COMMISSION STAFF WORKING DOCUMENT Bosnia and Herzegovina 2020 Report Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions 2020 Communication on EU Enlargement Policy
Date: 2020-10-06
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Bosnia and Herzegovina, accession criteria, accession negotiations, coronavirus disease, epidemic, pre-accession strategy

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 6.10.2020  SWD(2020) 350 final  COMMISSION STAFF WORKING DOCUMENT Bosnia and Herzegovina 2020 Report Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions     2020 Communication on EU Enlargement Policy        {COM(2020) 660 final} - {SWD(2020) 351 final} - {SWD(2020) 352 final} - {SWD(2020) 353 final} - {SWD(2020) 354 final} - {SWD(2020) 355 final} - {SWD(2020) 356 final}  
 
 
1. 

1.1. 

1.2. 

2. 

2.1. 

Table of Contents 

Introduction 

Context 

Summary of the report 

Fundamentals first: political criteria and rule of law chapters 

3 

3 

4 

6 

Fundamentals first: Functioning of democratic institutions and Public Administration 
Reform 

6 

2.1.1.  Democracy 

2.1.2.  Public administration reform 

2.2.1.  Chapter 23: Judiciary and fundamental rights 

2.2.2.  Chapter 24: Justice, freedom and security 

3. 

3.1. 

4. 

5. 

5.1. 

5.2. 

5.3. 

5.4. 

5.5. 

5.6. 

5.7. 

5.8. 

5.9. 

5.10. 

5.11. 

5.12. 

5.13. 

5.14. 

5.15. 

5.16. 

5.17. 

5.18. 

Fundamentals first: economic development and competitiveness 

The existence of a functioning market economy 

Good neighbourly relations and regional cooperation 

Ability to assume obligations from membership 

Chapter 1: Free movement of goods 

Chapter 2: Freedom of movements 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 

Chapter 14: Transport policy 

Chapter 15: Energy 

Chapter 16: Taxation 

Chapter 17: Economic and monetary policy 

Chapter 18: Statistics 

1 

6 

12 

15 

34 

46 

47 

56 

58 

58 

60 

61 

62 

63 

65 

66 

67 

69 

71 

72 

73 

75 

76 

79 

82 

83 

84 

 
 
 
5.19. 

5.20. 

5.21. 

5.22. 

5.25. 

5.26. 

5.27. 

5.28. 

5.29. 

5.30. 

5.31. 

5.32. 

5.33. 

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 and climate change 

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 – Relations between the EU and Bosnia and Herzegovina 

86 

90 

92 

94 

96 

97 

99 

103 

105 

107 

108 

110 

113 

115 

2 

 
 
 
 
 
1. 

Introduction  

1.1.  Context  

In  February  2016,  the  country  applied  for  EU  membership  and  in  September  2016  the 
European  Council  invited  the  European  Commission  to  submit  its  opinion  on  the  merits  of 
Bosnia and Herzegovina's application. In May 2019, the Commission adopted its Opinion and 
accompanying  analytical  report  on  Bosnia  and  Herzegovina’s  EU  membership  application.1 
The Opinion  identifies 14 key priorities for Bosnia and  Herzegovina to  fulfil  in  order to  be 
recommended  for  the  opening  of  accession  negotiations,  in  the  areas  of  democracy  / 
functionality,  the  rule  of  law,  fundamental  rights,  and  public  administration  reform.  In  its 
December  2019  conclusions,  the  EU  Council  welcomed  the  Opinion  and  invited  the 
Commission to focus its annual reports on Bosnia and Herzegovina, starting with the one in 
2020, on the implementation of the key priorities from the Opinion.2  

Bosnia and Herzegovina continues to implement the Stabilisation and Association Agreement 
and the meetings of the joint bodies under the agreement took place regularly, except for the 
parliamentary committee, which has yet to adopt its rules of procedures. 

The public political commitment of the authorities at all levels of government to the strategic 
goal of European integration remained to a large extent merely declarative and was not turned 
into concrete actions, as political leaders spent the reporting period engaging in party politics 
and unconstructive political  disputes, which impeded the appointment of a new  government 
until late 2019, 14 months after the October 2018 elections, and hindered its work afterwards. 

Some steps have been taken in the recent months, amid the COVID-19 pandemic, to address 
the  key  priorities  from  the  Opinion.  In  October  2019,  the  Council  of  Ministers  adopted  an 
action  plan  for  the  implementation  of  the  recommendations  from  the  Commission’s  2019 
analytical  report,  whose  content  was  not  fully  agreed  among  all  levels  of  government.  The 
Constitutional  Court  repealed  the  provision  on  the  death  penalty  in  the  Republika  Srpska 
entity  constitution,  fulfilling  part  of  key  priority  10.  Legislative  amendments  following  a 
political agreement in June 2020 should allow holding local elections in Mostar in December 
for the first time since 2008, thus fulfilling part of key priority 1.  In July 2020, all levels of 
government adopted the strategic framework on public administration reform, contributing to 
key priority 14. Bosnia and Herzegovina adopted the revised National War Crimes Strategy in 
September 2020, contributing to key priority 5. Preparations are also ongoing to hold the joint 
parliamentary  committee.  Bosnia  and  Herzegovina  needs  to  move  forward  on  the  other  key 
priorities too. 

The outbreak of the COVID-19 pandemic is a global shock that has not spared the Western 
Balkans. It represents an unprecedented burden on their health and social protection systems. 
The final extent of its footprint in terms of loss of human lives and damage to the economies 
is still difficult to assess, but early Commission estimates foresee a drop of between 4 and 6% 
of Gross  Domestic Product  (GDP) in  the region. Thousands of  citizens are at  risk of losing 
their 
temporary  government  support  measures  (unemployment  benefits, 
deferrals/waivers  to  tax  and  social  security  contributions,  etc.)  have  an  important  fiscal 
impact.  

jobs,  and 

1 SWD(2019) 222 final, COM(2019) 261 final 
2https://www.consilium.europa.eu/en/press/press-releases/2019/12/10/council-conclusions-on-commission-
opinion-on-bosnia-and-herzegovina-s-application-for-membership-of-the-european-union/ 

3 

 
 
