for  international  and  inter-entity  transport  and  infrastructure  including 
preparation of strategic and policy documents. The State also has a coordination role and the 
responsibility to represent and commit the country at international level. The state level is also 
responsible for harmonisation, coordination and planning in the field of energy infrastructure. 
The  two  entities  and  Brčko  District  have  legislation  relevant  for  the  planning  and 
implementation of projects under the trans-European networks. 

At state level, the Ministry of Transport and Communications is responsible for international 
and inter-entity transport, including agreements, relations with international organizations and 
preparation  of  strategic  and  planning  documents.  The  Ministry  of  Foreign  Trade  and 
Economic  Relations  is  in  charge  of  setting  energy  policy,  basic  principles,  coordinating 
activities  and  harmonising  entities’  plans  at  the  international  level.  At  entity  level,  the 
responsible  ministries  on  transport  infrastructure  are  the  Ministries  of  Transport  and 
Communication  of  the  Federation  and  of  the  Republika  Srpska  entity,  while  for  energy 
infrastructure  they  are  the  Federation  Ministry  of  Energy,  Mining  and  Industry  and  the 
Republika  Srpska  Ministry  for  Energy  and  Mining.  In  Brčko  District  the  Department  for 
Public  Affairs  and  the  Department  for  Communal  Affairs  are  responsible  for  transport  and 
energy infrastructure. 

On  transport  networks  an  indicative  extension  of  the  trans-European  transport  network 
(TEN-T) including core network, core network corridors and pre-identified priority projects 
for infrastructure investment was set in 2015.  

The legal framework is aligned with the EU acquis. Bosnia and Herzegovina participated in 
the  South  East  Europe  Transport  Observatory  (SEETO),  until  it  reached  the  end  of  its 
mandate in December 2018, succeeded by the Transport Community Treaty. It participates in 
the  Western  Balkans  6  (WB6)  processes  focusing  on  improving  connectivity  within  the 
Western Balkans 6 and with the EU. Priority connectivity projects on the indicative extension 
of  the  TEN-T  core  network  to  the  Western  Balkans  have  been  planned  through  the  single 
priority project pipeline. Their implementation is uneven and hampered by poor preparedness 
and  ineffective  use  of  available  funds.  Bosnia  and  Herzegovina  has  made  slow  progress  on 
implementing the connectivity reform measures. Much of the progress achieved is related to 
the  measures  supported  by  EU  technical  assistance.  Further  efforts  are  needed  on  border 
crossing  facilitation  measures,  road  safety  and  infrastructure  maintenance  plans  (road  and 
rail). Bosnia and Herzegovina ratified the Transport Community Treaty in 2018 and needs to 
further  improve  and  increase  its  administrative  capacity  to  mobilise  sufficient  resources  to 
support  its  implementation.  A  2015  framework  transport  policy  and  a  separate  framework 
transport strategy and action plan are in place, setting out the main strategic framework for the 
development  of 
the  TEN-T  comprehensive  and  core  networks  until  2030.  Future 
infrastructure investments need to be implemented in compliance with EU standards on public 
procurement,  State  aid  and environmental impact  assessment. Projects  should be channelled 
through  a  single  project  pipeline,  confirming  the  strategic  orientation  towards  the  trans-
European networks. 

Road  network  improvements  focus  mostly  on  the  project  to  complete  the  Corridor  Vc 
motorway crossing Bosnia and Herzegovina from north to south between the border of Bosnia 
and Herzegovina at Svilaj and the port of Ploče in Croatia. The interstate bridge over the Sava 
River at Svilaj is under construction with a contract deadline for the completion of works by 
mid-2019.  The  connecting  Svilaj  to  Odžak  motorway  section  on  Corridor  Vc  is  completed. 
Most of the remaining sections are under preparation, while a few are under construction. A 
second  interstate  bridge  with  Croatia  is  planned  on  route  2A,  connecting  Banja  Luka  with 

145 

 
Gradiška.  The  Banja  Luka  to  Doboj  highway  on  comprehensive  network  route  9a  was 
completed  in  2018.  Investments  in  the  rail  network  are  limited.  Inland  waterways  need 
improvement  and  regular  maintenance.  The  navigability  of  the  Sava  River  requires  further 
demining and rehabilitation.   

Trans-European  energy  networks  (TEN-E)  cover  gas  transport  and  storage  facilities  and 
electricity transmission and make a significant contribution to the electricity and gas market. 
The TEN-E are a response to the growing importance of securing and diversifying the EU’s 
energy  supplies,  integrating  the  energy  networks  of  the  Member  States,  candidate  countries 
and potential candidates, thus ensuring the coordinated operation of the energy networks in 
the EU and in neighbouring countries.  

Bosnia  and  Herzegovina  needs  to  transpose  Regulation  (EU)  347/2013  on  guidelines  for 
trans-European  energy  infrastructure,  as  adapted  and  adopted  by  the  Ministerial  Council  of 
the  Energy  Community.  The  country  failed  to  comply  with  the  specific  provisions  of  this 
Regulation  which  would  support  the  definition  and  promotion  of  strategic  infrastructure 
projects both in electricity and gas by 31 December 2016, and to apply them as of 1 January 
2017.  As a result, the Ministerial Council of the Energy Community adopted a decision at the 
end of 2018 identifying the breach and asked the country to report to the Secretariat and the 
Permanent High-Level Group about the measures taken to ensure transposition. The country 
needs  to  ensure  full  compliance  by  1  July  2019,  otherwise  further  measures  will  be 
recommended against the country. The long-term transmission network development plan for 
2018-2027  identifies  priority  electricity  transmission  interconnections  with  neighbouring 
countries. The country has four electricity transmission interconnections included on the list 
of projects of energy community interest (PECI) and projects of mutual interest (PMI).  

There is no legislative framework at state level on natural gas, and no compliant harmonised 
laws at  entity level.  This  hampers the development  of natural  gas infrastructure and the  gas 
market. The country has three projects for gas interconnections on PECI/PMI lists that would 
connect  its  infrastructure  with  the  Croatian  natural  gas  system.  The  project  connecting  the 
country’s  gas  infrastructure  via  Slobodnica-Brod-Zenica  is  blocked  due  to  lack  of  political 
consensus.  The  development  of  project  documentation  for  the  Zagvozd–Posusje–Travnik 
southern gas pipeline interconnection is advancing, although it is currently being challenged 
by the government of the Republika Srpska entity. The country is currently supplied through a 
single-entry  point  and  is  fully  dependent  on  Russian  natural  gas.  It  needs  to  ensure  proper 
maintenance of infrastructure and enhance the security of supply. 

Bosnia  and  Herzegovina  has  achieved  some  level  of  preparation  in  the  area  of  trans-
European networks.  

The  legislative  framework  needs  to  be  aligned  with  the  TEN-T  and  TEN-E  regulations  for 
implementing  transport  and  energy  projects.  Transport  and  energy  infrastructures  are 
insufficiently developed. The implementation of connectivity reform measures in Bosnia and 
Herzegovina is slow.  

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

  proceed with the development of the core transport networks (Regulation No. 1315/2013 
guidelines for the development of the trans-European transport network) and core energy 
networks  in  line  with  the  infrastructure  investment  priorities  agreed  under  the  regional 
connectivity agenda; 

  accelerate  the  implementation  of  connectivity  reform  measures  and  continue  with 
adoption of the multiannual maintenance plans for the entire road and rail core network; 

146 

 
  align  with  Regulation  (EU)  347/2013  on  guidelines  for 

trans-European  energy 

infrastructure. 

Chapter 22: Regional policy and coordination of structural instruments 

Regional  policy  is  the  EU’s  main  tool  for  investing  in  sustainable  and  inclusive  economic 
growth.  Member  States  bear  responsibility  for  its  implementation,  which  requires  adequate 
administrative capacity and sound financial management of project design and execution. 

The  SAA  establishes  measures  to  strengthen  regional  and  local  development  cooperation, 
with  the  objective  of  contributing  to  economic  development  and  reducing  regional 
imbalances. 

According  to  the  constitutional  and  legal  framework  competences  in  the  thematic  areas 
relevant to the implementation of regional policy rest with the state level, the two entities, the 
cantons and the Brčko District. The state level has a coordination and planning function and 
represents as well as commits the country internationally. 

At  state  level  there  is  no  specific  ministry  in  charge  of  regional  policy;  there  are,  however, 
state-level  ministries  who  have  a  coordination  function  in  thematic  areas  relevant  to  the 
implementation  of  regional  policy,  such  as  environment,  transport,  competitiveness,  labour 
and  employment.  At  entity  and  cantonal  level  there  are  ministries  in  charge  of  all  these 
thematic  areas  although  none  of  them  is  specifically  tasked  with  preparing  possible  future 
implementation of structural instruments. 

Republika Sprska entity contests competences of the National  IPA coordinator as defined in 
the IPA Framework Agreement and the role of the National Investment committee. 

Bosnia  and  Herzegovina  prepared  the  Nomenclature  of  Statistical  Territorial  Units  in  2013, 
according to which the  country  as  a whole represents  the NUTS  I level,  and the  Federation 
entity, Republika Srpska entity and Brčko District make up the NUTS II level. The NUTS II 
regions  are  only  provisionally  defined  and  accepted  by  the  European  Commission  until 
Bosnia and Herzegovina finalises and agrees the entire classification to include definition of 
the  NUTS  III  level  as  well.  Bosnia  and  Herzegovina  needs  to  provide  the  European 
Commission  with  its  GDP  per  capita  figures  harmonised  at  NUTS  II  level,  an  obligation 
stemming from the SAA, overdue since 2013, i.e. 5 years after the entering into force of the 
Interim Agreement in 2008. 

Bosnia  and  Herzegovina  needs  to  adopt  a  legislative  framework  establishing  a  system  for 
managing Structural Funds in compliance with the requirements of Article 174 and 175 of the 
Treaty  on  the  Functioning  of  the  European  Union.  Alignment  of  the  legal  framework  in 
thematic areas relevant to the implementation of regional policy is not complete. The Law on 
Financing  of  the  Institutions  of  Bosnia  and  Herzegovina  and  the  Law  on  the  Budget  of  the 
Institutions  in  Bosnia  and  Herzegovina  and  International  Obligations  allow  for  budget 
flexibility.  Multiannual  budgeting  at  state  level  is  not  regulated  as  such,  but  there  is  an 
obligation to prepare a three-year budget framework paper that, in turn, guides the preparation 
of the budget for the following year. The Federation entity Law on Budgets and the Republika 
Srpska entity Law on Budget Systems and Law on Budget Execution regulate both flexibility 
and  multi-annual  budgeting.  However,  the  manner  in  which  multiannual  projects  and 
programmes  are  included  in  the  entities’  budgets  is  neither  comprehensive  nor  consistent 
across  various  administrative  levels.  As  part  of  the  annual  ‘Economic  Reform  Programme’ 
exercise,  a  consolidated  three-year  budget  outlook  is  prepared,  but  it  is  still  insufficiently 
comprehensive,  especially  as  regards  foreign-financed  projects.  IPA-funded  projects  can  be 
co-financed at state,  entity and  local  level. The country needs to adapt necessary legislation 

147 

 
 
and budget provisions allowing for co-financing of multiannual cohesion programmes. Bosnia 
and Herzegovina has a legal framework at state and entity levels regulating internal audit and 
financial management and control as well as determining which public bodies are required to 
set up financial control and audit structures.  

As to the institutional framework, the Directorate for European Integration is responsible for 
coordinating  the  planning,  implementation  and  monitoring  of  EU  financial  assistance  in 
Bosnia and Herzegovina, including the programming of IPA multi-country funds through the 
Western  Balkans  Investment  Framework  (WBIF).  The  National  IPA  Coordinator  (NIPAC) 
was appointed in 2017 on a temporary basis. The coordinator’s office supports the country’s 
participation  in  the  macro-regional  strategies  and  EU  programmes  and  coordinates  cross-
border, transnational and interregional cooperation programs. Bosnia and Herzegovina has not 
reached  political  consensus  on  methods  of  coordination  for  effective  use  of  pre-accession 
funds.  The  administrative  set-up  of  Bosnia  and  Herzegovina  and  the  high  number  of  actors 
involved  in  the  programming  and  implementation  of  EU  funds  requires  a  high  degree  of 
coordination between authorities at state level and between the state level and other levels of 
government.  The  current  level  of  coordination  needs  strengthening,  for  instance,  by  an 
agreement of the key stakeholders on how the coordination mechanism on EU matters could 
be  utilised  in  certain  IPA  related  issues,  such  as  the  needs  assessment,  while  respecting  the 
existing  functions  of  the  NIPAC  deriving  from  the  IPA  Framework  Agreement.  In  all 
thematic areas relevant to regional policy, Bosnia and Herzegovina should improve ownership 
of  the  institutions  involved  in  the  planning  and  programming  of  EU  funds.  Countrywide 
institutional and administrative structures as well as legislative acts for the management and 
implementation  of  future  EU  funds  need  to  be  put  in  place  to  prepare  for  the  future 
coordination  of  EU  structural  instruments  and  ensure  the  sustainability  of  their  future 
operational programmes. 

Bosnia  and  Herzegovina  has  insufficient  administrative  capacity  to  deal  with  the 
requirements of EU regional policy. Resources allocated to EU programmes and projects vary 
across institutions, as do staff expertise and experience of management, public procurement, 
evaluation,  financial  monitoring  and  control  of  funds.  Specialised  competences  and  specific 
sector  knowledge  are  limited  and  need  to  be  developed  in  most  institutions.  Numerous 
authorities benefit from relevant training opportunities, including capacity-building activities 
provided by EU-funded projects. Some training plans to strengthen the skills of civil servants 
in EU funds management have been established. Bosnia and Herzegovina has not established 
a provisional plan on a capacity-building needs assessment or training measures in relation to 
the preparation of cohesion policy. In addition, it does not have any other systematic plan to 
prepare the administrative capacity of relevant bodies to implement cohesion policy. 

On  programming,  Bosnia  and  Herzegovina  has  adopted  countrywide  strategies  including 
priorities at state, entity and Brčko District levels in some fields relevant to cohesion policy, 
namely  transport  (2016),  environmental  approximation  (2017),  and  a  strategy  for  climate 
change  adaptation  and  low  emission  development  (2013).  The  country  has  a  2017-2020 
information  society  development  policy  and  related  action  plan.  Countrywide  sectoral 
planning  and  strategic  documents  on  social  inclusion,  human  rights,  anti-discrimination, 
public administration reform,  public finance management, employment,  education and SME 
competitiveness  have  not  been  adopted.  Coordination  at  all  levels  on  selecting,  prioritising 
and  implementing  the  planned  strategic  interventions  needs  to  improve.  Medium-term 
financial planning for investments is not systematically introduced in line with the objectives 
of the strategic documents.  

Bosnia and Herzegovina’s National Investment Committee (NIC) was set up in 2015 and the 
NIPAC Office was appointed as its Technical Secretariat. The NIC composition reflects the 

148 

 
constitutional  competences  at  various  levels  of  government  in  Bosnia  and  Herzegovina,  but 
the Republika Srpska entity does not send its representatives to the meetings. A methodology 
for prioritisation of infrastructure projects and a single project pipeline have been adopted in 
the same year for the transport sector, followed by the adoption of a countrywide framework 
transport strategy. A revised single project pipeline covering transport and environment was 
adopted in February 2019. Single project pipelines in the energy and social sectors need to be 
set up.  

There are no institutions or bodies in  the country  with  sufficient  experience and capacity to 
perform monitoring and evaluation of public investment programmes. The Monitoring and 
Evaluation Department within the NIPAC Office, responsible for the overall coordination of 
monitoring  activities  for  IPA,  has  insufficient  capacity  and  experience  to  perform  its  tasks 
well  at  project  level.  There  are  currently  no  concrete  plans  to  build  such  a  capacity  at  state 
level  and  create  an  efficient  system  that  could  constitute  the  basis  for  monitoring  and 
evaluation of future cohesion policy programmes.   

There is no financial management and control system for EU funds in place in Bosnia and 
Herzegovina, except for EU funds in shared management and indirect management for cross 
border cooperation programmes, where the state-level Ministry of Finance is responsible for 
verifying the correct implementation of operations and expenditure certification. Bosnia and 
Herzegovina  needs  to  establish  most  structures  and  bodies  defined  in  Annex  A  of  the 
Framework Agreement.  

Impact 

Bosnia and Herzegovina had a nominal GDP of EUR 4.5 billion in 2016. This equals about 
0.01% of EU-28 GDP for about 0.68% of the EU-28 population. Considering the size of its 
economy and population, Bosnia and Herzegovina’s accession would only marginally reduce 
the  EU’s  average  GDP  per  capita  compared  to  today’s  data  and  hence  would  slightly 
influence the  eligibility  of regions.  Given that  the country’s GDP  per  capita is  considerably 
below  the  EU  average,  Bosnia  and  Herzegovina  would  be  entitled  to  receive  EU  cohesion 
policy contributions under the convergence objective. Following a preliminary assessment of 
the country’s economic  situation and considering the  current  capping rules of the Structural 
Funds, the estimated impact of its possible accession on the EU cohesion policy is considered 
marginal. 

Bosnia and Herzegovina is at an early stage of preparation in the area of regional policy.  

Significant  efforts  are  needed  to  align  the  legislative  framework  on  regional  policy  and  to 
implement this policy effectively. The country needs to strengthen its administrative capacity 
in  terms  of  programming,  implementation,  monitoring  and  evaluation  of  EU  funds.  An 
efficient  coordination  is  needed  among  the  levels  of  government  on  preparing  and 
implementing relevant sector strategic and planning documents. Bosnia and Herzegovina has 
to  improve  the  prioritisation  of  planned  interventions  in  the  context  of  programming  EU 
funds. 

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

  adopt  pending  countrywide  strategies  in  the  fields  relevant  to  EU  regional  policy  and 
ensure efficient  coordination of cross-border, transnational and interregional  cooperation 
programmes as an important step in preparing regional development strategies;  

  improve public investment planning and develop a single project  pipeline in  all relevant 

sectors and ensure its endorsement by the National Investment Committee; 

149 

 
  reach  agreement  on  coordination  modalities  for  the  effective  use  of  pre-accession  funds 
while  respecting  the  NIPAC’s  functions  as  provided  for  in  the  IPA  Framework 
Agreement. 

Chapter 25: Science and research 

The  EU  provides  significant  support  for  research  and  innovation.  All  Member  States  can 
benefit  from  the  EU’s  research  programmes,  especially  where  there  is  scientific  excellence 
and  solid  investment  in  research.  Successful  implementation  of  the  acquis  in  this  domain 
requires  integration  into  the  European  Research  Area.  Well-developed  research  and 
innovation  capacity  to  produce  scientific  excellence  to  support  sustainable  economy  and 
knowledge-based society is needed. 

Under the SAA Bosnia and Herzegovina and EU Member States are to encourage cooperation 
in civil scientific research and technological development on the basis of mutual benefit. This 
is  to  be  done  taking  into  account  the  availability  of  resources,  and  adequate  access  to  the 
specific  programmes,  subject  to  appropriate  levels  of  effective  protection  of  intellectual, 
industrial and commercial property rights.  

According to the constitutional and legal framework, competences in the area of science and 
research rest predominantly with the Republika Srpska entity, Brčko District and the cantons, 
while  the  Federation  entity  exercises  a  coordinating  role.  At  state  level,  there  is  framework 
legislation  on  the  fundamentals  of  scientific  research  and  coordination  of  internal  and 
international  cooperation. Based on constitutional  framework, at  state level,  the competence 
primarily  takes  the  form  of  defining  basic  principles  of  internal  coordination,  harmonising 
plans of entity authorities, and representing and committing the country at international level. 

At state level there is no specific ministry of science and research, therefore the Ministry of 
Civil  Affairs  has  a  coordinating  role  in  the  areas  covered  by  this  chapter  and  hosts 
the Horizon  2020  coordinator.  Ministries  in  charge  of  science  are  in  place  at  entity  and 
cantonal level. There is a competent department in Brčko District.  

On  research  and  innovation  policy,  the  legislative  framework  regulating  science  and 
research development, based on the 2009 Framework Law on the fundamentals of scientific 
research activity and coordination of internal and international scientific research cooperation, 
is  fragmented  and  needs  to  be  improved  throughout  the  country.  The  revised  strategy  for 
scientific  development  (RSSD)  for  the  period  2017-2022  needs  to  be  implemented,  and  its 
Action Plan has to be adopted.  

A smart specialisation strategy needs to be adopted and specific strategic priorities have to be 
identified.  The  Smart  Specialisation  process  in  Bosnia  and  Herzegovina  is  currently  in  its 
initial  stages  of  preparation.  The  process  in  which  scientific  knowledge  is  fed  into 
policy-making is rather weak and non-inclusive. Systemic collaboration and interaction needs 
to  be  enhanced  between  ‘triple  helix’  actors  -  academia,  industry  and  governments.  The 
country’s research capacities are very limited with a total of 1 942 researchers in 2016, while 
a trend of brain drain has been observed, most notably in the health and medical sector, with 
no  systematic  measures  to  address  the  issue.  The  country’s  estimated  total  allocations  for 
research amounts to 0.3% of GDP. The RSSD sets the goal to reach 0.8% of GDP investment 
in research and development by 2022, which is far from the 3% EU target for 2020.  

The  country  lacks  reliable  and  comprehensive  statistics.  Data  collection  and  processing  is 
done  by  each  entity’s  statistics  institute,  which  submit  relevant  data  to  the  Bosnia  and 
Herzegovina  Agency  for  Statistics  that  publishes  countrywide  data.  As  this  Agency  has 

150 

 
 
limited capacity, notably regarding staffing, it does not collect sufficient data on research and 
innovation  hampering  the  monitoring  of  the  implementation  and  impact  of  research  and 
innovation efforts.  

Bosnia  and  Herzegovina  is  not  included  in  the  European  Innovation  Scoreboard  as  not  all 
indicators  necessary  to  participate  are  available.  Bosnia  and  Herzegovina  is  intensifying  its 
statistical data collection efforts to make all indicators available.   

On  framework  programmes,  the  country  participates  in  Horizon  2020,  the  European 
Cooperation in Science and Technology (COST) and EUREKA research programmes. It has 
also established the network of national contact points. The country shows good performance 
in Horizon 2020. It also cooperates at regional level, as co-signatory of the Regional Strategy 
on Research for Innovation, with the Central European Initiative, the Danube Initiative, and it 
is a member of UNESCO.  

In terms of European Research Area priorities, Bosnia and Herzegovina participates in the 
European  Research  Area  Committee  and  related  advisory  bodies  and  initiatives.  It  also 
participates in  the European Strategic Forum on  Research  Infrastructure,  but  has to  develop 
the roadmap for researcher infrastructure. Bosnia and Herzegovina has concluded numerous 
bilateral  cooperation  agreements,  with  a  focus  on  close  cooperation  with  neighbouring 
countries and the EU.    

All competent authorities need to agree in order to enable the implementation of international 
research  and  innovation  agreements.    The  allocated  staffing  and  budget  for  supporting 
international  cooperation  are  not  adequate  and  need  to  be  increased.  An  observer  to 
participate in the Strategic Forum on International Cooperation has not been nominated.   

Bosnia and Herzegovina has some level of preparation in the area of science and research.  

The  country  actively  participates  in  the  EU  research  programmes  and  other  regional 
initiatives,  but  its  capacity  for  technological  absorption  and  for  research,  development  and 
innovation actions is limited due to its fragmented national research landscape. Key obstacles 
include low expenditure and investment in research and development, a very low number of 
researchers per inhabitants, very few innovation related policies or strategies and very limited 
cooperation  between  academia  and  the  private  sector.  Bosnia  and  Herzegovina  should 
increase investment in research and innovation and introduce concrete measures which would 
effectively  prevent  brain  drain.  Strong  efforts  are  needed  to  ensure  a  harmonised  and 
systematic approach from all levels of authority in addressing priorities in this sector, ensure 
effective  implementation  of  strategic  objectives,  as  well  as  the  adoption  of  the  smart 
specialisation strategy.  

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

  adopt  the  action  plan  for  the  implementation  of  the  2017-2022  revised  strategy  for 

scientific development;  

  adopt the smart specialisation strategy;  
  prepare and adopt the roadmap for research infrastructure.  
Chapter 26: Education and culture 

The EU supports cooperation in education and culture through funding programmes and the 
coordination of Member State policy through the open method of coordination. The EU and 
the Member States must also prevent discrimination and ensure quality education for children 
of migrant workers, including those from disadvantaged backgrounds. 

151 

 
Under the SAA Bosnia and Herzegovina and the EU Member States are required to cooperate 
with the aim of raising the level of general education and vocational education and training in 
Bosnia and Herzegovina. They are also required to cooperate on youth policy and youth work, 
including on non-formal education. Achieving the objectives of the Bologna Declaration is a 
priority for higher education systems on both sides. The cooperation needs to aim at ensuring 
that  access  to  all  levels  of  education  and  training  in  Bosnia  and  Herzegovina  is  free  of 
discrimination on any grounds.  

According  to  the  constitutional  and  legal  framework,  in  Bosnia  and  Herzegovina,  the 
competences  in  the  area  of  education  and  culture  rest  predominantly  with  the  Republika 
Srpska  entity,  Brčko  District,  and  cantons  with  the  Federation  entity  playing  a  coordinating 
role. The state-level  competence primarily takes the form  of internal  coordination, based on 
the constitutional responsibility to represent and commit the country at international level, and 
in case of education, to oversee implementation of framework legislation.  

Ministries in charge of education and culture are in place at entity and cantonal level and there 
is  a  competent  department  in  Brčko  District.  At  state  level  there  is  no  specific  ministry  of 
education and culture although, the Ministry of Civil  Affairs has a coordinating role for the 
areas covered by this chapter.  

There are competence disputes between the Republika Srpska entity and the state and between 
the  cantonal  and  the  Federation  level.  Such  disputes  impede  the  capacity  of  Bosnia  and 
Herzegovina  to  effectively  communicate  with  the  EU  institutions,  as  demonstrated  in  the 
preparation  of  the  replies  to  the  European  Commission’s  follow-up  Questionnaire:  due  to 
disagreements  no  replies  could  be  given  to  a  number  of  questions  in  areas  covered  by  this 
chapter 

As regards the legislative framework, four framework laws are in place at the state level, and 
the other levels  of government need to  harmonise their laws with  them. Some cantons have 
not adopted their specific legislation. The purpose of framework laws is to provide principles 
and  standards  and  to  harmonise  and  to  coordinate  legislation  and  policies  of  educational 
authorities within Bosnia and Herzegovina and with EU standards and principles, and cover 
pre-school,  primary  and  secondary  education,  secondary  vocational  education  and  training 
and higher education. Legislation needs to be harmonised between the state level, entity and 
cantons.  

The constitutional set-up provides for a complex and fragmented system which contributes to 
the  lack  of  common  standards  for  the  different  levels  of  education,  as  well  as  in  teacher 
training and performance evaluation.  

Due  to  demographic  changes,  the  number  of  students  enrolled  at  all  levels  of  education  is 
gradually  decreasing.  In  pre-school  education  the  enrolment  trend  is  positive,  but  still  very 
low compared with the EU average (in 2017/18: approximately 18% compared with 95.3% in 
the EU, for children from the age of 4 until the start of the compulsory primary education).  

Comprehensive reforms have been undertaken in education. Recent reforms addressed mostly 
the labour market  needs through the development  of Bosnia  and Herzegovina qualifications 
framework  for  all  levels  of  education.  However,  enrolment  policies  are  inefficient  in 
channelling students to fields of study which are on demand on the domestic labour market.  

The lack of relevant strategic documents in the labour sector prevents the establishment of an 
interface with educational reforms. In addition, an inter-sectoral Commission for qualification 
framework  has  to  be  established.  A  state-wide  vocational  education  and  training  strategy 
expired in 2015. A new strategy should give particular focus to skills development in sectors 
with  growth  potential.  The  mismatch  of  qualifications  of  labour  force  and  labour  market 

152 

 
needs  has  to  be  decreased  especially  in  higher  and  vocational  education.  The  efforts  of 
education authorities to cover this mismatch are not harmonised. Additional efforts are needed 
to improve also the quality of non-formal education, especially in terms of development of the 
policies  related  to  validation  of  non-formal  and  informal  learning.  Measures  dedicated  to 
disadvantaged  groups  are  in  place  regulating  qualifications  and  standards  for  semi-qualified 
labour  force  giving  an  opportunity  to  continue  education.  Disabled  persons  are  part  of 
mainstream education.  

Better efforts to improve quality assurance across all levels of education are required. Quality 
assurance  procedures  for  developing  and  validating  learning  outcomes-based  qualifications 
have to be established.   

The longstanding disputes between the two Accreditation Agencies, the one at state level and 
the  one  in  the  Republika  Srpska  entity  hamper  the  accreditation  of  higher  education 
institutions and the new study programmes. This situation has a negative impact on the overall 
quality of the education system and puts the participation of the country in Erasmus+ projects 
at serious risk.  

Participation  in  this  EU  programme  fosters  young  people’s  non-formal  learning  at 
international and national levels so as to enhance their competences, skills and employability. 
Records show 3,700 mobilities of staff and students from Bosnia and Herzegovina since 2015, 
and  30  capacity  building  projects  are  currently  being  implemented  in  the  field  of  higher 
education involving local beneficiaries.  

Bosnia and Herzegovina  also  needs  to  enhance the administrative capacities of the National 
Erasmus+ Office, responsible for the local management of the international dimension of the 
higher education aspects of this programme. 

The lack of cooperation and coordination between entities on areas of education, training and 
employment  continues  to  undermine  overall  policy,  including  as  regards  obtaining 
consolidated  education  related  data  on  vocational  education  and  training.  Initial  teacher 
education  needs  to  be  reformed  in  line  with  developed  qualification  and  occupational 
standards. The continuous professional development of teachers is not harmonised within the 
country  and  is  not  based  on  results  from  an  external  assessment  of  learning  outcomes  and 
students achievements but is the result of consultations between pedagogical institutes, school 
principals  and  teachers  in  each  entity/canton  separately.  Student-centred  and  competence 
based learning are in an initial stage due to a very low level of implementation of outcome-
based curricula 

Children with  disabilities  are part of mainstream education, but  most schools  in  Bosnia and 
Herzegovina  are  not  ready  to  fully  accept  them  as  they  lack  required  infrastructure  and 
transportation. Teachers are not sufficiently trained to use adequate learning methods to work 
with  children  with  special  needs  and  to  give  individual  support.  There  is  a  lack  of  school 
assistants to support both children and teachers.  

In  2018,  the  country  participated  in  the  OECD  Programme  for  International  Student 
Assessment (PISA) for the first time with results due to be published in December 2019. The 
country will also participate in the TIMMS 2019 and PIRLS 2021 international assessments. 