                                                           
While the EU is itself heavily affected by the pandemic, it has spared no time and effort  to 
provide  essential  and  unparalleled  support  to  the  Western  Balkans.  This  includes  financial 
support  of  more  than  EUR  3.3  billion  for  countries  in  the  region  to  address  the  immediate 
health crisis and resulting humanitarian needs, as well as longer term and structural impact on 
their  societies  and  economies.  Given  the  European  perspective  of  the  Western  Balkans,  the 
EU  is  also  treating  the  region  as  privileged  partners  by  associating  them  with  the  Union’s 
mechanisms  and 
the  Health  Security  Committee,  Joint 
include 
Procurement  Agreements,  Union  Civil  Protection  Mechanism,  Solidarity  Fund,  consular 
assistance  in  repatriation  or  exemption  from  temporary  EU  export  restrictions  of  medical 
equipment. These and other measures have provided immediate relief and are a clear message 
of the EU’s political commitment towards the region. 

instruments.  These 

In the initial response to the COVID-19 outbreak Bosnia and Herzegovina reacted promptly 
and closely followed global recommendations by introducing mitigation measures to prevent, 
slow  down  and  control  the  transmission  of  the  virus.  The  authorities  also  increased  health 
system  capacities  and  re-oriented  health  providers  towards  COVID-19  designated  facilities. 
Despite  the  initial  success  of  the  health  authorities  to  prevent  and  control  the  spread  of  the 
virus,  early  relaxation  of  the  restrictive  measures  was  followed  by  an  epidemiological  peak 
during the summer months. By all relevant parameters and benchmarks, the response of the 
health  system  was  comparatively  effective  in  curbing  the  initial  COVID-19  outbreak  in  the 
country, however, coping with the later peak proved to be challenging. During the COVID-19 
outbreak, health services were provided to all persons in Bosnia and Herzegovina, including 
migrants and asylum seekers, irrespective of citizenship or health insurance status.  

The COVID-19 crisis demanded a high level of coordination among all levels of government 
which proved challenging in practice. The established crisis management bodies acted in their 
respective  jurisdictions,  without  countrywide  harmonisation  of  decisions  and  actions.  The 
fragmentation  of  the  healthcare  system  compounded  coordination  difficulties,  and  formal 
strategic response plans were not developed. Restrictive measures were relaxed gradually and 
in  a  more  harmonised  manner  throughout  the  country.  Citizens’  compliance  with  the 
protective epidemiological measures remains limited.  

It  is  of  utmost  importance  that  emergency  measures  taken  during  the  crisis  are  not  at  the 
expense of  fundamental  principles and values and that such measures remain proportionate, 
time-bound and subject to democratic oversight. 

1.2. 

Summary of the report 

Regarding  the  political  criteria,  during  most  of  the  reporting  period  the  Parliamentary 
Assembly of Bosnia and Herzegovina was blocked for political reasons,  which resulted in a 
legislative  backlog,  and  the  Council  of  Ministers  acted  in  caretaker  function,  pending  the 
appointment of a new government, which only took place in December 2019, 14 months after 
the general elections. The Federation entity government is still in a caretaker function.  Bosnia 
and  Herzegovina’s  Constitution  remains  in  breach  of  the  European  Convention  on  Human 
Rights (ECHR), as per the Sejdić-Finci and related cases. No progress was made in improving 
the  electoral  framework  in  line  with  European  standards  and  ensuring  transparency  of 
political  party  financing.  Amendments  adopted  in  July  2020  should  allow  holding  local 
elections  in  Mostar  for  the  first  time  since  2008.  Preparations  are  also  ongoing  to  hold  the 
Stabilisation  and  Association  Parliamentary  Committee,  as  well  as  develop  and  adopt  a 
national programme for the adoption of the EU acquis. No progress was made in ensuring an 

4 

 
 
enabling  environment  for  civil  society.  Meaningful  and  systematic  consultations  with  civil 
society remain to be ensured. 

Bosnia and Herzegovina is at an early stage with public administration reform (PAR) and 
there  was  no  progress  on  ensuring  a  professional  and  depoliticised  civil  service  and  a 
coordinated  countrywide  approach  to  policy  making.  All  levels  of  government  adopted  the 
strategic framework on public administration reform and now need to adopt the related action 
plan.  A  political  body  steering  the  coordination  of  public  administration  reform  is  not  yet 
established. To guarantee a professional civil service, civil service procedures must be based 
on merit principles and free from political interference. 

Bosnia  and  Herzegovina  is  at  an  early  stage/has  some  level  of  preparation  in  the  area  of 
judiciary.  No  progress  was  made  in  this  area  during  the  reporting  period.  No  appropriate 
action was taken to address the findings of the Expert Report on Rule of Law issues. Integrity 
reforms have met resistance from within the judiciary. Evident signs of deterioration require 
urgent measures to strengthen the integrity and regain citizens’ trust in the judiciary, starting 
with  a  credible  and  rigorous  system  of  verification  of  financial  statements  of  judicial  office 
holders.  Obstructions  to  judicial  reforms  from  political  actors  and  from  within  the  judiciary 
and the poor functioning of the judiciary undermine citizens’ enjoyment of rights and the fight 
against corruption and organised crime. 

Bosnia and Herzegovina is at an early stage/has some level of preparation in the prevention 
and fight against corruption and organised crime. No progress was made in addressing the 
Opinion key priorities and 2019 recommendations in this area, as well as the findings of the 
Expert  Report  on  Rule  of  Law  issues.  Corruption  remained  widespread  and  is  a  serious 
concern, with all levels of government showing signs of political capture directly affecting the 
daily life of citizens. There are  systemic shortcomings in the operational cooperation of law 
enforcement agencies and a very limited exchange of intelligence. The police is vulnerable to 
political  interference.  Financial investigations and asset seizures are largely ineffective.  The 
contact  point  for  cooperation  with  Europol  is  not  yet  operational.  No  steps  were  taken  to 
establish cooperation with Eurojust. The country needs to improve its capacity and continue 
its efforts in the fight against terrorism and drug trafficking.  