On cultural policy, the Strategy of Cultural Policy in Bosnia and Herzegovina was adopted in 
2008 and its objectives are pursued through support for projects from budget grant funds. The 
institutions at state level are the Commission to Preserve National Monuments, the Archive of 
Bosnia  and  Herzegovina  and  the  State  Commission  for  Cooperation  of  Bosnia  and 
Herzegovina  with  UNESCO.  On  Creative  Europe,  two  coordination  desks  have  been 
nominated,  one  for  the  cultural  sector  and  one  for  the  audio-visual  sector.  Regarding  the 

153 

 
youth,  there  are  no  youth  policies  at  state  level,  nevertheless  there  is  the  Commission  for 
Coordination  of  Youth  Issues  within  the  Ministry  for  Civil  Affairs.  This  commission 
comprises  representatives  of  competent  state,  entities’  and  Brčko  District  ministries,  and 
youth NGOs. 

to 

the  Federation  entity  Law  on  youth,  all 

According 
levels  of  authority 
(municipalities/cities/cantons)  are  obliged  to  define,  adopt  and  implement  youth  strategies. 
Brčko  District  has  its  own  Law  on  Youth,  which  regulates,  inter  alia,  conditions  for 
institutional and systematic care for  youth, their organisation, social action and participation 
in  decision-making.  In  the  Republika  Srpska  entity  the  Youth  Policy  2016-2020  is  under 
implementation and it focuses on youth employment.  

Regarding the bodies representing the young people, in the Federation entity there are Youth 
Councils, established at the municipalities, cantonal and entity level. The youth Council of the 
Federation  entity  is  defined  as  an  umbrella  youth  association  composed  of  cantonal  youth 
councils. The Youth Council of the Republika Srpska entity is also the umbrella organisation 
of the youth, gathering local and the entity’s youth organisations with the aim of representing 
their interests in the institutions of the entity and in international cooperation.  

On sport, Bosnia and Herzegovina has not ratified the Council of Europe Convention on the 
Manipulation of Sports Competitions and the Convention on Integrated Safety, Security and 
Service  Approach  at  Football  Matches  and  Other  Sports  Events.  The  Council  of  Europe 
Anti-doping  Convention  and  the  UNESCO  International  Convention  against  Doping  were 
ratified in 1994 and 2009 respectively.  

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  in  the  area  of  education  and 
culture.  

The education system lacks common standards for the different 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.  Quality  assurance,  accreditation  of 
higher education institutions and new study programmes, as well as development of common 
standards in education, should be ensured. Bosnia and Herzegovina needs to align legislation 
at  all  levels  with  the  Framework  laws  on  education,  particularly  in  terms  of  mandatory 
application of the Common Core Curriculum. Social inclusion at all stages of education needs 
to be ensured. Youth strategies across the country should be developed and implemented. 

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

  ensure  a  fully  functional  system  of  (re-)accreditation  of  higher  education  institutions 

across the country; 

  develop a Vocational Education and Training strategy addressing labour market needs; 
  establish an inter-sectorial commission for National Qualification Framework.   
Chapter 27: Environment 

The  EU  promotes  strong  climate  action,  sustainable  development  and  protection  of  the 
environment. EU law contains provisions addressing climate change,  water and air quality, 
waste  management,  nature  protection,  industrial  pollution,  chemicals,  noise  and  civil 
protection. 

The SAA requires the parties to develop and strengthen their cooperation in the environmental 
field with the vital task of halting further degradation and start improving the environmental 
situation  with  the  aim  of  sustainable  development.  The  parties  shall,  in  particular,  establish 
cooperation with the aim of strengthening administrative structures and procedures to ensure 

154 

 
strategic planning of environment  issues and coordination between relevant  actors and shall 
focus on the alignment of Bosnia and Herzegovina’s legislation to the EU acquis. Cooperation 
could also centre on the development of strategies to significantly reduce local, regional and 
trans-boundary air and water pollution, including waste and chemicals, to establish a system 
for efficient, clean, sustainable and renewable production and consumption of energy, and to 
execute  environmental  impact  assessment  and  strategic  environmental  assessment.  Special 
attention  shall  be  paid  to  the  ratification  and  the  implementation  of  the  Kyoto  Protocol. 
Protection of environment should be addressed also in other policy areas such as in transport 
and industrial cooperation.  

According  to  the  constitutional  and  legal  framework,  the  competences  for  environment  and 
climate change rest predominantly with the two entities, and Brčko District. In the Federation 
the  competence  is  shared  between  the  Federation  and  the  cantons.  The  state  level  draws  up 
policy and harmonises and coordinates entities’ activities and plans that have an international 
dimension.  It  has  the  constitutional  responsibility  to  represent  and  commit  the  country  at 
international level.  

At  state  level  the  Ministry  of  Foreign  Trade  and  Economic  Relations  is  responsible  for 
drawing  up  policies  and  basic  principles  and  for  coordinating  of  activities  and  harmonising 
entity  level  plans  relevant  for  international  relations  with  regard  to  the  environment  and 
climate  change.  In  the  Republika  Srpska  entity,  responsibility  for  the  environment  lies  with 
the Ministry of Spatial Planning, Construction and Ecology and the Ministry of Agriculture, 
Forestry and Water Management while in the Federation responsibility lies with the Ministry 
of Environment  and Tourism  and Ministry  of Agriculture, Water Management and  Forestry 
are  responsible  for  environment.  Brčko  District  Department  of  Agriculture,  Forestry  and 
Water  Management  and  the  Department  for  Spatial  Planning,  Proprietary  and  Legal  Affairs 
are in charge. In all cantons there are ministries in charge of environmental issues.  

The Republika Srpska entity contests state-level competences to represent and act on behalf of 
the country at international level. This is particularly prominent when it comes to the strategic 
framework, policy setting, data exchange and reporting, as well as formally regulating roles 
and appointment procedure for the National Focal Point (NFP) to international conventions. 

Due  to  the  complex  political  and  institutional  set-up,  lack  of  political  consensus  and 
awareness,  understaffing  and  scare  financial  resources,  progress  with  legal  and  policy 
measures  requires  considerably  greater  efforts  and  much  more  time  than  in  other  countries. 
This has created a considerable backlog in aligning with the EU acquis in this area.   

Environment 

Bosnia and Herzegovina has no state-level law on environmental protection and no state-level 
authority  exclusively  dealing  with  the  environment.  The  alignment  of  legislation  with  the 
acquis  has  been  undertaken  so  far  without  a  National  Programme  for  the  Adoption  of  the 
Acquis (NPAA) in place or a vertically coordinated approach. Bosnia and Herzegovina needs 
to develop a systematic monitoring of alignment on the basis of tables of concordance in the 
field  of  environment  protection  and  climate  change.  Implementation  often  takes  place  on  a 
project-by-project  basis.  This  entails  the  danger  of  lack  of  ownership  by  the  administration 
and will have effects on how strategies and legislations are implemented. 

A countrywide environment approximation strategy was adopted in 2017, and supplemented 
by  more  specific  environmental  approximation  programmes  for  the  entities  and  Brčko 
District. There are few sub-sector strategies at state and entity level in place. These are mostly 
not  harmonised  between  the  entities  for  the  respective  areas  covered.  Thus  the  existing 
strategies provide unevenly coverage of the environment sector countrywide. A countrywide 

155 

 
harmonised  approach  in  strategic  planning  needs  to  be  ensured  to  address  the  issues  in  a 
consistent and comprehensive manner.  

Bosnia  and  Herzegovina  needs  to  ensure  an  efficient,  cohesive  and  comprehensive 
environmental  inspection  and  monitoring  system  or  a  central  database,  e.g.  for  air  quality, 
water, noise and biodiversity.  

Horizontal legislation is to a limited extent aligned with the acquis. Bosnia and Herzegovina 
needs to align with the EU environmental acquis at all levels of government and strengthen 
administrative capacities for efficient implementation. Practical implementation at entity level 
of  strategic  environmental  assessments  (SEAs)  is  very  limited.  Environmental  impact 
assessments (EIAs) are a widespread tool in the permitting process of both entities. However, 
for both  SEA and EIA, the authorities have a  rather wide mandate of discretion. Secondary 
legislation  is  not  fully  aligned  with  the  acquis  on  public  participation,  which  remains  often 
limited. It is necessary to formalise the procedures for appointment and the functions of the 
NFP  for  Bosnia  and  Herzegovina  for  the  implementation  of  environmental  conventions  to 
which Bosnia and Herzegovina is a signatory party. This act is pending and by its adoption 
the issue of appointment of NFPs to all conventions will be addressed in a systematic manner.  

Air protection and air quality are under the responsibility of the entities and Brčko District. 
Industrial  air  emissions  and  emissions  from  vehicles  and  from  domestic  heating  using 
firewood  and  lignite  create  severe  air  pollution.  They  often  exceed  considerably  WHO  and 
EU air quality standards and cause one of the highest average mortality rates by air pollution 
in  the  world.  Alignment  with  the  acquis  on  air  quality  is  limited  and  hampered  by  the 
complex  political  and  administrative  structure,  lack  of  staff  and  funding.  There  is  neither  a 
national  or  countrywide  strategy  or  programme  for  air  quality  improvement  and  monitoring 
nor a functioning countrywide air monitoring network. Reporting to international authorities 
such  as  the  European  Environment  Agency  has  not  been  formally  defined  and  there  is  no 
reporting to the European Commission under the Directive on ambient air quality and cleaner 
air for Europe. Air quality monitoring networks exist in both entities but not in Brčko District. 
Due  to  a  lack  of  resources  for  the  maintenance  of  devices  there  is  no  full  and  regular 
monitoring of all parameters in the Federation entity. Air quality plans for areas where levels 
of pollutants exceed limit values need to be adopted. In the Federation entity, some cantons 
have their own air quality  protection plans for areas  where levels  of pollutants exceed limit 
values. In cantons where there are no such laws or plans these are regulated by the Federation 
entity-level law and strategy. In the Republika Srpska entity only Banja Luka has a local air 
protection  programme  and  air  protection  plan  for  areas  where  air  quality  limit  values  are 
exceeded.  

Alignment with the EU acquis on reducing the sulphur content of certain liquid fuels (heavy 
fuel oil limiting value for sulphur content being 1%) has been pending for several years and is 
considered  by  the  Energy  Community  Council  as  a  serious  and  persistent  breach  of  the 
Energy  Community  Treaty.  Bosnia  and  Herzegovina  is  only  partially  aligned  with  EU 
legislation  on  volatile  organic  compounds  (VOC).  Control  of  VOC  emissions  in  the 
Federation  entity  is  regulated  in  rulebooks  taken  over  from  Socialist  Federal  Republic  of 
Yugoslavia. There are no accredited bodies in Bosnia and Herzegovina for monitoring VOC 
emissions.  

Regarding  waste  management,  strategies  exist  only  at  entity  and  Brčko  District  level.  The 
Federation  entity  is  implementing  its  2008-2018  waste  management  strategy  through  the 
2012-2017 waste management plan. A 2017-2026 waste management strategy is  in  place in 
the  Republika  Srpska  entity,  but  a  related  waste  management  plan  for  its  implementation 

156 

 
needs to be adopted. In the Federation entity, cantons are obliged to develop and subsequently 
implement their own cantonal waste management plans. Seven out of ten have done so12.  

In terms of the legislative framework, waste management is  implemented primarily through 
entities  and  Brčko  District  laws  on  waste  management.  In  the  Federation  entity,  waste 
management  is  a  shared  responsibility  with  cantons.  Some  of  the  cantons  have  their  own 
legislation on waste management. Due to the administrative order of Bosnia and Herzegovina, 
the country needs  to  ensure a  coordinated  and harmonised countrywide  approach in  dealing 
with waste management. This needs to be reflected both in the legislative framework and its 
strategic  approach.  Insufficient  human  and  financial  resources  hamper  the  development  of 
legislation and its implementation. Bosnia and Herzegovina needs to align with the EU acquis 
on sewage sludge, batteries, packaging, polychlorinated biphenyls/polychlorinated terphenyls 
and end-of-life vehicles. It also needs to align with the Landfill Directive, adopt a respective 
Directive  Specific  Implementation  Plan  and  close  or  rehabilitate  non-compliant  landfills. 
Substantial  efforts  and  awareness  raising  measures  are  required  to  reduce  waste  generation 
and promote reuse and recycling.  

On  water  quality,  the  Ministry  of  Foreign  Trade  and  Economic  Relations  coordinates 
cooperation  with  international  institutions  in  water  management  affairs.  Water  resource 
management  is  fully  assigned  to  entities  and  Brčko  District.  Cantonal  authorities  are 
responsible for  water management at  local  level  and for tariff supervision.  In the  Republika 
Srpska  entity,  tariff  oversight  is  covered  by  the  municipalities.  The  Federation  entity  is 
implementing its water management strategy for 2010-2022, and the Republika Srpska entity 
is implementing its strategy for integrated water management for 2015-2024. Alignment with 
the  EU  acquis  on  water  quality  is  advanced.  There  is  no  state-level  law  on  water.  Thus, 
alignment with EU water-related legislation is done through entity-level  and Brčko District-
level  laws  on  water.  Specific  plans  for  implementing  the  EU  legislation  on  drinking  water, 
urban waste water and flood risk management need to be adopted. Following the adoption of 
the  Sava  River  basin  management  plans  by  both  entities’  and  Brčko  District,  the  water 
management plan for the Adriatic Sea River Basin in the Federation and the decision on the 
adoption of the Trebišnjica River Basin management plan of the Republika Srpska entity , the 
competent  authorities  at  state  level  now  need  to  adopt  a  ‘Roof  report  on  river  basin 
management plans’ for the country. An action plan for flood protection and river management 
in  Bosnia  and  Herzegovina  for  2014-2021  is  being  implemented.  Floods  hazard  and  risk 
mapping for the entire country is under preparation.  

Due  to  its  specific  geographical  position,  Bosnia  and  Herzegovina  is  one  of  the  richest 
countries in Europe in terms of biodiversity. However, alignment with the acquis on nature 
protection,  in  particular  the  habitats  and  birds  directives,  is  very  limited.  The  protection  of 
nature  and  biodiversity  is  regulated  to  some  extent  by  the  laws  on  nature  protection  at  the 
level of the entities and Brčko District. A 2015-2020 strategy for biodiversity and landscape 
protection  for  Bosnia  and  Herzegovina  and  action  plan  are  in  place.  The  list  of  potential 
Natura  2000  sites  and  secondary  legislation  needs  to  be  adopted.  The  planning  and 
construction of power plants, including hydro, wind and solar power plants, requires inter alia 
compliance with EU environmental legislation including the directives on birds and habitats, 
SEA and, for concrete projects, EIA. There is no system in place in Bosnia and Herzegovina 
for collecting information on biodiversity  and for systematic monitoring  of the biodiversity. 
The  2015-2020  strategy  and  action  plan  for  the  protection  of  biological  diversity  in  Bosnia 
and  Herzegovina  aims  to  aligning  with  the  requirements  under  the  UN  Convention  on 
Biological  Diversity.  Bosnia  and  Herzegovina  needs  to  designate  institutions,  ensure  the 
necessary  human  and  financial  resources  and  establish  structures  for  implementing  the 

12 Except the Herzegovina-Neretva, Posavina and Zenica-Doboj Cantons 

157 

 
                                                 
Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). 
Biannual and annual reports on trade in CITES species have been submitted. 

Alignment with the EU acquis on industrial pollution control and risk management is very 
limited. A national emission reduction plan (NERP) for large combustion plants was adopted 
in  December  2015  and  submitted  to  the  Energy  Community  Secretariat.  The  plan  is  under 
implementation. A pollutant release and transfer register (PRTR) needs to be fully operational 
for  Bosnia  and  Herzegovina.  This  includes  enforcing  the  obligation  to  report  to  PRTR 
countrywide, enabling public access and integration of collected data and transmission to the 
EU  institutions.  Due  to  insufficient  resources  the  ratification  of  the  PRTR  Protocol  to  the 
Aarhus  Convention  was  stopped.  Bosnia  and  Herzegovina  needs  to  further  align  with  the 
Industrial Emissions Directive (IED). Bosnia and Herzegovina is party to the Convention on 
the  Transboundary  Effects  of  Industrial  Hazards.  Related  controlling  procedures  at  state, 
entity and Brčko District level are in place. Bosnia and Herzegovina is not aligned with the 
EU  Directive  on  the  control  of  major-accident  hazards  involving  dangerous  substances 
(Seveso III).  

On  chemicals,  a  national  implementation  plan  for  the  Stockholm  Convention  on  Persistent 
Organic  Pollutants  (POPs)  in  Bosnia  and  Herzegovina  was  adopted  in  2016.  It  contains  19 
strategies  and  action  plans.  There  is  no  state-level  law  on  chemicals.  Legislation  covering 
chemicals  is  at  entity  and Brčko  District  level.  Bosnia and Herzegovina needs to  align  with 
the  EU’s  REACH  Regulation  concerning  the  registration,  evaluation,  authorisation  and 
restriction  of  chemicals  at  all  levels  of  government  and  strengthen  the  administrative 
capacities  necessary  for  effective  implementation.  The  country  also  needs  to  implement  the 
EU Regulation on Classification, Labelling and Packaging of substances and mixtures (CLP) 
and appoint the bodies responsible for receiving information for formulating preventative and 
curative measures. It also needs to align with EU legislation on asbestos and on the protection 
of animals used for scientific purposes. Bosnia and Herzegovina is a  party to the Rotterdam 
Convention on the Prior  Informed Consent  Procedure for Certain  Hazardous Chemicals  and 
Pesticides in International Trade but has not fully implemented it. 

There is no state-level law or countrywide noise reduction policy in Bosnia and Herzegovina. 
Noise levels are only measured as needed for spatial planning purposes. The area is regulated 
by entity, Brčko District and cantonal regulations. In the Federation entity it is covered by the 
law on chemicals while in the Republika Srpska entity the noise area is regulated by the law 
on environmental protection. 

Regarding  civil  protection,  earthquakes,  floods,  heavy  snowfall, 
landslides,  mine 
contamination as well as forest fires have been identified as the main disaster risks for Bosnia 
and Herzegovina citizens. At the state level, the competent administrative bodies for disaster 
risk management are the Ministry of Security and the Coordination Body for Protection and 
Rescue, an expert operational body at the Bosnia and Herzegovina Council of Ministers. The 
Ministry  of  Security  hosts  the  BiH-112  Operational-Communication  Centre  which  is  not 
linked to  the Common Emergency Communication  and  Information System (CECIS) of the 
Commission. There are also civil protection authorities at the entity, Brčko District and canton 
level.  At  municipality  level  there  are  civil  protection  services,  with  mayors  having  the 
ultimate authority. Due to decentralised political structure and the existence of several levels 
of government, the normative, strategic and institutional framework for civil protection in the 
country is complex. There is a lack of cooperation in civil protection between the entities and 
the Brčko District. 

The  Framework  Law  on  Protection  and  Rescue  in  Bosnia  and  Herzegovina  regulates 
international cooperation as well as the competences and coordination among the designated 

158 

 
civil  protection  authorities  in  Bosnia  and  Herzegovina.  The  operative  system,  including 
resources  for  the  protection  and  rescue  of  people  and  property,  are  regulated  by  entity 
legislation and a Brčko District law. 

The  country  is  preparing  to  become  a  participating  state  of  the  Union  Civil  Protection 
Mechanism  (UCPM).  There  is  a  need  for  more  systematic  horizontal  cooperation  and 
enhanced vertical coordination, including on standardisation and methodologies applied. The 
112  European  unified  emergency  number  (for  police,  ambulance  and  firefighters),  the 
connection  to  CECIS  and  the  Secure  Trans  European  Services  for  Telematics  connections 
between  Administrations  (sTESTA),  as  a  precondition  to  connect  to  CECIS,  need  to  be 
established. 

Climate change 

Climate change policy and legislation are under the responsibility of ministries and bodies at 
all levels of government. The Ministry of Foreign Trade and Economic Relations is the state-
level ministry in charge. However, neither at entity and Brčko District nor cantonal levels are 
there  clearly  defined  roles  of  specific  ministries  or  bodies  regarding  responsibilities  for 
drafting,  implementation  and  monitoring  of  policies,  legal  acts  and  measures  for  climate 
change.  There  are  no  clear  efforts  to  mainstream  climate  considerations  into  other  relevant 
policy areas. Bosnia and Herzegovina authorities suffer from insufficient human and financial 
resources  also  in  this  area.  Bosnia  and  Herzegovina  has  a  focal  point  as  regards  the  UN 
Framework  Convention  on  Climate  Change  (UNFCCC).  However,  an  overall  formal 
procedure  needs  to  be  put  in  place  to  appoint  and  determine  the  functions  of  a  NFP  for 
implementation  of  all  environmental  conventions  to  which  Bosnia  and  Herzegovina  is  a 
signatory.  

The  level  of  alignment  on  EU  climate  acquis  is  limited.  Bosnia  and  Herzegovina  does  not 
have  a  separate  state-level  law  on  climate  change.  The  legal  basis  for  action  in  the  field  of 
climate  in  the  Republika  Srpska  entity  is  a  provision  in  the  Law  on  Air  Protection.  The 
Federation of Bosnia and Herzegovina does not have any specific legislation on climate. The 
countrywide  2013  climate  change  adaptation  and  low  emissions  development  strategy  for 
Bosnia  and  Herzegovina  covering  the  period  2013  –  2025  is  currently  being  updated. 
However, its implementation consistent with the EU 2030 framework on climate and energy 
policies  and  its  integration  into  all  relevant  sectors  is  very  slow,  mainly  due  to  lack  of 
knowledge  and  institutional  capacity.  Bosnia  and  Herzegovina  is  working  on  a  National 
Adaptation  Plan  (NAP)  which  will  identify  the  necessary  resources  and  set  timelines  for 
implementing  climate  change-related  policies  and  strategies.  The  focus  will  be  on  sectoral 
approaches, on aligning with the climate acquis and on building institutional capacities in the 
medium  term.  Bosnia  and  Herzegovina  has  established  a  working  group  with  the  aim  to 
develop an integrated national energy and climate plan (NECP) in line with the 2018 Energy 
Community recommendation and related policy guidelines. 

As for the UNFCCC, the third national communication, containing the greenhouse gas (GHG) 
inventory  reports  for  2002-2009  and  2012-2013  and  the  second  Biennial  Update  Report  on 
GHG emissions containing inventory data for 2014, was adopted in May 2017 and submitted 
to the UNFCCC secretariat. The responsibility for compiling GHG inventory reports lies with 
the  entity-level  hydro-meteorology  services.  Preparation  has  started  on  the  fourth  national 
report and the third biannual  report on  climate change.  Bosnia and  Herzegovina ratified the 
Paris Agreement in April in December 2016 and should now give priority to implementing its 
National  Determined  Contribution  (NDC)  as  specified  in  its  first  report  of  March  2017  to 
UNFCCC.  

159 

 
Bosnia and Herzegovina needs to align with the climate acquis including the EU Monitoring 
and  Reporting  Regulation,  the  directives  on  fuel  quality,  ozone  depleting  substances, 
fluorinated  gases,  carbon  capture  and  storage  and  other  relevant  legislation.  Bosnia  and 
Herzegovina  has  not  ratified  the  2016  Kigali  amendment  to  the  Montreal  Protocol  on 
Substances  that  Deplete  the  Ozone  Layer  which  entered  into  force  in  January  2019. 
Administrative  capacities  of  the  respective  ministries  and  bodies  at  all  levels  need  to  be 
strengthened significantly, and particularly in support of the implementation of NDC.  

Bosnia and Herzegovina is at an early stage of preparation / has some level of preparation 
in  the  area  of  environment  and  climate  change.  Following  the  adoption  of  the  countrywide 
environmental  approximation  strategy  for  Bosnia  and  Herzegovina,  the  country  needs  to 
strengthen  and  fully  implement  a  countrywide  coordinated  and  harmonised  approach  in 
strategic  planning  and  legislation  in  the  environment  sector  and  all  sub-sectors,  aiming  at 
further alignment with the EU acquis at all levels of government. Bosnia and Herzegovina has 
to  establish  a  functioning  air  monitoring  network  throughout  the  country  and  ensure 
harmonised collection of data in order to take appropriate measures against air pollution. 

On climate change, Bosnia and Herzegovina should considerably strengthen its administrative 
capacities  across  the  country  and  improve  inter-sectoral  cooperation  to  (i)  address  climate 
change in a systematic manner that goes beyond the current project-by-project approach and 
(ii) ensure further alignment with climate acquis and enable its efficient implementation and 
enforcement. 

In the coming year, Bosnia and Herzegovina should: 

  start  the  process  of  implementing  the  adopted  countrywide  Bosnia  and  Herzegovina 
environmental  approximation  strategy,  and  accordingly  enhance  the  legal  framework, 
strengthen administrative capacity and monitoring systems and improve inter-institutional 
coordination among all authorities on environmental protection; 

  formalise  procedures  for  the  appointment  and  functions  of  the  national  focal  point  for 
Bosnia  and  Herzegovina  for  the  implementation  of  all  environmental  conventions  to 
which Bosnia and Herzegovina is a signatory;  

  start  implementing  the  Paris  Agreement  by  putting  in  place  policies  and  measures  to 
deliver  on  its  NDC,  update  and  implement  the  climate  change  adaptation  and  low 
emissions development strategy and start to develop an integrated NECP in line with the 
Energy Community recommendation.  

Chapter 28: Consumer and health protection 

EU rules protect consumers’ economic interests and in relation to product safety, dangerous 
imitations and liability for defective products. The EU also ensures high common standards 
for tobacco control, blood, tissues, cells and organs, and medicines for human and veterinary 
use.  The  EU  also  ensures  high  common  standards  for  upholding  patients’  rights  in  cross-
border healthcare and tackling serious cross-border health threats  including  communicable 
diseases. 

The  SAA  provides  for  enhanced  cooperation  between  the  EU  and  Bosnia  and  Herzegovina 
with the aim of aligning consumer protection standards in Bosnia and Herzegovina with those 
of the EU, including by means of active consumer protection and efficient law enforcement. 

According  to  the  constitutional  and  legal  framework,  the  competences  for  consumer 
protection are exercised by the state level, the two entities and Brcko District: the state level 

160 

 
 
has  legislation  in  place  which  is  applied  in  the  two  entities,  cantons  and  Brčko  District 
alongside their own legislation regulating certain issues in this area. For health protection the 
competences  rest  predominantly with  the two  entities, cantons and  Brčko District.  The state 
level  has  mainly  a  coordination  function,  and  represents  and  commits  the  country  at 
international level, whereas there is no state-level legislation or strategy in this area. 

As  regards  consumer  protection,  at  state  level  the  Ministry  of  Foreign  Trade  and  Economic 
Relations, the Market Surveillance Agency and the Ombudsman for Consumer Protection are 
the lead institutions for consumer protection, while at the entity level these are the Federation 
Ministry of Trade and the Republika Srpska Ministry of Trade and Tourism. In Brčko District 
the Department  of  Economic  Development,  Sports  and  Culture  is  in  charge.  Competent 
inspection authorities are also in place at entity, cantonal and Brčko District level. In addition, 
consumer protection associations have an important role in this area.  

In the area of health protection, at state level the Ministry of Civil Affairs has a coordinating 
role and deals mainly with the country’s international obligations, while the entity Ministries 
of Health and 10 cantonal ministries are in charge of health protection.  

The  legal  framework  for  consumer  protection  is  enshrined  in  the  Law  on  consumer 
protection,  adopted  in  2006  at  state  level.  The  country  needs  to  ensure  alignment  with  the 
significant  developments  in  the  EU  acquis.  Consumer  protection  policy  in  the  country 
consists  of  a  series  of  measures  intended  to  protect  consumers’  health  and  safety,  and 
economic  interests,  to  ensure  that  damage  compensation  is  paid  to  consumers  and  inform 
consumers.  The  Law  on  consumer  protection  applies  in  the  Federation  entity  and  Brčko 
District, whereas the Republika Srpska entity applies its separate law on consumer protection. 

A  Consumer  Protection  Council  is  in  place  acting  as  an  expert  and  advisory  body  of  the 
Council  of  Ministers.  The  basic  tasks  of  this  Council  include  proposing  an  Annual  State 
Consumer  Protection  Programme,  monitoring  the  implementation  of  that  programme, 
defining  the  fundamentals  of  consumer  protection  policy  and  direction  of  the  scope  of 
activities funded from the state budget. It also defines the goals and tasks related to educating, 
informing  and  raising  awareness  of  consumer  protection.  There  are  16  consumer  protection 
organisations in the country – 7 in the Federation entity, 8 in the Republika Srpska entity and 
1  in  the  Brčko  District.  A  consumer  is  entitled  to  court  and  out  of  court  protection  and  to 
alternative dispute resolution. 

As regards product safety, the market surveillance system in the country is composed of the 
Market Surveillance Agency and other administrative authorities at entity and Brčko District 
level.  The  market  surveillance  system  authorities  check  and  ensure  the  compliance  of 
non-food  products  that  are  placed  on  the  market  with  regard  to  the  product  safety 
requirements.  They  demonstrate  a  good  level  of  cooperation  and  coordination  through  the 
regular  work  of  the  coordination  board,  though  further  improvement  is  needed.  The  legal 
framework consists of the Law on market surveillance and the Law on general product safety 
adopted at state-level. Full alignment of the legislation with the acquis needs to be ensured. 

As regards public health, there is no health strategy at the state level or in the Brčko District. 
In  the  Federation  entity  the  strategic  plan  for  health  development  expired  in  2018.  The 
Republika Srpska entity has a policy for improvement of health of the population valid until 
2020. Three cantons (Zenica-Doboj, Sarajevo and Herzegovina-Neretva) have developed their 
own strategies. There is no harmonisation between the strategic documents developed at the 
different levels of decision-making. The relevant legislation is not aligned with the EU acquis 
across the country. 

161 

 
International reporting is performed by the Ministry of Civil Affairs, which collates the data 
collected by healthcare institutions in the entities and Brčko District. There is limited capacity 
for  statistical  governance  as  a  prerequisite  for  evidence-based  policy  due  to  lack  of 
harmonisation and cooperation between the different levels of government.   

Legislation  on  tobacco  control  policies  at  the  level  of  the  entities  and  Brčko  District  is  not 
aligned  with  the  relevant  EU  acquis.  Bosnia  and  Herzegovina  is  a  party  to  the  Framework 
Convention  on  tobacco  control,  but  this  convention  is  not  fully  implemented  due  to  lack  of 
systematic  monitoring.  Bosnia  and  Herzegovina  has  not  ratified  the  protocol  to  eliminate 
illicit trade in tobacco products. 

Legislation  on  the  protection  of  the  population  against  communicable  diseases  needs  to  be 
aligned with the EU acquis at all level of government. Measures to promote healthy lifestyles 
in  connection with  the prevention of non-communicable diseases  are regulated and partially 
implemented by the competent institutions of the entities and Brčko District. These measures 
are implemented in cooperation with international organisations and civil society. 

The  legal  framework  regulating  the  areas  of  blood,  tissues,  cells  and  organs,  at  entity  and 
Brčko  District  level  needs  to  be  aligned  with  the  EU  acquis.  The  entities  have  established 
institutes for transfusion medicine. Transplantation programmes are organised at entity level 
with  very  limited  cooperation  between  them.  The  country  does  not  have  the  necessary 
administrative capacities, including human and material resources, to fulfil the requirements 
laid down in the EU acquis on human organ, tissue and cell transplantation. 

As mentioned in Chapter 23 (Judiciary and fundamental rights), Bosnia and Herzegovina has 
a  network  of  74  community-based  mental  health  centres  with  multi-disciplinary  teams  and 
some of them with additional specialists. Beds are available on psychiatric wards in general 
hospitals for acute cases, and secondary and tertiary healthcare services are provided by the 
teaching clinical centres. A special forensic psychiatric hospital provides treatment to forensic 
patients from across the country. 