As regards fundamental rights, while the legislative and institutional framework is largely in 
place; a comprehensive strategic framework remains to be adopted. Some steps were made – 
notably, the Constitutional Court repealed the provision on the death penalty in the Republika 
Srpska  entity  constitution,  and  the  first  LGBTI  Pride  Parade  took  place  peacefully  in 
Sarajevo. Challenges remain on freedom of assembly, notably in the Republika Srpska entity. 
Significant  reforms  are  needed  to  ensure  that  all  citizens  are  able  to  exercise  their  political 
rights and to overcome the practice of ‘two schools under one roof’ and ensure inclusive and 
quality education for all. There was no progress on guaranteeing freedom of expression and of 
the media and the protection of journalists by ensuring the appropriate judicial follow-up to 
cases of threats and violence against journalists and media workers, and ensuring the financial 
sustainability of the public broadcasting system.  

The EU has provided considerable support to Bosnia and Herzegovina to manage migration. 
The EU urges Bosnia and Herzegovina authorities to urgently take all necessary measures to 
prevent a humanitarian crisis from unfolding. The EU also expects violations of the law to be 
duly  investigated.  Bosnia  and  Herzegovina  needs  to  ensure  effective  coordination,  at  all 
levels, of border management and migration management capacity, as well as the functioning 
of the asylum system. 

5 

 
 
As regards the economic criteria, Bosnia and Herzegovina has made limited progress and is 
at  an  early  stage  of  establishing  a  functioning  market  economy.  The  quality  of  economic 
governance  suffered  from  delays  in  government  formation  and  insufficient  cooperation  at 
entity  and  state  levels,  paralysing  among  others  progress  towards  improving  the  business 
environment which is held back by significant weaknesses, including in market entry and exit 
procedures,  the  rule  of  law  and  supervisory  and  regulatory  institutions.  Economic  growth 
benefitted  from  strong  domestic  demand,  reflecting  sizeable  inflows  of  workers  remittances 
and low inflation. The public sector remained oversized and inefficient. The financial sector 
remained  stable  and  lending  increased,  while  unemployment  has  declined,  partly  due  to  a 
substantial labour force outflow. However, the economic impact of COVID-19 led to a sharp 
drop in economic activity and a marked deterioration in the labour market. 

Bosnia  and  Herzegovina  made  limited  progress,  and  remains  at  an  early  stage  in  terms  of 
capacity  to  cope  with  the  competitive  pressure  and  market  forces  in  the  EU.  The  overall 
quality  of  education  remained  low,  while  measures  to  improve  the  transport  and  energy 
infrastructure  have  remained  insufficient.  The  extent  of  structural  adjustment  has  been 
limited, although there has been some diversification in the country’s trade structure. 

Bosnia  and  Herzegovina  has  continued  to  participate  actively  in  regional  cooperation  and 
maintain  good  neighbourly  relations.  Progress  on  alignment  with  the  EU  Common  Foreign 
and Security Policy has been made and should be further pursued. 

Bosnia and Herzegovina is overall at an early stage/has some level of preparation regarding 
its level of preparedness and ability to take on the obligations of EU membership and needs 
to  significantly  step  up  the  process  to  align  with  the  EU  acquis  and  implement  and  enforce 
related  legislation.  Limited  to  no  progress  was  made  on  the  different  EU  acquis  chapters 
during the reporting period. Particular attention should be paid to the areas of free movement 
of  goods,  right  of  establishment  and  freedom  to  provide  services,  information  society  and 
media,  agriculture  and  rural  development,  fisheries,  transport  policy,  energy,  economic  and 
monetary  policy,  statistics,  social  policy  and  employment,  enterprise  and  industrial  policy, 
regional  policy  and  coordination  of  structural  instruments,  education  and  culture,  consumer 
and health protection, and financial control.  

2. 

FUNDAMENTALS FIRST: POLITICAL CRITERIA AND RULE OF LAW CHAPTERS 

Fundamentals 

2.1. 
Administration Reform  

first:  Functioning  of  democratic 

institutions  and  Public 

2.1.1.  Democracy 

The reporting period was marked by the stalemate in forming the state-level and Federation 
entity governments following the October 2018 elections. Although a political agreement had 
been  found  already  in  March  2019,  Bosnia  and  Herzegovina  remained  with  a  caretaker 
government for 14 months until December 2019, while coalition partners remained embroiled 
in  a longstanding dispute over the NATO integration of the country and over the control of 
the Sarajevo and Tuzla cantonal governments. A breakthrough was reached with international 
and EU facilitation. Nonetheless, the political environment remained polarised, with repeated 
calls  from  the  Republika  Srpska  entity,  in  November  2019  and  February  2020,  to  roll  back 
reforms  and  to  block  State-level  institution.  The  reshuffling  of  the  Central  Election 
Commission  also  further  strained  relations  within  the  ruling  coalition.  The  need  for  a 
coordinated response to the COVID-19 crisis helped to temporarily put political issues aside, 

6 

 
 
 
but tensions persisted. The Federation entity remains to date with a caretaker government. In 
such a political atmosphere, little action has been taken by political actors to address the 14 
key  priorities  of  the  Commission’s  May  2019  Opinion  and  accompanying  analytical  report. 
On 28 April 2020, the Presidency tasked the Council of Ministers to present an action plan on 
the  Opinion  key  priorities.  A  political  agreement  in  June  2020,  leading  to  legislative 
amendments  in  July,  should  allow  for  local  elections  to  be  finally  held  in  Mostar  on  20 
December 2020. 

Elections  

Some progress was made towards addressing part of the Opinion key priority 1 on ensuring 
that  elections  are  conducted  in  line  with  European  standards  by  implementing  the 
recommendations  of  the  Office  for  Democratic  Institutions  and  Human  Rights  at  the 
Organisation  for  Security  and  Cooperation  in  Europe  (OSCE/ODIHR)  and  relevant  Venice 
Commission  recommendations,  ensuring  transparency  of  political  party  financing,  and 
holding municipal elections in Mostar. Legislative amendments adopted in July 2020 should 
allow residents of Mostar to vote by the end of the year.  

No  legislative  steps  were  taken  to  implement  the  comprehensive  set  of  recommendations 
issued  by  the  Office  for  Democratic  Institutions  and  Human  Rights  (ODIHR)  of  the 
Organisation for Security and Cooperation in Europe (OSCE) and by the Council of Europe’s 
Group  of  States  against  Corruption  (GRECO).  These  recommendations  address  the 
transparency and overall integrity of the electoral process and the implementation of election 
results. Bosnia and Herzegovina does not have an action plan for this. 

Due  to  the  Parliament’s  inaction  following  a  decision  of  the  Constitutional  Court,  local 
elections  have  not  been  held  in  Mostar  since  2008.  In  October  2019  the  European  Court  of 
Human  Rights  (ECtHR)  established  in  the  Baralija  case  that  there  was  discriminatory 
treatment  of  Mostar  residents  due  to  the State’s  failure  to  enable  the  conduct  of  democratic 
elections.  The  ECtHR  requested  the  country  to  amend  its  legislation  within  6  months,  also 
noting  that  the  Constitutional  Court  has  the  power  to  set  up  interim  arrangements  if  the 
Parliament fails to do so. A political agreement on 17 June 2020 was followed by the swift 
adoption  of  legislative  amendments  in  July  2020.  These  developments  paved  the  way  for 
Central  Electoral  Commission  to  announce  the  holding  of  local  elections  on  20  December 
2020 in Mostar. 

In March and May 2020, the House of Representatives decided on a different composition of 
the Central Election Commission. Court cases on the legality of the appointment process are 
pending. The decision of the Central  Election Commission  to  postpone local  elections from 
4 October  to  15  November  2020  due  to  lack  of  budget  allocations  was  unsuccessfully 
challenged before both the Constitutional Court and the Court of Bosnia and Herzegovina. 

Parliament  

The Parliamentary Assembly was blocked for most of 2019 for political reasons, resulting in a 
heavy legislative backlog. Blockages continued in 2020 as well. The legislative assemblies in 
the country remain weak in relation to the executives, with little cooperation among them and 
weak  capacities  to  ensure  a  harmonised  alignment  with  the  EU  acquis.  Legislation  and 
practices  on  registration  of  political  parties  and  on  political  party  financing  needs  to  be 
improved. Some progress was made in addressing the Opinion key priority 3 on ensuring the 
proper functioning of the Stabilisation and Association Parliamentary Committee. 

7 

 
 
The Parliamentary Assembly of Bosnia and Herzegovina was blocked for most of 2019 due 
to the political dispute surrounding the appointment of a new state-level Council of Ministers. 
This had heavy repercussions on the democratic functions of Parliament, with no progress in 
legislative work and lack of oversight of the executive. Following the political agreement on a 
new  government,  by  early  2020  both  houses  of  Parliament  appointed  their  members  to  the 
standing  committees  and  joint  standing  committees,  enabling  legislative  work  to  get 
underway. The appointment of inter-parliamentary delegations was completed only in January 
2020.  

After  five  years  of  stalemate,  in  July  2020  the  Parliament  adopted  the  proposal  of  rules  of 
procedure of the Stabilisation and Association Parliamentary Committee (SAPC). Such rules 
of  procedure,  which  foresee  two-thirds  majority  voting  without  ethnic  rules,  must  now  be 
confirmed at the next meeting of the joint body. The country needs to ensure the functioning 
of the SAPC. Political dialogue at parliamentary level is an obligation under the SAA. 

Despite  legislation  laying  down  a  40%  gender  quota  for  candidates,  in  the  2018-2022  term 
women account  for 21% of the members of the House of Representatives (9 out  of 42) and 
20% of the members of the House of Peoples (3 out of 15). The rules of procedure requiring 
gender  balance  in  the  appointment  of  members  of  the  collegiums  and  of  delegations  to 
international organisations are largely ignored. There are no measures to promote the political 
representation of disadvantaged groups of women.  

Citizens who do not declare themselves as Bosniaks, Croats or Serbs cannot be appointed to 
the  state-level  House  of  Peoples;  since  2009  the  ECtHR  has  established  in  its  Sejdić-Finci 
case law that these restrictions are in breach of the Convention and its Protocols.  

Entity parliaments  have  been in  regular operation since October 2018. Since May  2019, the 
Parliament of the Federation entity adopted 16 laws in urgent procedure out of 18 (89%). In 
the Republika Srpska entity, the National Assembly adopted in the reporting period, 34 laws 
in  fast-track  procedures  out  of  107  (36%),  including  the  budget;  such  procedures  are  in 
principle  reserved  only  for  exceptional  cases.  There  are  no  specific  standing  committees  on 
oversight and control of the entity government. In June 2020 the entity assembly adopted new 
rules of procedure, aimed at improving the quality and speed of parliamentary work.  

The  state-level  parliament  suspended  their  sessions  from  March  to  May  2020  due  to  the 
COVID-19 pandemic; the Federation entity introduced rules of procedure for online sessions. 
In  the  Republika  Srpska  entity,  on  28  March  the  parliament  declared  a  state  of  emergency, 
suspending  parliamentary  works  and  entrusting  the  entity  President  with  the  power  to  issue 
decrees  with  force  of  law  in  matters  of  entity  competence.  In  this  period,  19  decrees  with 
force  of  law  were  adopted.  The  entity  parliament  terminated  the  state  of  emergency  on  20 
May and confirmed all adopted decrees on 23 May.  

The  parliamentary  forum  on  European  integration  did  not  hold  any  session  in  2019, 
negatively affecting the coordination between members of sectoral committees. All legislative 
assemblies,  including  at  cantonal  level,  need  to  significantly  improve  their  cooperation, 
notably  to  ensure  a  harmonised  countrywide  alignment  process  based  on  a  national 
programme for the adoption of the EU acquis. The capacities of legislative assemblies to align 
with  the  EU  acquis  should  be  significantly  enhanced,  if  necessary  by  pooling  resources 
countrywide.  All  assemblies  should  ensure  that  the  legislation  includes impact  assessments 
and  should  step  up  the  oversight  of  the  governments,  including  by  monitoring  the 
implementation of legislation. 

8 

 
 
The  legislation  on  the  registration  of  political  parties  needs  to  be  harmonised  across  the 
country. Bosnia and Herzegovina has made no progress in ensuring transparency of campaign 
financing and in preventing misuse of public resources. The Central Election Commission’s 
audit department  needs  to  strengthen its capacity to  monitor compliance with  the regulation 
on  political  party  financing.  The  country  needs  to  ensure  appropriate  legislative  and 
institutional  follow-up  to  the  outstanding  GRECO  and  OSCE/ODIHR  recommendations  on 
political party financing, including transparency of campaign costs and sanctions for breaches. 
Issues  persist  in  relations  to  internal  party  democracy,  which  include  a  lack  of  democratic 
internal  policies  and  structures.  There  are  no  women  among  the  political  party  leaders,  and 
few in other party leadership positions. 