Preventative  measures  in  respect  of  drug  abuse  prevention  and  harm  reduction  are 
implemented through education and NGO activities, although these efforts are not systematic. 
Rehabilitation  and  social  reintegration  programmes  have  been  introduced  unequally  in 
different parts of the country and there is a need to introduce a more systematic approach.           

As  regards  cancer  screening,  Bosnia  and  Herzegovina  has  no  countrywide  cancer  control 
plan, or a countrywide early detection programme. At the entity level, the Federation has no 
systematic solution for cancer registers or screening programmes for the treatment of cancer, 
due  to  legislative  imbalance  and  limited  financial  capacities.  Both  entities  have  cancer 
registers.  The  Republika  Srpska  entity  has  an  early  detection  programme  in  place.  Brčko 
District has no register or early detection programmes. 

There  is  no  countrywide  plan  for  rare  diseases.  Entity  strategies  exist  with  a  timeframe  for 
implementation until 2020, but their implementation is limited. There is no register in Brčko 
District and some cantons. 

Bosnia and Herzegovina is at an early stage of preparation in the field of consumer protection 
and public health. 

Special attention should be paid to aligning the legislation on consumer protection at all levels 
with the EU acquis and ensuring its proper enforcement. In the area of public health, Bosnia 
and  Herzegovina  should  make  additional  efforts  to  establish  an  effective  system  of 
coordination  and  cooperation  between  different  levels  of  government  and  further  align  its 
legislation with the EU acquis. 

162 

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

  adopt  legislation  at  all  levels  prohibiting  smoking  in  public  places  in  line  with  the  EU 
acquis and ratify the protocol to eliminate illicit trade in tobacco, and start to enforce both 
measures;  

  conduct an assessment on the status of communicable diseases and establish an oversight 
system  in  the  field  of  substances  of  human  origin  with  a  view  to  ensuring  efficient 
coordination in the whole country; 

  align the state-level Law on consumer protection with the EU acquis. 

Chapter 29: Customs union 

All Member States are part of the EU customs union and follow the same customs rules and 
procedures.  This  requires  legislative  alignment,  adequate  implementing  and  enforcement 
capacity, and access to the common computerised customs systems. 

Under the SAA a free-trade area between Bosnia and Herzegovina and the EU is established 
with  a  progressive  removal  of  customs  duties  on  a  wide  range  of  products.  The  Agreement 
requires  Bosnia  and  Herzegovina  to  gradually  align  its  customs  system  and  customs 
legislation to that of the EU. The SAA also includes provisions on  rules of origin, which have 
to be complied with in order to benefit from trade preferences. 

According  to  the  constitutional  and  legal  framework,  in  Bosnia  and  Herzegovina  customs 
policy is an exclusive competence of the state level.  

The  Indirect  Taxation  Authority  (ITA)  is  the  competent  body  in  charge  of  implementing 
customs legislation and policies, while the Ministry of Foreign Trade and Economic Relations 
is  responsible for  customs  policy.  The  ITA  is  an  autonomous  administrative  organisation 
responsible  for  its  activities,  through  its  governing  board,  to  the  Council  of  Ministers  of 
Bosnia and Herzegovina. See also Chapter 16 on taxation.  

The  customs  legislation  is  regulated  by  the  2003  Law  on  customs  policy  and  its 
implementing  provisions,  the  Law  on  customs  tariff  and  the  Law  on  customs  offences.  The 
2015 Law on customs policy, which is partially aligned with the acquis, is not implemented. 
Further alignment with the Union Customs Code is needed, notably on custom procedures and 
simplified  procedures.  The  2015  Customs  Policy  Law  provides  for  the  introduction  of 
authorised  economic  operators  and  for  additional  simplified  customs  procedures.  However, 
these require use of the electronic signature, which is not operational on a countrywide basis. 
This leads to difficulties in the practical implementation of taxation and customs legislation. 

The  customs  tariff  of  Bosnia  and  Herzegovina  is  harmonised  with  the  Combined 
Nomenclature  (CN).  The  system  of  customs  valuation  in  Bosnia  and  Herzegovina  is 
harmonised  with  EU  customs  valuation  rules.  Bosnia  and  Herzegovina  implements 
preferential rules of origin with the EU, CEFTA, EFTA and Turkey. Furthermore,  it applies 
diagonal  cumulation  with  the  EU  and  other  countries  subject  to  the  EU  stabilisation  and 
association process. The status of approved exporter also exists. 

The country is an observer in the Common Transit Convention and intends to join it once it 
has  met  all  legal  and  technical  requirements.  Current  transit  procedures  used  in  Bosnia  and 
Herzegovina are the TIR (Transports Internationaux Routiers - International Road Transports) 
and  ATA  (Admission  Temporaire/Temporary  Admission)  carnets,  as  well  as  a  simplified 
transit procedure in line with the acquis, i.e. the Union Customs Code (UCC).   

163 

 
 
The  country  should  also  continue  aligning  its  provisions  on  the  protection  of  intellectual 
property  rights  (IPR)  in  the  area  of  customs  enforcement.  See  also  Chapter  7  intellectual 
property law.   

With regard to administrative and operational capacity, the ITA is the competent body in 
charge  of  customs  policy  implementation.  It  requires  substantial  strengthening  of  its 
administrative  capacity  both  in  qualitative  and  quantitative  terms.  Bosnia  and  Herzegovina 
needs  to  progressively  align  its  systems  with  EU  customs  requirements,  such  as  the  new 
computerised  transit  system  (NCTS)  and  internal  control  standards  (ICS).  The  risk  analysis 
capacity  is  hampered  by  an  insufficient  IT  system.  The  customs  authorities  perform  a  high 
percentage of physical controls. 

Bosnia and Herzegovina is participating in the Customs 2020 and Fiscalis 2020 programmes. 
The ITA has new adequate premises for its customs laboratory. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  area  of  customs  union. 
Customs legislation is not fully aligned with the acquis.  

Bosnia  and  Herzegovina  needs  to  further  align  its  2015  Law  on  customs  with  the  Union 
Customs Code. The administrative and operational capacity of the ITA needs to be improved 
by continuously adapting its structure and increasing its resources, in order to enforce customs 
legislation and make sure that procedures and working methods are implemented effectively.  

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

  implement  the  2015  Law  on  Customs  Policy;  and  eliminate  administrative  burdens  in 
order  to  ensure  the  interoperability  of  the  electronic  signature  system  on  a  countrywide 
basis;  

  reinforce the administrative and operational capacity of ITA;  
  increase  post-clearance  controls  based  on  risk  analysis,  expand  use  of  simplified 
interconnectivity  and 

procedures  for  reliable  economic  operators  and  upgrade 
interoperability with the EU IT systems and requirements.  

Chapter 30: External relations 

The  EU  has  a  common  trade  and  commercial  policy  towards  third  countries,  based  on 
multilateral and bilateral agreements and autonomous measures. There are also EU rules in 
the field of humanitarian aid and development policy. 

The SAA includes  a core trade part which establishes a free-trade area between  Bosnia and 
Herzegovina and the EU. It includes provisions requiring the Parties to act in accordance with 
the rules of the WTO or relevant international obligations. Bosnia and Herzegovina is also a 
member of the Central European Free Trade Agreement (CEFTA). 

According  to  the  constitutional  and  legal  framework,  the  state  level  has  exclusive 
competences  in  the  areas  covered  by  this  chapter  as  regards  the  conclusion  of  trade  and 
investment agreements  with other countries and with international organisations. In addition 
to the state-level Law on policy of foreign direct investment, the two entities also have laws 
on foreign investments. The state-level competence for development policy and international 
humanitarian aid is exercised only to a very limited extent. 

At  state  level  the  Ministry  of  Foreign  Trade  and  Economic  Relations  is  responsible  for 
external trade issues and is leading the negotiations on WTO accession and other trade-related 
agreements. On development policy and humanitarian aid for other countries, the Ministry of 

164 

 
 
Foreign Affairs and the Ministry of Finance are in charge, but are neither particularly active 
nor provide any significant funding. 

Upon  accession  to  the  EU,  Bosnia  and  Herzegovina  will  be  bound  by  the  common 
commercial policy and will have to apply the customs union, common customs tariff and all 
the  free  trade  agreements  (FTAs)  and  autonomous  (preferential  and  non-preferential)  trade 
regimes that the EU grants to certain non-EU countries; this includes the Generalised Scheme 
of  Preferences  (GSP).  Bosnia  and  Herzegovina  will  also  have  to  terminate  all  its  current 
preferential  trade  agreements  with  third  countries  and  bring  all  other  agreements,  including 
non-preferential  trade  agreements,  in  line  with  the  obligations  imposed  by  EU  membership. 
Moreover,  Bosnia  and  Herzegovina  will  become  a  party  to  the  European  Economic  Area 
(EEA) and will have to apply all the EU’s international trade agreements. 

Bosnia and Herzegovina is not a member of the World Trade Organisation (WTO), although 
membership  negotiations  are  at  a  very  advanced  stage.  The  Russian  Federation  is  the  only 
WTO member that has not completed its bilateral negotiations with Bosnia and Herzegovina 
on  market  access  for  goods  and  services.  The  Russian  Federation  has  also  raised  in  the 
multilateral  discussions  one  outstanding  issue  on  the  need  to  amend  the  legislation  on  the 
quality  of  liquid  petroleum  fuels,  a  decision  that  needs  to  be  approved  by  the  Bosnia  and 
Herzegovina’s  Council  of  Ministers.  Bosnia  and  Herzegovina’s  commitments  under  the 
General Agreement on Tariffs and Trade (GATT) and under the General Agreement on Trade 
in Services (GATS) should in principle be aligned to the largest extent with those of the EU.  
Upon accession to the EU, Bosnia and Herzegovina will have to apply the Common Customs 
Tariff  of  the  European  Union  and  the  acquis  on  trade  in  services  and  the  EU’s  WTO 
commitments will supersede those of Bosnian and Herzegovina.  Therefore, depending on the 
final  terms  of  the  country’s  accession  to  the  WTO,  Bosnia  and  Herzegovina’s  WTO 
commitments may have to be modified upon accession to the EU. 

The average Bosnia  and Herzegovina  ad  valorem  tariff  rate  applied  is  9.3% for  agricultural 
products,  2.9%  for  fish  and  fishery  products  and  5.8%  for  industrial  goods,  with  an  overall 
average  of  6.3%.  The  EU  average  most  favoured  nation  (MFN)  ad  valorem  tariff  rate  is 
14.1% for agricultural products, 12.2% for fish and fishery products and 4.3% for industrial 
goods,  with  an  overall  average  of  6.3%.  A  Bosnia  and  Herzegovina  law  on  foreign  trade 
policy  and  secondary  legislation  are  in  place  and  include  provisions  on  anti-dumping, 
countervailing and safeguard measures.  

The export credits scheme in Bosnia and Herzegovina is operated solely by the Export Credit 
Agency of Bosnia and Herzegovina (IGA), which provides short-term export credit insurance. 
The  IGA  also  provides  short-term  export  credit  support  for  exports  to  the  EU.  The  OECD 
Arrangement  on  Officially  Supported  Export  Credits  is  the  framework  that  the  IGA  applies 
when assessing and classifying risks.  The IGA is a member of the Prague Club of the Berne 
Union.  In  line  with  EU  membership  requirements,  Bosnia  and  Herzegovina  will  have  to 
ensure full alignment of its short-term export credit insurance system with the EU competition 
rules.  

Concerning  dual-use  export  controls,  Bosnia  and  Herzegovina  applies  export  controls  on 
dual-use  goods in  accordance with  its 2016  Law on the control of foreign trade of dual-use 
goods  and  the  list  of  dual-use  goods  adopted  in  2017.  Bosnia  and  Herzegovina  is  not  a 
member of the multilateral export control regimes (such as the Wassenaar Arrangement) that 
could facilitate preparations to implement the acquis on dual-use goods export control. Bosnia 
and  Herzegovina  is  not  a  member  of  the  Kimberley  process  and  does  not  control  trade  in 
rough  diamonds.  In  line  with  EU  membership  requirements,  Bosnia  and  Herzegovina  will 
need to apply relevant EU regulations governing this field. 

165 

 
As regards bilateral agreements with third countries, Bosnia and Herzegovina has been  a 
member of the Central  European Free Trade Agreement  (CEFTA) since  May  2007.   It  also 
has  a  free  trade  agreement  with  the  European  Free  Trade  Association  (EFTA);  and  has 
concluded bilateral FTAs with Turkey and Iran.  

Bosnia and Herzegovina is implementing 42 bilateral investment treaties (BITs), 20 of which 
are with EU Member States. Those agreements will become incompatible with the Treaty on 
the  Functioning  of  the  European  Union  (TFEU)  in  the  event  of  Bosnia  and  Herzegovina’s 
accession  to  the  EU.  As  regards  agreements  with  non-EU  countries,  from  the  day  of  its 
accession  to  the  EU,  Bosnia  and  Herzegovina  will  need  to  implement  Regulation  (EU)  No 
1219/12  establishing  transitional  arrangements  for  bilateral  investment  agreements  between 
Member  States  and  third  countries.  The  BITs  which  are  incompatible  with  the  acquis  will 
have to  be brought  in  line with  the  acquis or terminated. Bosnia  and Herzegovina has been 
implementing  29  agreements  on  trade  and  economic  cooperation.  The  country  has  laws  in 
place for anti-dumping actions and countervailing measures as to offset the injury caused by 
subsidised imports. Upon EU accession, Bosnia and Herzegovina will have to repeal national 
legislation related to its trade defence instruments and measures based on this legislation. 

With  regard  to  administrative  capacity,  future  participation  in  EU  decision-making 
mechanisms  on  trade  and  on  the  implementation  and  enforcement  of  the  acquis  requires 
Bosnia  and  Herzegovina  both  to  further  strengthen  the  administrative  capacity  and  improve 
cooperation and coordination between ministries and different levels of competent authorities.  

Bosnia and Herzegovina has no legislation on development policy.   

As  regards  humanitarian  aid,  Bosnia  and  Herzegovina  is  a  recipient  of  aid  programmes 
rather  than  a  humanitarian  aid  donor.  To  date  Bosnia  and  Herzegovina  has  provided  only 
limited  support  to  non-EU  countries  on  an  ad-hoc  basis,  and  participates  in  some  United 
Nations programmes dealing with humanitarian work with voluntary contributions There is no 
particular  legislation  and  policy  on  humanitarian  aid  and/or  development  cooperation.  The 
country has no dedicated budget line for this area, if ad-hoc humanitarian aid is approved by 
the government it is paid out from the budgetary reserve. Dedicated administrative structures 
are not in place. Both legislation and administrative capacities should be established. 

Bosnia and Herzegovina is encouraged to establish a legal framework covering international 
cooperation and development policy, as well as humanitarian aid towards non-EU countries in 
accordance with EU policies and principles. The country is also encouraged to build dedicated 
administrative structures. 

Bosnia and Herzegovina has some level of preparation in the area of external relations. 

Bosnia and Herzegovina needs to ensure that its commercial policy and commitments to third 
countries  and  international  organisations  are  aligned  and  coordinated  with  those  of  the  EU. 
The country will have to incorporate the horizontal “REIO clause (Regional and International 
Organisation)” in all bilateral investment treaties to be signed with non-EU Member States or 
negotiate  a  more  comprehensive  approach  in  line  with  EU  law  if  necessary.  Also,  when 
terminating  the  bilateral  investment  treaties  (BITs)  which  are  incompatible  with  EU  law, 
Bosnia and Herzegovina will need to take into account the existence of the “interim clauses”, 
i.e. the gradual termination clauses to be used to negotiate the removal of such clauses prior to 
termination. 