Governance  

The  State-level  Council  of  Ministers  acted  in  caretaker  function  for  most  of  2019.  The 
appointment of new governments in the Federation entity and in two cantons remain pending. 
The  executives  have  little  capacities  for  coordination  and  policy  planning,  including  on  EU 
matters. This requires strengthening the Directorate for European Integration, and making full 
use  of  the  coordination  mechanism.  No  progress  was  made  in  addressing  the  Opinion  key 
priority 2 on developing and adopting a national programme for the adoption of the EU acquis 
(NPAA), reflecting the role of all levels of government in aligning with the EU acquis.  

The  composition  of  the  Presidency  of  Bosnia  and  Herzegovina  remains  in  violation  of  the 
ECHR and its Protocols, as established since 2009 in the ECtHR Sejdić-Finci case-law. The 
lack of consensus among members of the Presidency led to long delays in the appointment of 
the  new  government.  Presidency  decisions  taken  by  a  majority  faced  ‘vital  interest’  vetoes, 
supported  by  the  Republika  Srpska  entity  parliament,  and  were  invalidated  in  July  2019, 
February and July 2020. Despite disagreements, the Presidency managed to act coherently to 
respond to the COVID-19 outbreak. On 28 April, ahead of the Zagreb Summit, the Presidency 
adopted  conclusions  aimed  at  starting  to  address  the  Opinion  key  priorities,  including  by 
tasking  the  Council  of  Ministers  to  develop  an  action  plan  on  the  14  key  priorities  and  a 
methodology for the program of EU integration (NPAA). 

The Council of Ministers continued to work in a caretaker function for the whole 2019, often 
only via telephone sessions. A new Council of Ministers was not appointed until 23 December 
2019, 14 months after the general  elections. The  last ministerial  appointments  took  place in 
July 2020. As in its previous composition, the new government includes 2 women among the 
9 ministers (22%), with responsibility for foreign affairs and for civil affairs.  

The Council of Ministers acted swiftly in the context of the COVID-19 pandemic, including 
by  declaring  a  state  of  natural  or  other  disaster  in  the  whole  country  on  17  March  and 
activating  the  coordination  body  for  protection  and  rescue.  The  Council  of  Ministers 
continued to meet regularly and with growing intensity across the COVID-19 pandemic crisis. 

As regards the EU integration agenda, in October 2019 the Council of Ministers adopted the 
2018-2021 medium-term development strategy, as well as an action plan for implementing the 
recommendations  from  the  Commission’s  2019  analytical  report.  The  content  of  the  action 
plan was not fully agreed among all levels of government.  

The governments of the Republika Srpska entity and of most cantons worked regularly in the 
reporting  period.  The  government  of  the  Republika  Srpska  entity  declared  a  situation  of 
emergency on 16 March, which remains in force, and a state of emergency, from 3 April till 
20 May. The governments of the Federation entity and of the Herzegovina-Neretva Canton 

9 

 
 
and  Canton  10  acted  in  a  caretaker  mandate  throughout  2019  and  2020,  pursuing  a  less 
ambitious  agenda,  as  new  executives  have  not  been  appointed  since  the  election.  The 
Federation government declared a state of disaster from 16 March till 29 May.  

In  2019,  the  Sarajevo  Canton  government  introduced  ambitious  anticorruption  and 
transparency  measures,  restructuring  public  companies  and  addressing  infrastructural  and 
environmental  challenges  in  the  canton.  Following  a  shift  in  alliances  connected  with  the 
formation  of  the  state-level  coalition,  a  no-confidence  motion  was  adopted  in  January  2020 
and a new cantonal government took office on 3 March 2020. 

The  Constitutional  Court  of  the  Federation  entity  operates  with  only  5  judges  out  of  9;  this 
seriously  impairs  its  decision-making,  which  requires  a  quorum  of  five.  Its  panel  on  ‘vital 
national interest’ vetoes is not able to function with only 3 judges out of the 7 required. The 
entity Presidency and Parliament should swiftly proceed to fill the judicial vacancies. 

The entity and state governments  adopted in  October 2019 and January 2020 respectively a 
document  outlining  a  socio-economic  reform  programme  for  2019-2022.  Bosnia  and 
Herzegovina  needs  to  develop  and  implement  a  common  action  plan  of  socio-economic 
reforms in line with the key short-term recommendations from the Commission Opinion and 
analytical  report  and  with  the  joint  conclusions  of  the  economic  and  financial  dialogue. 
Coordination  among  executives  at  all  levels  has  to  be  ensured  when  formulating  and 
implementing this package of socio-economic reforms.  

The participation of women in the executives across the country stands at around 20%, with 
the Republika Srpska entity scoring the highest with 6 women out of 16 ministers (37.5%) and 
Herzegovina-Neretva Canton the lowest with no women among the ministers.  

The  capacities  of  governments  at  all  levels  to  ensure  coordination  and  policy  planning  are 
insufficient. Coordination on EU matters needs to be strengthened in order to efficiently deal 
with increasing EU requirements. This calls for strengthening both the role and capacities of 
the Directorate for European Integration, and making full use of the coordination mechanism 
for  the  tasks  required.  As  a  key  priority  and  outstanding  obligation  under  the  SAA,  Bosnia 
and  Herzegovina  needs  to  develop  a  national  programme  for  the  adoption  of  the  acquis 
(NPAA)  that  reflects  the  role  different  levels  of  government  play  in  aligning  with  and 
enforcing  the  EU  acquis.  SAA  obligations  and  other  EU  requirements  need  to  be  duly 
included  in  the  NPAA  and  in  the  corresponding  annual  work  programmes  of  all  levels  of 
government.  

The Republika Srpska entity has a 2017-2021 strategy for developing local self-government, 
while there is no such strategy at the state level or in the Federation entity.  

Civil society 

The  overall  legal  and  regulatory  framework  for  civil  society  in  Bosnia  and  Herzegovina  is 
broadly  in  line  with  the  EU  acquis.  No  progress  was  made  in  addressing  the  Opinion  key 
priority  11  on  ensuring  an  enabling  environment  for  civil  society,  notably  by  upholding 
European standards on freedom of association and freedom of assembly. Challenges remain, 
as exemplified in  the case of the “Justice for David” movement  in  Banja  Luka. Meaningful 
and  systematic  consultations  with  civil  society  remain  to  be  ensured  as  part  of  an  inclusive 
policy  dialogue.  A  framework  for  the  transparent  funding  of  civil  society  organisations  is 
needed. 

An empowered civil society is a crucial component of any democratic system and should be 

10 

 
 
recognised and treated as such by state institutions.  

The  legislation  on  freedom  of  association  is  broadly  in  line  with  standards  and  generally 
upheld.  However,  activists dealing with sensitive issues  have been subject  to  threats,  verbal 
abuse  and  physical  attacks.  The  distribution  of  public  funds  is  not  fully  transparent  and 
impartial.  Only  a  few  municipalities  have  regulations  for  the  transparent  funding  of  civil 
society  organisations  that  are  based  on  clearly  defined  criteria  and  require  monitoring  and 
evaluation tools. A framework for the transparent funding of civil society is needed across the 
country. 

The legislation on freedom of peaceful assembly needs to be harmonised across the country 
and aligned with European standards, in particular as regards grounds for restriction and the 
responsibility of organisers. Civil  society organisations have reported increasing  attempts to 
restrict freedom of assembly, in particular in relation to the ‘Justice for David’ movement in 
Banja Luka, whose activists have been subject to intimidation, fines, and judicial prosecution. 
The  Sarajevo  Pride  parade  organisers  also  reported  facing  with  several  additional  burdens, 
including extra costs for additional security requirements. 

Legislation  on  public  consultations  is  uneven  across  the  country  and  there  is  no  strategic 
framework for cooperation with civil society. Meaningful and systematic consultations remain 
to be ensured. The Council of Ministers needs to enact the 2017 charter on cooperation with 
civil society organisations, notably by developing regular cooperation and consultations.  

Civilian oversight of the security forces  

The  Parliamentary  Assembly  and  its  committees  have  a  key  role  in  the  oversight  of  the 
country’s security forces. Due to the parliamentary blockade, the joint committees on defence 
and security and on the security and intelligence agency were not formed and did not hold any 
session in 2019; the committees held their first session only in January 2020.  

The Military Commissioner, who oversees the protection of the human rights and freedoms of 
soldiers  and  personnel  of  the  armed  forces  and  the  Ministry  of  Defence,  conducted  92 
proceedings in 2019, of which 8 are pending. 

11 

 
 
 
 
2.1.2.  Public administration reform 

Bosnia  and  Herzegovina  is  at  an  early  stage  with  public  administration  reform.  There  was 
limited  progress  in  the  reporting  period  in  addressing  the  Opinion  key  priority  14  on 
completing  essential  steps  in  public  administration  reform  towards  improving  the  overall 
functioning  of  the  public  administration  by  ensuring  a  professional  and  depoliticised  civil 
service and a coordinated countrywide approach  to  policy making. The strategic framework 
on  public  administration  reform  was  adopted  by  the  government  of  the  Republika  Srpska 
entity,  two  years  after  other  governments  did  so.  The  State  government  and  the  Republika 
Srpska  entity  have  established  working  groups  to  develop  strategies  on  public  financial 
management  for  2021-2025.  However,  stronger  political  commitment,  sufficient  financial 
resources  and  more  efficient  coordination  structures  are  needed  to  ensure  a  comprehensive 
and  harmonised  approach  to  public  administration  reforms.  A  political  body  steering  the 
coordination  of  public  administration  reform  is  not  yet  established.  To  guarantee  a 
professional civil service, civil service procedures must be based on merit principles and free 
from political interference.  

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

  adopt  action  plan  for  public  administration  reform  and  strategic  framework  for  public 
financial management, establish a common performance-based monitoring framework and 
ensure financial sustainability; 

  establish a political decision-making body to steer coordination of  public administration 

reforms across all government levels;    

  amend  civil  service  laws  to  ensure  respect  of  the  merit  principle  at  all  levels  of 
government  and  strengthen  the  capacities  of  civil  service  agencies  to  improve  human 
resource management and trainings 

Strategic framework for public administration reform 

In  June  2020  the  government  of  the  Republika  Srpska  entity  also  adopted  the  countrywide 
strategic  framework  on  public  administration  reform  (PAR  SF)  2018-2022,  two  years 
after  the  State  and  Federation  entity  governments  had  done  so.  The  related  action  plan  has 
been  developed  with  participation  of  PAR  Coordinators  at  state  and  entities  levels  and 
remains  to  be  adopted  together  with  a  coordinated  monitoring  and  reporting  system  and 
related indicators passport.  

Insufficient political support hinders the coordinated implementation of reforms by all levels 
of government. Due to the lack of political ownership, budgetary resources for implementing 
reforms  are  insufficient.  Financial  sustainability  is  not  ensured,  and  reforms  are  mostly 
donor-driven. The PAR Fund, an instrument to pool donor assistance and local funding, is not 
operational since 2017, preventing coordinated assistance across the country. The country has 
yet  to  demonstrate  political  commitment  to  public  administration  reform  by  establishing  a 
political  decision-making  body  to  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 

The policy-making system  in  Bosnia  and Herzegovina  remains fragmented. The legislative 
framework on medium-term policy planning is incomplete and uneven. The Federation entity 
adopted a set of bylaws regulating annual, three-year and strategic planning. Otherwise, there 

12 

 
 
has been no progress in developing harmonised legal provisions or methodological guidance 
for countrywide strategic planning. There is still no harmonisation between central planning 
documents such as the medium-term and annual government programme, framework budget 
document  and  action  plan  for  implementation  of  priorities  and  no  harmonisation  of  such 
documents with the sector strategies. Quality review remains insufficient. 

The  legal  framework  for  inclusive  and  evidence-based  policy  development  is  incomplete 
and not consistently implemented. The Republika Srpska entity simplified procedures on the 
regulatory  impact  assessment  for  law-making.  The  impact  and  quality  of  the  analysis 
supporting policy proposals needs to be improved across all levels. The financial implications 
are not systemically calculated, and the collection and use of administrative data for policy-
making are not ensured.  