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

  finalise the accession to the WTO;  

166 

 
  start the process that will lead to the  establishment of a development and humanitarian aid 
policy,  as  Bosnia  and  Herzegovina  will  need  to  create  resilient  capacities  to  fulfil  the 
obligations of EU membership in this area. 

Chapter 31: Foreign, security and defence Policy 

Member  States  must  be  able  to  conduct  political  dialogue  under  EU  foreign,  security  and 
defence policy, to align with EU statements, to take part in EU actions and to apply agreed 
sanctions and restrictive measures. 

Under the SAA, Bosnia and Herzegovina is to strengthen cooperation with the EU in the fight 
against  the  proliferation  of  weapons  of  mass  destruction  and  the  fight  against  terrorism,  by 
taking  steps  to  accede  to  relevant  international  instruments  and  to  implement  international 
obligations  in  these  areas.  Regional  cooperation  and  the  development  of  good  neighbourly 
relations, cooperation in the areas covered by the EU’s Common Foreign and Security Policy 
(CFSP)  of  the  EU,  and  full  cooperation  with  the  International  Criminal  Tribunal  for 
Yugoslavia constitute essential elements of the agreement. 

According  to  the  constitutional  and  legal  framework,  the  competences  for  foreign,  security 
and  defence  policy  rest  exclusively  at  the  state  level.  At  state  level,  the  Presidency  is 
responsible  for  conducting  foreign  policy  and  representing  Bosnia  and  Herzegovina  in 
international  and European institutions and organisations, negotiating, denouncing and, with 
the consent of the Parliamentary Assembly, ratifying treaties. The Ministry of Foreign Affairs 
is in charge of implementing the foreign policy as defined by the Presidency. The Presidency 
exercises supreme command and control over the Armed Forces of Bosnia and Herzegovina 
whereas the command and control chain continues to the Minister of Defence and the Chief of 
Joint  Staff  of  the  Armed  Forces.  The  Ministry  of  Defence  is  responsible  for  the  overall 
strategy  and  policy  of  the  defence  system  and  for  ensuring  implementation  of  legislation  in 
the  area  of  defence.   The  Joint  Staff  of  Bosnia  and  Herzegovina’s  Armed  Forces  is 
responsible  for  planning,  organising  and  implementing  the  directives  and  orders  of  the 
Minister of Defence 

Bosnia and Herzegovina’s Strategy of Foreign Policy 2018-2023 outlines four pillars: security 
and stability, economic prosperity, the protection of the interests of Bosnia and Herzegovina’s 
citizens abroad and international legal cooperation as well as the promotion of the country in 
the world. The main strategic goals and priorities are: full membership in the EU, activation 
of NATO Membership Action Plan, fight against terrorism, cooperation at regional level, and 
bilateral and multilateral cooperation. At the same time, the implementation of the country’s 
Foreign Policy Strategy  goals  is  affected by frequently divergent  positions expressed by the 
three members of the Presidency. 

Administrative  structures  in  the  area  of  foreign,  security  and  defence  policy  are  mostly 
adequate  but  their  further  strengthening  will  be  needed.  This  includes  the  need  to  appoint 
within the Ministry for Foreign Affairs the persons in charge with performing the functions of 
‘political director’ and of ‘European correspondent’ as well as ensure the adequate training of 
the diplomatic staff. The diplomatic and consular service consists of 44 embassies, 6 missions 
and 6 general consulates. In the MFA, both in the headquarters and diplomatic and consular 
missions,  there  is  a  total  of  658  workplaces  with  550  persons  currently  being  employed. 
Regulation  and  practices  applied  in  the  process  of  appointment  of  Bosnia  and  Herzegovina 
diplomatic and consular network negatively impact on the capacity of the Ministry of Foreign 
Affairs  to  perform  its  tasks  effectively,  eventually  resulting  in  adverse  effects  on  the 
implementation of the overall country’s foreign policy objectives.  

167 

 
 
Bosnia  and  Herzegovina  has  established  an  intensive  political  dialogue  with  EU  Member 
States  as  well  as  neighbouring  countries  and  within  regional  initiatives.  Relations  between 
Bosnia and Herzegovina and other countries are generally good. At the same time a number 
of outstanding issues exist, notably when it comes to Croatia and Serbia where border matters 
needs to be addressed. Bosnia and Herzegovina signed agreements on cooperation in the EU 
accession process with Montenegro, Serbia, Croatia and North Macedonia. It plays a broadly 
constructive  role  in  regional  cooperation  in  Southeast  Europe  and  actively  participates  in 
initiatives such as the Western Balkans Six, Brdo-Brijuni Process, CEFTA South East Europe 
Cooperation  Process  or  Central  European  Initiative.  Bosnia  and  Herzegovina  does  not 
recognise  Kosovo  as  an  independent  state  and  maintains  a  very  strict  visa  regime.  The 
Ministry of Foreign Affairs issues 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. 

Bosnia  and  Herzegovina  has  expressed  its  commitment  to  the  objectives  of  the  Common 
Foreign and Security Policy of the EU outlined in the Global Strategy of June 2016 and is 
willing to contribute to the implementation of the Strategy in accordance with its capacities. 
The country expressed its readiness to act regionally and to be a reliable partner of the EU. 
From  beginning  of  2008  until  the  end  of  2018,  Bosnia  and  Herzegovina  aligned  with  541 
relevant EU declarations and Council decisions out of a total of 809, representing an average 
alignment rate of 67%. From beginning of March 2018 to end of February 2019, Bosnia and 
Herzegovina aligned with 60 out of 86 relevant High Representative declarations on behalf of 
the EU and Council decisions representing an alignment rate of around 70%. 

Bosnia and Herzegovina did not align with High Representative declarations on behalf of the 
EU  and  Council  Decisions  related  to  the  Russian  Federation.  Bosnia  and  Herzegovina 
committed to continue to gradually align its foreign policy with the CFSP and to increasingly 
proceed  with  the  alignment  of  its  positions  with  those  of  the  EU  on  international  issues  as 
required under EU membership obligations.  

Bosnia and Herzegovina ratified the Rome Statute of the International Criminal Court (ICC) 
in  2002.  There  have  not  been  any  instances  where  cooperation  with  the  ICC  has  been 
required. The country initiated in January 2017 the adoption of the draft basis for accession of 
Bosnia and Herzegovina to the amendments to the Rome Statute of the International Criminal 
Court  but  the  completion  of  the  process  is  pending.  These  are  amendments  related  to  war 
crimes, specifically regarding the use of particular weapons-poison, gases, special bullets  as 
well as concerning the inclusion of the crime of aggression. In addition, the country maintains 
a bilateral immunity agreement with the United States, granting US citizens exemptions from 
the jurisdiction of the International Criminal Court. In doing so, it does not comply with the 
EU  common  positions  on  the  integrity  of  the  Rome  Statute  or  with  the  related  EU  guiding 
principles on bilateral immunity agreements. The country needs to align with the EU position. 

Concerning restrictive measures, after aligning with a related EU decision and following the 
approval  of  the  Bosnia  and  Herzegovina’s  Presidency,  the  Ministry  for  Foreign  Affairs 
submits for adoption to the country’s Council of Ministers the proposal for an implementing 
decision.  An  inter-ministerial  working  group  for  monitoring  the  implementation  of  the 
international restrictive measures is in place. In addition, the Ministry for Foreign Trade and 
economic  relations  coordinates  the  delivery  of  the  export  licenses  for  arms  and  military 
equipment. Such licences need prior agreement of the ministries for Foreign Affairs, Security 
and Defence. Bosnia and Herzegovina respects arms embargoes as provided for under the lists 
of the UN Security Council, the OSCE and the EU.   

168 

 
Bosnia  and  Herzegovina  supports  all  EU  measures  and  the  long-term  and  short-term 
instruments in the area of conflict prevention, acts in accordance with the principles of the UN 
Charter  and  rules  of  international  law,  and  fully  supports  the  EU  Programme  for  the 
Prevention  of  Violent  Conflicts  endorsed  by  the  Göteborg  European  Council  and  the 
Communication from the Commission on Conflict Prevention. Bosnia and Herzegovina does 
not  possess any  chemical,  biological  or nuclear  weapons  and there  are no capacities for the 
production  of  these  weapons.  The  country  has  ratified  a  series  of  treaties  and  international 
agreements  in  this  area  and  participates  in  related  international  activities.  However,  Bosnia 
and  Herzegovina  has  not  joined  international  control  regimes  such  as  the  Wassenaar 
Arrangement, the Australia Group, the Missile Technology Control Regime and the Nuclear 
Suppliers Group.  

With regard to trade in conventional weapons, military equipment (WME) and dual use items, 
the country has overall legal and institutional framework broadly in line with the EU acquis. 
However,  further  improvements  are  needed  regarding  the  monitoring  regime  of  WMEs 
produced and traded within the country.  

Bosnia  and  Herzegovina  ratified  the  Chemical  Weapons  Convention  (CWC)  in  1997. 
Legislation on the implementation of the Convention on the Prohibition of the Development, 
Production,  Stockpiling  and  use  of  Chemicals  and  on  their  Destruction  is  in  place  together 
with a state-level Coordination Body on CWC-related matters.  

A countrywide 2016-2020 Strategy for Control of Small Arms and Light Weapons (SALW) 
developed on the basis of relevant international standards is in place, together with an action 
plan.  At  the  same  time,  some  issues  need  to  be  tackled  in  this  area.  The  provisions  of  the 
Bosnia  and  Herzegovina  Law  on  Marking  of  SALWs  and  associated  ammunitions  do  not 
cover the weapons of the national security forces which were in their possession prior to the 
entry  into  force  of  the  law.  All  weapons  of  national  security  forces  should  be  marked  and 
registered into a single registry to  ensure adequate traceability of SALWs in the country. In 
addition, Bosnia and Herzegovina should develop post-manufacture marking requirements for 
seized or confiscated weapons, and weapons earmarked for deactivation.  

Regarding  the  cooperation  with  international  organisations  Bosnia  and  Herzegovina  is  a 
member of and actively participates in the work of the United Nations (1992), the Council of 
Europe  (2002),  the  Organisation  for  Security  and  Cooperation  in  Europe  (1992),  the  World 
Bank  (1993),  the  International  Monetary  Fund  (1992),  and  other  major  international 
organisations.  It  acts  as  an  observer  in  the  Non-Aligned  Movement  (1994)  and  the 
Organisation of  Islamic Cooperation (1994). The country is in the process of negotiating its 
membership  in  the  World  Trade  Organisation.  In  addition,  it  participates  in  NATO’s 
Partnership for Peace Program since 2006 and was invited in November 2018 to submit the 
first annual national programme. Bosnia and Herzegovina also participates in the observation 
of elections in other countries as part of the OSCE, including the observation delegations of 
the Council of Europe.  

On  security  measures,  an  agreement  on  security  procedures  for  the  exchange  of  classified 
information is in place since October 2004 between the EU and Bosnia and Herzegovina. The 
Agreement was ratified in February 2006 and applies to classified information and materials 
in  any  form,  either  delivered  or  exchanged  between  the  EU  and  Bosnia  and  Herzegovina. 
Some regular exchanges of classified information, up to the level of EU Restricted, are taking 
place.  

Regarding the common security and defence policy (CSDP), an agreement between Bosnia 
and  Herzegovina  and  the  EU  on  the  establishment  of  the  framework  for  the  country's 
participation  in  both  civilian  and  military  crisis  management  operations.  Bosnia  and 

169 

 
Herzegovina  supports  the  EU’s  efforts  and  activities  from  the  Headline  Goal  2010,  in 
particular  the  strengthening  of  the  capacity  to  respond  quickly  to  humanitarian  rescue 
operations and peacekeeping missions. Since 2017, two members of Bosnia and Herzegovina 
armed forces have been involved in the EU Training Mission (EUTM) in the Central African 
Republic.  The  contingents  of  Bosnia  and  Herzegovina  also  participate  in  UN  and  NATO 
missions in Congo, Mali and Afghanistan.  

Regarding the Armed Forces of Bosnia and Herzegovina, a Defence Review was adopted in 
2016, providing for an action plan for the modernisation of the military. The implementation 
of the Defence Review has been delayed by political divisions and coalition talks following 
the October 2018 general elections. The financing threshold for the 2019 Defence budget, as 
prescribed  in the Budget Framework Document 2019-21, represents less than 1% of GDP. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  area  of  the  foreign,  security 
and defence policy.  

Bosnia and Herzegovina has to  step up its  alignment with  the EU foreign  policy statements 
and  restrictive  measures  towards  third  countries  and  entities.  It  will  need  to  appoint  the 
persons  in  charge  with  performing  the  functions  of  ‘political  director’  and  ‘European 
correspondent’.  Bosnia  and  Herzegovina  has  to  join  a  number  of  international  arms  control 
regimes  as  well  as  strengthen  the  monitoring  regime  regarding  weapons  and  military 
equipment. Bosnia and Herzegovina should progressively improve its capacities to be able to 
comply  with  EU  membership  obligations  in  the  area  of  the  EU  Common  Security  and 
Defence Policy.  

By granting US citizens exemptions from the jurisdiction of the International Criminal Court, 
Bosnia and Herzegovina does not comply with the EU common positions on the integrity of 
the Rome Statute or with the related EU guiding principles on bilateral immunity agreements 
and needs to align with the EU position.  

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

  develop post-manufacture marking requirements for weapons earmarked for deactivation 

in line with EU standards;  

  improve traceability of seized and confiscated weapons, notably by amending the Bosnia 

and Herzegovina Law on Marking to cover these types of firearms. 

Chapter 32: Financial Control 

The  EU  promotes  the  reform  of  national  governance  systems  to  enhance  managerial 
accountability, sound financial management of income and expenditure, and external audit of 
public funds. The financial  control  rules further protect  the EU’s financial interests against 
fraud in the management of EU funds and the euro against counterfeiting. 

Under  the  SAA,  Bosnia  and  Herzegovina  shall  strengthen  cooperation  with  the  EU  on 
priority areas related to the acquis in the field of public internal financial control (PIFC) and 
external audit. Such cooperation aims to develop PIFC, including financial management and 
control and functionally independent internal audit, and independent external audit systems in 
Bosnia and Herzegovina, by elaborating and adopting relevant regulation. The agreement as 
well stipulates the need to build capacities and training for the relevant institutions with the 
purpose  of  developing  PIFC  and  external  audit,  as  well  as  establish  and  strengthen  central 
harmonisation  units  for  financial  management  and  control  and  for  internal  audit  systems. 
There  are  no  specific  provisions  in  the  SAA  concerning  protection  of  the  EU’s  financial 
interests  and  protection  of  the  euro  against  counterfeiting.  At  the  same  time,  Bosnia  and 

170 

 
 
Herzegovina  has  committed  under  the  SAA  to  ensure  that  its  existing  laws  and  future 
legislation will be gradually made compatible with the EU acquis, and properly implemented 
and enforced. 

According to the constitutional and legal framework the competences for  PIFC and external 
audit  rest  with  the  state  level,  the  two  entities,  and  Brčko  District.  The  state  level,  the  two 
entities  and  Brčko  District  have  their  own  legislation  and  relevant  institutions  on  PIFC  and 
external  audit.  Competent  state  authorities  and  the  procedures  for  protection  of  the  EU’s 
financial  interests  need  to  be  defined,  while  the  Central  Bank  of  Bosnia  and  Herzegovina 
performs  technical  analysis  in  the  area  of  the  protection  of  the  euro  against  counterfeiting. 
While  all  institutions  benefiting  from  public  funds  at  different  levels  of  government  and  in 
public enterprises are expected to implement PIFC, Central Harmonisation Units (CHUs) are 
the main institutions responsible for developing  and disseminating methodological  guidance 
and coordinating PIFC development in the public sector. Supreme Audit Institutions (SAIs) at 
the respective level of government perform external audit of public funds. 

At  the  state  level,  the  CHU  of  the  Ministry  of  Finance  and  Treasury  is  in  charge  of  policy 
development  for  PIFC  of  the  institutions  of  Bosnia  and  Herzegovina.  The  SAI  is 
responsible for external audit of the state budget. At entity level, the CHUs at the Ministries 
of  Finance  and  SAIs  perform  a  similar  role  for  the  institutions  at  the  respective  level  of 
authority.  Brčko  District  has a  Directorate  of  Finance  that  undertakes  basic  CHU  functions 
but currently lacks the legal framework to formally endorse this role and the Office for Audit 
of  the  Public  Administration  and  Institutions  of  this  District  carries  out  external  audit.  A 
Coordination Board of CHUs is responsible for the harmonisation of policies and procedures 
related to public internal financial control. A Coordination Board for the SAIs is in charge of 
coordinating external audit related issues. 

Public internal financial control 

A comprehensive strategic framework for PIFC needs to be developed. Currently, none of 
the three levels of government has updated the previous PIFC strategies for the period beyond 
2018  and  Brčko  District  has  never  endorsed  an  action  plan.  Previous  strategies  focused 
narrowly on financial control rather than on a wider definition of internal control. Bosnia and 
Herzegovina needs to adopt a comprehensive policy approach on PIFC that defines a common 
vision across all levels of government on managerial accountability and internal control. This 
policy vision should be complemented with detailed implementation strategies at state, entity 
and  Brčko  District  level.  The  comprehensive  policy  paper  should  outline  as  well  the 
institutional  responsibilities  and  coordination  structures  for  effective  implementation. 
Furthermore, the enabling conditions for implementing managerial accountability are not fully 
in place, as the countrywide strategic framework on public administration reform is lacking. 
Central  Harmonization  Units  and  institutions  in  charge  of  public  administration  reform  and 
public financial management reform need to coordinate closely in order to ensure a coherent 
approach for the implementation of PIFC with other strategies. A coordinated monitoring and 
reporting framework for all these strategies needs to be put in place. 

On managerial accountability, a clear framework for the strategic planning, the delegation 
of  decision-making,  financial  and  operational  management  responsibilities,  resource 
allocation,  and  reporting  on  the  achievement  of  objectives  needs  to  be  designed  and 
embedded  in  the  administrative  culture.  Although  delegation  of  decision-making  is  legally 
regulated at state level and in the Federation entity, the practice of delegation of managerial 
responsibilities is rare. Both the lack of clear provisions of what constitutes the authority of 
lower  level  managers  as  well  as  a  highly  centralised  system  of  decision-making  hinder 
efficient implementation of the principle of managerial accountability. 

171 

 
The legal framework for the functioning of  internal control is in place at State and entities 
level, except in Brčko District. However the functioning of internal control is generally weak, 
particularly  regarding  risk  management.  The  legal  framework  at  all  levels  will  need  to  be 
further  revised  to  reflect  the  wider  definition  on  internal  control  in  line  with  the  proposed 
policy approach for PIFC development. 

Internal audit is regulated at State and entity levels, except in Brčko District. The criteria for 
establishing  internal  audit  units  exist  at  these  two  levels  of  government  in  line  with 
international  audit  standards.  However,  even  though  the  legal  requirements  are  in  place, 
senior management needs to accept and actively  support internal  audit. The effectiveness of 
internal  audit  practice  is  further  limited  because  internal  auditors  are  often  required  to 
perform financial inspection rather than internal audit in line with the standards. There is no 
systematic, comprehensive programme in place for certification and continuous professional 
development of audit staff. 

Central  harmonisation  units  (CHUs)  have  been  established  at  state  and  entity  levels.  In 
Brčko District, the Directorate of Finance takes on a basic function, but no legal requirements 
for the establishment of a CHU have been adopted at this level of government. CHU staffing 
is  not  sufficient  to  effectively  provide  methodological  guidance,  promote  and  monitor 
reforms. The three CHUs prepare yearly-consolidated reports to their respective governments 
on PIFC implementation.  These reports do not  assess progress  in  implementing the planned 
activities  but  assess  more  generally  progress  in  developing  internal  audit,  focusing  on  its 
organisation rather than on quality. The government at state and entity level should adopt an 
effective  mechanism  to  ensure  adequate  follow-up  to  annual  reports’  recommendations.  In 
Brčko District, the Directorate of Finance, acting as CHU, needs to elaborate and address the 
report  to  the  government.  The  CHUs  should  develop  an  effective  approach  and  start  to 
implement quality reviews on internal control and internal audit implementation.  

External audit 

With  regard  to  constitutional  and  legal  framework,  while  there  is  no  constitutional 
anchorage  of  any  of  the  supreme  audit  institutions  (SAI),  the  functional,  operational  and 
financial independence of the SAIs at all respective levels of government is regulated in the 
specific  SAI  laws  broadly  in  line  with  the  standards  of  the  International  Organisation  of 
Supreme Audit Institutions (INTOSAI). In practice, instances of executive interference in the 
budget setting of SAIs have been observed. 

Institutional  capacity  of  SAIs  needs  to  be  strengthened  across  government  levels.  The 
Federation  entity  faces  a  particular  challenge  in  ensuring  external  audit  coverage  of  its 
cantonal  level.  Professional  development  of  auditors  is  based  on  auditor  education  plans 
adopted by each audit institution and based on guidelines issued by the Coordination Board of 
SAIs.  All  SAIs,  except  the  SAI  of  the  Brčko  District,  are  implementing  their  respective 
strategic development plans. 

As  regards  the  quality  of  audit  work,  the  various  SAIs  have  a  mandate,  which  covers 
financial,  compliance  and  performance  audit.  Audit  manuals  have  been  adopted  broadly  in 
line with the International Standards of Supreme Audit Institutions (ISSAI). As part of their 
audits, the SAIs assess the state of the internal control systems to detect systemic weaknesses. 
However, the proportion of the number of performance audits carried out on the total number 
of audits performed is low. All SAIs have adopted codes of ethics based on the code of ethics 
of INTOSAI. While SAIs have developed quality control procedures, quality assurance is not 
systematically implemented. 

172 

 
The  impact  of  the  audit  work  of  all  SAIs  is  limited.  The  rate  of  implementation  of  audit 
recommendations needs to be improved. SAIs have limited capacities to analyse the reasons 
for  non-implementation  of  their  recommendations  or  to  carry  out  follow-up  audits.  While 
parliaments have procedures in place for examining audit reports, the level of parliamentary 
scrutiny to these reports varies across government  levels. SAIs can also, based on their own 
assessment and decision, perform special audit requested by the parliament. Audit reports are 
published on SAI websites, but a more proactive communication with the media and the wider 
public  to  explain  audit  results,  has  not  been  established.  The  SAIs  cooperate  with  CHUs 
through  joint  meetings  to  raise  awareness  on  PIFC.  However,  Brčko  District  is  only  an 
observer in the Coordination Board. 

Protection of the EU’s financial interests  

Bosnia  and  Herzegovina’s  legislation  on  state,  entity  and  Brčko  District  levels  ensure  some 
degree of acquis alignment. The legislation cover many elements of the Directive 2017/1371 
and its predecessor, the  Convention on the  protection of the  EU’s  financial interests and its 
protocols, such as on the treatment of suspected cases of fraud, money laundering, definitions 
of  active  and  passive  corruption,  misappropriation,  the  liability  of  legal  persons  and  related 
penalties. However, the scope and definitions of the offences are not always in line with the 
Directive:  for  example  in  the  case  of  corruption  and  misappropriation  offence.  Further 
alignment of the legislation is needed, including on the freezing and confiscation of criminal 
assets.  Effective  implementation  and  enforcement  of  the  legislation  will  also  need  to  be 
ensured. 

An  anti-fraud  coordination  service  (AFCOS)  to  facilitate  effective  cooperation  with  the 
Commission  is  not  in  place.  Similarly,  there  is  no  corresponding  AFCOS  network  of 
authorities involved in the protection of the EU’s financial interest. A countrywide anti-fraud 
strategy for the protection of the EU’s financial interest needs to be adopted.  

While  there  is  no  solid  track-record  on  cooperation  with  the  Commission  during 
investigations  and  the  reporting  on  irregularities,  the  State  Investigation  and  Protection 
Agency and Ministry of Finance and Treasury ensure cooperation on an ad-hoc basis. Bosnia 
and Herzegovina does not report on irregularities to the Commission through the Irregularity 
Management System. 

Protection of the euro against counterfeiting  

Bosnia and Herzegovina has not ratified the 1929 Geneva Convention for the suppression of 
counterfeiting  currency.  The  level  of  acquis  alignment  for  technical  aspects  needs  to  be 
determined.  The  Central  Bank  has  a  regulation  in  place  that  obliges  commercial  banks  and 
other  entities  to  withdraw  all  suspect  banknotes  and  coins  from  circulation.  However,  no 
sanctions  are  imposed  for  failure  to  fulfil  this  obligation.  There  is  no  legal  obligation  for 
credit institutions and other payment service providers to ensure that euro banknotes and coins 
are checked for authenticity and that counterfeits are detected.  

The  Central  Bank  of  Bosnia  and  Herzegovina  ensures  technical  analysis  and  classifies 
counterfeit  money  in  national  currency,  but  there  are  no  special  procedures  for  the 
transmission of examples of counterfeit euro banknotes and coins and of other currencies and 
related  data.  Procedures  for  collecting  and  indexing  statistical  data  related  to  counterfeiting 
banknotes  and  coins  need  to  be  established.  No  formal  cooperation  agreements  exist  with 
the European Commission and the European Central Bank.  

Bosnia and Herzegovina is at an early stage in the area of financial control. In the medium-
term, Bosnia and Herzegovina should adopt and implement a comprehensive public internal 
financial  control  policy  in  line  with  a  countrywide  public  administration  reform  strategic 

173 

 
framework. The constitutional anchorage of independence of supreme audit institutions needs 
to be ensured. Functioning of the coordination board of the Supreme Audit Institutions should 
be  improved  and  participation  of  the  SAI  of  Brčko  District  in  this  board  ensured.  Further 
efforts  are  needed  to  address  managerial  accountability  and  to  strengthen  functioning  of 
internal  control  and  internal  audit  for  the  whole  public  sector  and  public  enterprises  at  all 
levels of government. Ensuring high-level political support is instrumental for implementing 
PIFC  reforms.  Bosnia  and  Herzegovina  needs  to  allocate  appropriate  resources  to  internal 
audit function across the public sector.  

In the coming year, Bosnia and Herzegovina should: 

  start  preparing  a  new  medium-term  strategic  policy  paper  for  public  internal  financial 
implementation  of  managerial 
control  with  a  specific  focus  on  definition  and 
accountability  that  spells  out  the  common  vision  and  coordination  structure  for 
implementation of countrywide PIFC policy approach;   

  set-up a formal Central Harmonization Unit in Brčko District and ensure adequate staffing 

of Central Harmonisation Units; 

  ensure more timely and systematic implementation of external audit recommendations at 

state, entity and Brčko District levels. 

Chapter 33: Financial and budgetary provisions 
This  chapter  covers  the  rules  governing  the  funding  of  the  EU  budget  (‘own  resources’). 
These  resources  mainly  consist  of:  (i)  contributions  based  on  the  gross  national  income  of 
each  Member  State;  (ii)  customs  duties;  and  (iii)  a  resource  based  on  value-added  tax. 
Member  States  must  have  the  appropriate  administrative  capacity  to  adequately  coordinate 
and ensure the correct calculation, collection, payment and control of own resources.  

There are no specific rules in the SAA concerning financial and budgetary provisions. At the 
same time, Bosnia and Herzegovina has committed under the SAA to ensure that its existing 
laws  and  future  legislation  will  be  gradually  made  compatible  with  the  EU  acquis,  and 
properly implemented and enforced.  

According to the constitutional and legal framework the competences for the areas covered by 
this chapter rest predominantly with the state level, which has powers for the areas of customs 
and VAT, that are essential elements of the EU’s own resources. The entities send to the state 
level the data necessary to count gross national income; such data is equally relevant for the 
calculation of the future contribution to the EU budget. Law enforcement agencies at all levels 
play a role in fighting tax and customs fraud. 

The  main  actors  at  state  level  are:  the  Indirect  Taxation  Authority,  which  is  in  charge  of 
customs  and  VAT  (see  chapters  16 and  29),  the  Ministry  of  Finance  and  Treasury,  the 
Agency for Statistics (see Chapter 18) and the Central Bank. At entity level, the two statistical 
institutes produce and provide relevant statistics to their counterpart at state level agency so 
that countrywide statistics can be compiled. 

A  coordination  institution  will  need  to  be  appointed  that  is  in  charge  with  the  forecasting, 
calculation and reporting  the level  of the country’s contribution  to  the own resources  of the 
EU or the collection and transfer of the resources to the EU budget and the organisational and 
procedural links between the institutions involved in the own resources system will need to be 
established.  

Bosnia  and  Herzegovina  has  in  place  all  basic  principles  for  the  underlying  policy  areas 
affecting  the  own  resources  system.  A  single  VAT  system  is  in  operation,  while  customs 
duties  are  levied  on  imports,  and  national  accounts  are  partly  harmonised  with  ESA  2010 
standards.  

174 

 
The country’s Indirect Taxation Authority (ITA) is responsible for levying indirect taxes, i.e. 
customs duties, VAT, excise duties and  road toll. Other duties  charged at the border on the 
occasion of imports include administrative fees regulated at state level, as well as inspection-
related fees and charges imposed by the respective entity/district inspection authority.  

ITA  has  an  operational  customs  division  in  place  for  levying  customs  duties  but  its 
administrative capacities and procedures need to be strengthened, in particular as regards risk-
based post-release controls, simplified procedures and the interconnectivity between national 
and EU IT systems.  All payments of indirect taxes are paid into a single account of ITA and 
there  are  no  separate  accounts  to  distinguish  recovered  debts  and  outstanding  debts.  ITA 
maintains  special  registers  for  paid  taxes  and  unpaid  taxes  but  these  are  not  adapted  to  EU 
traditional own resources accounting.  

The  VAT  division  of  ITA  is  in  charge  of  levying  VAT  revenues  generated  through  a 
single-rate VAT of 17% with a rather limited number of exemptions or items that are taxed at 
zero rate. In 2015, gross VAT revenues amounted to EUR 2.2 billion, 60% of the total being 
levied on imports. VAT refunds amounted to roughly one quarter of the total.  

In terms of Gross National Income (GNI) resource, definitions and accounting rules of ESA 
2010 are used for compilation of the GNI at sector level of the general government. National 
accounts  are  adjusted  for  the  value  of  the  non-observed  economy,  following  the  production 
approach. The adjustment  amounts to  some 7.6% of GDP, on average, for the period 2005-
2015, and the calculation is made in line with the OECD – Eurostat manual. A master plan for 
the development of national accounts needs to be adopted as common and coordinated work 
to develop an appropriate national accounts system. Fiscal notifications in line with ESA 2010 
and fiscal accounts need to be compiled and shared with the European Commission. Bosnia 
and Herzegovina authorities should continue to build up national accounts according to ESA 
2010.  

As regards the required administrative infrastructure, the human and administrative resources 
are  insufficient  to  ensure  full  and  correct  application  of  EU  rules  concerning  payments  into 
the  EU  budget  upon  membership  of  the  EU.  Sufficient  coordination  among  administrative 
structures is needed to ensure correct forecasting, calculation, accounting, collection, payment 
and control of own resources. In view of the decentralised administrative set-up of Bosnia and 
Herzegovina  a  coordination  structure  on  own  resources  will  need  to  be  set  up.  The  Fiscal 
Council, a body established to coordinate the country’s fiscal policies is often impeded in its 
work by political disputes and should be strengthened. Capacities for forecasting revenues are 
weak.  