The legal framework on public consultations needs to be improved and applied consistently. 
The legislative framework does not fully establish standards for monitoring and reporting on 
key  government  planning  documents  at  each  level  of  government,  thus  preventing  public 
scrutiny  over  government  work.  Beyond  legislative  measures,  more  efforts  are  needed  to 
raise awareness on various forms of consultation with the public. It remains key to strengthen 
technical capacities at all levels of government on how to regularly use public consultations as 
a tool of policy-making. 

Public financial management 

A  country-wide  public  financial  management  (PFM)  reform  strategy  has  yet  to  be 
developed and adopted to ensure a common reform direction on PFM. The Republika Srpska 
entity continue to lack a PFM strategy, whereas all other levels have continued to implement 
reforms on PFM strategies that come to an end in 2020. However, in light of the COVID-19 
crisis  and  the  need  to  maintain  functioning  PFM  systems,  all  levels  of  government  have 
embarked on a process of developing new PFM strategies until 2025 by establishing working 
groups; the Federation needs to establish the same working group. The challenge continues to 
be that PFM reform programmes at various levels of government need to be further aligned 
with  international  standards  on  budget  formulation  and  execution  procedures,  monitoring, 
transparency of budget data and forecasting. Public institutions at all levels have insufficient 
internal  audit  capacity  and  inadequate  internal  controls,  especially  for  public  procurement. 
Reform efforts need to target the substantial payment arrears of the public sector, in particular 
in  the  health  sector,  and  target  the  management  of  publicly-owned  enterprises  in  order  to 
increase  transparency,  fiscal  sustainability  and  efficiency  in  the  sector.  The  management  of 
public investments needs further upgrading. (See also Chapter 5 and Chapter 32). 

Bosnia  and  Herzegovina  has  not  yet  achieved  sufficient  budget  transparency.  Annual 
budgets  and reports on budget implementation are only published by state-level institutions. 
The lack of harmonisation of the charts of accounts at state and entity level hampers access to 
consolidated data. In-year reporting still has to be improved at all levels. Available budgetary 
information  remains  incomplete,  and  assessing  the  overall  budgetary  and  fiscal  policy  is 
difficult. There is no citizens’ budget at any level of government and budget calendars remain 
to be adopted 

Public service and human resources management 

Ensuring  a  non-politicised,  merit-based  and  professional  civil  service  remains  a  major 
challenge. The Republika Srpska entity and Brčko District made no progress in adopting the 
common  policy  framework  on  civil  service.  Different  working  conditions  embedded  in  the 

13 

 
 
legislation  as  well  as  divergent  practices  across  levels  of  government  (notably  in  respect  of 
selection and recruitment,  scope of the civil  service, transfers and promotions requirements, 
appraisals and disciplinary procedures) could hamper the mobility of civil servants. All levels 
of government lack a coordinated approach to human resource management and civil service 
legislation.  In  particular,  the  Federation  entity  and  cantons  need  to  closely  coordinate  the 
institutional set-up of the civil service. The appointment of PAR coordinators in the cantons at 
the  end  of  2019  was  a  positive  step  towards  improved  coordination  within  the  Federation 
entity.  Political  influence  in  recruitment  and  promotion  procedures  persists  systematically 
across  all  levels,  with  lack  of  transparency  in  the  appointment  of  selection  committees. 
Candidates continue to be selected without applying merit principles and heads of institutions 
continue to use great discretion in final appointments. All civil service laws and recruitment 
practices  have  yet  to  ensure  that  ethnic  criteria  do  not  prevail  over  merit.  The  criteria  for 
dismissals and disciplinary procedures are still insufficiently used, including the possibility to 
appeal.  

Human  resources  management  (HRM)  remains  highly  fragmented.  Civil  service  agencies 
and  training  units  do  not  coordinate  appropriately.  A  general  lack  of  data  and  inconsistent 
methodologies  prevent  comparison  of  performance  on  HRM  practices  across  government 
levels.  Monitoring  of  human  resource  management  is  not  done  consistently  across  levels  of 
government  and civil  service agencies do not  make those data transparent to  the public. No 
progress has been made in establishing functional HRM information systems (HRMIS) across 
all  levels  of  government.  The  State  level  needs  to  adopt  a  legal  basis  to  render  HRMIS 
functional for civil service; the Federation entity has done so in July 2020; for the same aim, 
the  Republika  Srpska  entity  needs  to  clarify  the  responsibilities  on  HRMIS  between 
institutions in charge of public administration and the civil service agency. The administrative 
capacities and coordination of civil service agencies and integrated training units need to be 
strengthened. The remuneration system for civil servants remains inconsistent across public 
institutions and continues to lack transparency, also due to differences across the country in 
salary legislation, job classification, and pay grades. 

Insufficient  resources  are  provided  to  civil  service  agencies  for  training  and  professional 
development.  The  performance  appraisal  system  is  formally  in  place  but  not  used 
systematically  to  justify  promotions.  A  new  rulebook  on  performance  appraisal  of  the  civil 
servants  in  the  Federation  entity  has  introduced  the  use  of  behavioural  competencies  and 
defined objectives as separate criteria for assessing the performance. There was no progress in 
establishing  a  coherent  system  for  fair  performance  appraisal,  promotion  and  training  as  a 
right  of  a  civil  servant.  Different  recruitment  and  promotion  requirements  and  practices 
hamper  the  mobility  of  civil  servants.  There  are  no  systemic,  consolidated  data  on  the 
integrity of civil servants. Public perception of corruption of public officials remains high. 
Due to  the COVID-19 pandemic, civil  service agencies temporary suspended and postponed 
all  recruitment  procedures  in  the  civil  service,  whilst  training  activities were undertaken 
online, where appropriate. 