Impact 

Given the country’s GDP level, the impact of Bosnia and Herzegovina’s accession on the EU 
budget  is  expected  to  be  very  limited.  This  applies  to  both  the  receipts  under  various  EU 
expenditure  programmes  and  to  its  expected  contribution  to  the  EU  budget  based  on 
application of the own-resources rules.   

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  in  the  area  of  financial  and 
budgetary provisions. 
Bosnia  and  Herzegovina  needs  to  build  up  well-coordinated  analytical  and  forecasting 
capacities that will be necessary for correct calculation, collection, payment and control of 
own  resources.  Therefore,  it  will  need  to  build  up  a  system  of  national  accounts  and 
strengthen the alignment of its national policies with the VAT and customs acquis.  
In the coming year, Bosnia and Herzegovina should in particular:  
  strengthen the capacity and inter-agency cooperation to combat tax and customs fraud;  

175 

 
  reinforce the ITA capacity to increase post-release controls based on risk analysis;  
  adopt a Master Plan for production of National Accounts for Bosnia and Herzegovina. 

176 

 
 
 
 
 
 
ANNEX I – STATISTICAL ANNEX 
STATISTICAL DATA (as of 29.04.2019) 
Bosnia and Herzegovina 

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

National accounts 
Gross domestic product (GDP) (million national currency) 
Gross domestic product (GDP) (million euro) 
GDP (euro per capita) 
GDP 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 (%) 
Exports of goods and services, relative to GDP (%) 

2006 
3 842.7 
51 209 

2013 
3 835.6p 
51 209 

2014 
3 830.9p 
51 209 

2015 
3 825.3 
51 209 

2006 
: 
: 
: 
: 
: 
: 
: 

: 

: 
: 

: 

: 
: 
: 
: 
: 
: 
: 
: 

2013 
26 779 
13 692 
3 600 
7 500 
28 
2.3 
: 

: 

: 
: 

: 

8.0 
21.6 
4.5 
65.9 
108.2 
18 
0.2 
33.7 

2014 
27 359 
13 988 
3 700 
7 700 
28 
1.1 
: 

: 

: 
: 

: 

7.0 
21.3 
4.7 
67.0 
107.1 
19.5 
-0.4 
34.0 

2015 
28 586 
14 616 
4 000 
8 400 
29 
3.1 
: 

: 

: 
: 

: 

7.3 
21.9 
4.6 
66.2 
103.8 
17.8 
0.8 
34.6 

2016 
3 516 
51 209 

2016 
29 901 
15 288 
4 400 
9 000 
31 
3.1 
: 

: 

: 
: 

: 

7.5 
22.6 
4.6 
65.3 
100.9 
17.4 
2.3 
35.4 

2017 
3 509.7 
51 209 

2017 
: 
: 
4 700 
9 500 
32 
: 
: 

: 

: 
: 

: 

: 
: 
: 
: 
: 
: 
: 
: 

Note 

1) 

Note 

177 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Imports of goods and services, relative to GDP (%) 
Gross  fixed  capital  formation  by  the  general  government  sector,  as  a 
percentage of GDP (%) 

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

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

Balance of payments 
Balance of payments: current account total (million euro) 
Balance of payments current account: trade balance (million euro) 
Balance of payments current account: net services (million euro) 
Balance  of  payments  current  account:  net  balance  for  primary  income 
(million euro) 
Balance of payments current account: net balance for secondary income 
(million euro) 
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 (%) 

: 
: 

54.1 
: 

56.6 
: 

53.2 
: 

52.3 
: 

: 
: 

Note 

2) 

2006 
86.8 
: 
: 

2013 
104.1 
23 869 
: 

2014 
104.3 
64 963b 
: 

2015 
107.4 
65 800 
: 

2016 
112 
67 168p 
: 

2017 
115.5 
68 760 
: 

: 

: 

: 

: 

: 

66.0 

71.4b 

71.5 

72.0 

69.6 

3 513 

4 406b 

4 701 

5 043 

4 974 

5 847 

6 738b 

7 168 

7 594 

7 803 

2013 
-0.1s 
: 

2013 
-728 
-3 630 
830 
182 

2014 
-0.9 
: 

2014 
-1 025 
-4 026 
857 
114 

2015 
-1.0 
: 

2015 
-774 
-3 677 
979 
99 

2016 
-1.1 
: 

2016 
-711 
-3 610 
1 064 
42 

2017 
1.2 
: 

2017 
-754 
-3 775 
1 154 
-71 

1 889 

2 029 

1 825 

1 793 

1 938 

84 

-7.8 

121 

-7.1 

86 

-6.0 

44 

-5.8 

37 

: 

: 

: 

: 

: 

2006 
6.1 
: 

2006 
: 
: 
: 
: 

: 

: 

: 

2) 

2) 

2) 

Note 

Note 

178 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
**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 (%) 

Financial indicators 
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) 
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 (%) 

: 
438.8 

3.2 
: 

442.0 
367.1 

: 
: 

2006 
2.7 
20.6 
42.8 
40.1 

2006 
: 
: 
2 423 
5 063 

: 
4 506 

45.3 
8.8 
43.5 
: 
8.01 
0.51 

Note 

Note 

3) 4) 
3) 5) 

3) 

6) 
6) 
6) 7) 

8) 
9) 

179 

0.9 
174.6 

64.4 
: 

239.1 
122.9 

-56.7 
3.8 

2013 
-2.2 
37.7 
42.7 
44.8 

2013 
: 
: 
3 423 
8 229 

: 
8 194 

4.8 
0.4 
93.3b 
: 
7.23 
0.12 

1.0 
400.8 

7.4 
13.1 

408.3 
225.6 

-56.8 
6.4 

2014 
-2.0 
41.6 
43.8 
45.8 

2014 
: 
: 
3 738 
8 829 

: 
8 423 

5.2 
2.0 
93.3 
: 
6.32 
0.09 

1.0 
260.1 

85.2 
55.7 

345.3 
225.6 

-54.9 
2.9 

2015 
0.7 
41.9 
43.2 
42.6 

2015 
: 
: 
4 183 
9 534 

: 
8 624 

4.6 
-2.2 
87.1 
: 
5.74 
0.09 

1.2 
256.8 

-0.7 
35.4 

256.1 
250.3 

-52.1 
2.5 

2016 
1.2 
40.5 
42.7 
41.5 

2016 
: 
: 
4 756 
10 327 

: 
8 795 

5.5 
1.2 
84.5 
: 
4.97 
0.09 

1.2 
330.1 

83.3 
58.7 

413.4 
275.7 

-47.9 
8.5 

2017 
2.6 
36.1 
43.0 
40.4 

2017 
: 
: 
5 406 
11 308 

: 
9 419 

8.3 
3.2 
83.3 
: 
3.88 
0.06 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Euro exchange rates: average of period (1 euro = … national currency) 
Trade-weighted effective exchange rate index, 42 countries (2005 = 100)  10) 
10) 
**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) 

1.956 
95 
: 

1.956 
100 
2.4 

1.956 
101 
3.2 

1.956 
100 
1.5 

1.956 
101 
1.6 

1.956 
102 
1.0 

: 

3 614 

4 001 

4 400 

4 873 

5 398 

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

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

Labour market 
Economic  activity  rate  for  persons  aged  20–64:  proportion  of  the 
population aged 20–64 that is economically active (%) 
*Employment rate for persons aged 20–64: proportion of the population 
aged 20–64 that are in employment (%) 
Male employment rate for persons aged 20–64 (%) 
Female employment rate for persons aged 20–64 (%) 
Employment  rate  for  persons  aged  55–64:  proportion  of  the  population 
aged 55–64 that are in employment (%) 
Employment by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 

2006 
: 
: 
: 
: 
: 
: 

2006 
0.2 

7.5 

: 
: 

2006 
55.9 

38.8 

51.4 
26.6 
23.5 

: 
: 

Note 

Note 

Note 

180 

2013 
7 756 
4 285 
-3 472 
98 
73.5 
60.0 

2013 
-1.3p 

: 

: 
: 

2013 
58.7 

42.8 

53.3 
32.2 
27.7 

18.9 
22.2 

2014 
8 283 
4 439 
-3 844 
100 
72.1 
58.9 

2014 
-1.5p 

: 

: 
: 

2014 
59.2 

43.2 

54.6 
31.9 
28.5 

17.1 
22.1 

2015 
8 105 
4 595 
-3 510 
103 
71.6 
60.8 

2015 
: 

: 

: 
: 

2015 
59.2 

43.2 

53.9 
32.4 
28.2 

17.9 
22.0 

2016 
8 263 
4 815 
-3 448 
104 
71.3 
61.9 

2016 
-1.8p 

: 

: 
: 

2016 
58.8 

44.2 

56.4 
32.0 
29.7 

18.0 
22.7 

2017 
9 298 
5 653 
-3 646 
104 
71.2 
60.9 

2017 
-2.0 

: 

: 
: 

2017 
58.4 

46.6 

58.1 
35.1 
32.5 

18.9 
22.2 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction (%) 
Services (%) 
People  employed  in  the  public  sector  as  a  share  of  total  employment, 
persons aged 20–64 (%) 
People  employed  in  the  private  sector  as  a  share  of  total  employment, 
persons aged 20–64 (%) 
Unemployment  rate:  proportion  of  the  labour  force  that  is  unemployed 
(%) 
Male unemployment rate (%) 
Female unemployment rate (%) 
Youth  unemployment  rate:  proportion  of  the  labour  force  aged  15–24 
that is unemployed (%) 
Long-term  unemployment  rate:  proportion  of  the  labour  force  that  has 
been unemployed for 12 months or more (%) 
Unemployment rate for persons (aged 25–64) having completed at most 
lower secondary education (ISCED levels 0-2) (%) 
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) 

: 
: 
18.6 

11) 

7.7 
51.3 
20.4b 

7.9 
52.9 
19.9 

11) 

81.4 

79.6b 

80.1 

31.2 

29.0 
35.0 
62.3 

26.8 

31.2 

11.4 

27.6 

26.7 
29.1 
59.1 

22.9 

28.0 

15.7 

27.6 

25.3 
31.2 
62.7 

23.4 

31.6 

17.2 

7.5 
52.6 
20.0 

80.0 

27.9 

25.9 
30.9 
62.3 

22.8 

27.7 

16.4 

8.6 
50.8 
17.8 

82.2 

25.5 

22.6 
30.2 
54.3 

21.7 

26.2 

18.9 

Note 
12) 
12) 

2006 
586 
103.6e 

2013 
827 
101.3e 

2014 
830 
102.4e 

2015 
830 
102.1e 

2016 
838 
103.1e 

13) 

: 
: 
13.9 

: 
: 
6.7 

: 
: 
5.8 

31 
: 
5.2 

: 
: 
4.9 

7.3 
51.6 
18.4 

81.6 

20.7 

19.0 
23.3 
45.8 

17.0 

19.5 

14.6 

2017 
851 
101.4 

: 
: 
5.1 

Note 

2006 
162.6 

2013 
202.3p 

2014 
209.1p 

2015 
216.7 

2016 
245.0p 

2017 
252.0 

491.3e 

910.4e 

920.7 

887 

981.1 

974.3 

181 

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

: 
: 

: 
: 

30 
15 

36 
18 

40 
19 

43 
19 

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

Innovation and research 
Public expenditure on education relative to GDP (%) 
*Gross domestic expenditure on R&D relative to GDP (%) 
Government budget appropriations or outlays on R&D (GBAORD), as a 
percentage of GDP (%) 
Percentage of households who have internet access at home (%) 

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

Energy 
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) 
Gross electricity generation (GWh) 

Note 

Note 

Note 

Note 

2006 
20.2 
20 

2006 
: 
: 
: 

2013 
20.1 
50 

2013 
: 
0.32 
: 

2014 
20.1 
128 

2014 
: 
0.24 
0.05 

2015 
20.1 
128 

2015 
: 
0.22 
0.05 

2016 
20.0 
163 

2016 
: 
0.24 
0.04 

2017 
20.0 
172 

2017 
: 
: 
0.40p 

: 

: 

: 

: 

61.5 

66.0 

2006 
54.7 
: 

: 

: 

2006 
: 
: 
: 
: 
: 
: 
: 

2013 
70.2 
: 

2014 
76.1 
446.5 

2015 
: 
446.2 

52.6 

44.5 

41.1 

: 

: 

: 

2013 
: 
: 
: 
: 
: 
: 
: 

2014 
4 306 
0 
3 073 
0 
1 693 
6 003 
17 023 

2015 
4 367 
0 
3 165 
0 
2 083 
6 183 
16 438 

2016 
: 
473.5 

40.4 

76.6 

2016 
4 742 
0 
3 520 
0 
2 133 
6 767 
17 767 

2017 
: 
: 

27.5 

78.9 

2017 
4 624 
0 
3 612 
0 
2 299 
6 754 
16 438 

Agriculture 

Note 

2006 

2013 

2014 

2015 

2016 

2017 

182 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural production volume index of goods and services (at producer 
prices) (2010 = 100) 
Utilised agricultural area (thousand hectares) 
Livestock numbers: live bovine animals (thousand heads, end of period) 
Livestock numbers: live swine (thousand heads, end of period) 
Livestock  numbers:  live  sheep  and  live  goats  (thousand  heads,  end  of 
period) 
Raw milk available on farms (thousand tonnes) 
Harvested crop production: cereals (including rice) (thousand tonnes) 
Harvested crop production: sugar beet (thousand tonnes) 
Harvested crop production: vegetables (thousand tonnes) 

14) 

15) 

16) 

: 

: 

: 

: 

: 

: 

1 743e 
515 
712 
: 

: 
1 342e 
0 
280e 

1 726e 
447 
530 
1 089e 

: 
1 223e 
0 
304e 

1 711e 
444 
533 
1 099e 

: 
1 082e 
0 
229e 

1 7323e 
455e 
564e 
1 093e 

: 
1 138e 
0 
280e 

1 781e 
455e 
545e 
1 091e 

: 
1 658e 
0 
361e 

1 762e 
445e 
548e 
1 090e 

: 
1 163e 
0 
292e 

: = not available 
b = break in series 
e = estimate 
p = provisional  
s = Eurostat estimate 
* = Europe 2020 indicator 
** = Macroeconomic Imbalance Procedure (MIP) indicator 
*** = The government deficit and debt data of enlargement countries are published on an "as 
is" basis and without any assurance as regards their quality and adherence to ESA rules. 

Footnotes 

Inland waters estimated at 210 km². 
2013: excluding natural persons (entrepreneurs). 
Based on IMF monetary and financial statistics manual, 2000. 

1) 
2) 
3) 
4)  M1  money  supply  comprises  cash  outside  banks  and  transferable  deposit  in  domestic 

currency of all domestic sectors (except central government deposits). 

5)  M2  money  supply  is  comprised  of  money  supplies,  M1  money  and  QM  quasi  money.  QM 
money supplies cover other deposits in domestic currency, transferable and other deposits in 
foreign currency of all domestic sectors (except the deposits of the central government). 
Data for monetary financial institutions. 
2006: private sector debt excludes external debt of private sector. 

6) 
7) 

183 

 
 
 
 
 
 
 
 
 
 
 
 
8) 

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

9) 
10)  Calculation of effective exchange rate indices is against a group of 21 most important trading 

11) 

partners. 2015 = 100. 
2006: the public sector includes NACE Rev. 1.1 Sections L, M and N while the private sector 
includes other NACE Sections. 2013-2017: the public sector includes NACE Rev. 2 Sections 
O, P and Q while the private sector includes other NACE Sections. 

12)  Net earnings. 
13)  Total household consumption expenditure is used for the calculation, instead of Income. 
14)  The  utilised  agricultural  area  consists  of  arable  land,  kitchen  garden,  permanent  crops  and 

permanent grassland as cadastral data (not as UAA). 
2006: excluding triticale and buckwheat. 
2006: including dried pulses. 

15) 
16) 

184