Accountability of administration 

No progress was made in specifying in the legislation the different functions of administrative 
bodies, or the conditions for establishing, merging or abolishing them. This leaves excessive 
discretion  to  restructure  the  administration  without  consideration  of  the  rationale  and  cost-
effectiveness  of  changes.  Clear  supervision  and  reporting  lines  between  ministries  and 
subordinated  institutions  are  still  lacking.  The  political  level  does  not  sufficiently  delegate 
decision-making  responsibility  to  senior  civil  servants  or  to  middle  management.  (Also  see 

14 

 
 
Chapter 32) 

The recommendations of oversight mechanisms (Parliaments, the State Audit Institution and 
the  Human  Rights  Ombudsman)  are  rarely  implemented.  This  compromises  the  citizens’ 
the 
right  to  good  administration.  Several 
recommendations  addressed  to  them,  although  they  are  legally  obliged  to  do  so.  (Also  see 
Chapter 23) 

institutions  do  not  even  respond 

to 

The  right  to  access  public  information  remains  uneven  due  to  shortcomings  in  statutory 
deadlines for replying to public information requests, an incoherent system to submit requests, 
incompleteness of the information provided by the authorities, hardly accessible information 
to  the public  and the poor 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 still interpreted in a way that protects private rather than public interests. There is a lack of 
effective institutional mechanisms for supervising implementation of the laws or sanctioning 
violations. (Also see Chapter 23) 

The  citizens’  right  to  administrative  justice  remains  uneven  due  to  the  differences  in 
efficiency of courts across the country. There are no effective remedies against the excessive 
length  of  judicial  proceedings.  Though  applicants  may  file  a  case  with  the  Constitutional 
Court,  this  measure  does  not  ensure  acceleration  of  the  pending  proceedings.  (Also  see 
Chapter 23) 

There  is  no  systemic  collection  of  data  on  the  citizens’  right  to  seek  compensation  for 
damage caused by unlawful actions or omissions of the public administration. 

Service delivery to citizens and businesses 

The  legal  framework  for  a  user-oriented  administration  varies  substantially  across  the 
country.  The  adoption  of  a  new  law  on  electronic  identification  and  trust  services  for 
electronic transactions in compliance with the EU acquis is still pending. In October 2019, the 
Office for the Supervision and Accreditation of Certifiers, established within the Ministry of 
Communication and Transport, registered the first trust service provider, paving the way for 
the introduction of qualified electronic signature in the country. 

To foster a user-oriented administration, the country has to ensure a harmonised approach to 
the  modernisation,  simplification  and  digitalisation  of  services.  Special  administrative 
procedures still need to be reviewed and either abolished or brought in line with the laws on 
general administrative procedure. Different levels of authority decided to suspend time limits 
in administrative procedures and disputes, except in urgent cases, for the duration of the state 
of  disaster  or  emergency.  The  delivery  of  public  services  was  adjusted  to  the  specific 
measures to prevent the spread of COVID-19.  Bosnia and Herzegovina should simplify and 
harmonise  business  registration  procedures  and  ensure  full  mutual  recognition  between 
entities, including on concessions and licensing. No one-stop-shop exists for either citizens or 
businesses, except in the Republika Srpska entity. Systematic monitoring of user satisfaction 
with service delivery does not occur at any level. 

2.2.1.  Chapter 23: Judiciary and fundamental rights 

Bosnia  and  Herzegovina  has  some  level  of  preparation  to  implement  the  EU  acquis  and 
European standards in the area of judiciary and fundamental rights.  

No progress was made during the reporting period. Obstruction of justice reform by political 
actors and from within the judiciary, and the poor functioning of the judicial system continued 

15 

 
 
to undermine the citizens’ enjoyment of rights and the fight against corruption and organised 
crime. The authorities and the judiciary have not taken action to  address the findings of the 
Expert Report on Rule of Law issues.3 Corruption is widespread and the fight against it has 
not  advanced.  As  regards  fundamental  rights,  the  provision  on  the  death  penalty  in  the 
constitution  of  the  Republika  Srpska  entity  was  declared  unconstitutional.  The  first  LGBTI 
Pride Parade was held in Sarajevo. 

Functioning of the judiciary 

Bosnia and Herzegovina is at an early stage/has some level of preparation in the area of the 
judiciary. No progress was made in addressing the Opinion key priority 6. Two out of three 
of the 2019 recommendations remain outstanding. The authorities and the judiciary have not 
taken appropriate action to address the findings of the Expert Report on Rule of Law (“Priebe 
report”) issues. Reforms have also met resistance from within the judiciary, in particular with 
regard  to  declaration  and  verification  of  assets  of  judicial  office  holders  and  evaluation  of 
judges and prosecutors.  Evident signs of deterioration require urgent measures to strengthen 
the  integrity  and  regain  citizens’  trust  in  the  judiciary,  starting  with  a  credible  and  rigorous 
system of verification of assets of judicial office holders. Obstruction to justice reform from 
political actors and from within the judiciary, and the poor functioning of the judicial system 
continued to undermine the citizens’ enjoyment of rights and the fight against corruption and 
organised crime.   

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

  adopt the new law on the High Judicial and Prosecutorial Council and the new law on the 

Courts of Bosnia and Herzegovina, in line with European standards; 

  establish urgently a credible and rigorous system of verification of asset  declarations of 
judges and prosecutors, and members of the High Judicial and Prosecutorial Council;  

  apply  consistently  and  significantly  improve  rules  and  practices  on  the  appointment, 
integrity  and  training  of  judges  and  prosecutors;  ensure  that  a  system  of  performance 
appraisal is in place; 

  effectively implement the revised National War Crimes Strategy and put in place a new 

Justice Sector Reform Strategy. 

Strategic documents  

The countrywide 2014-2018 justice sector reform strategy and its action plan are outdated and 
implementation  is  significantly  behind  schedule.  It  has  had  almost  no  impact  on  reforms. 
Bosnia  and  Herzegovina  needs  to  step  up  the  strategy’s  implementation,  notably  by 
establishing  an  updated  timeline  and  by  ensuring  adequate  monitoring  and  funding.  At  the 
same  time,  decisive  action  must  be  taken  to  draft  and  adopt  a  new  strategy  and  action  plan 
without further delay. 

Legal and institutional framework 

The  legal  and  institutional  framework  has  significant  shortcomings.  As  an  Opinion  key 
priority,  the  country  needs  to  adopt  the  new  Law  on  Courts  of  Bosnia  and  Herzegovina  in 

3 http://europa.ba/wp-content/uploads/2019/12/ExpertReportonRuleofLawissuesinBosniaandHerzegovina.pdf 

16 

 
 
                                                           
order to achieve greater legal certainty and improve the functioning of the judiciary, notably 
in  the  fight  against  serious  crime.  The  law  should  clarify  the  courts’  subject-matter 
jurisdiction for particularly serious crimes in line with the standards set out in the Treaty on 
the Functioning of the European Union. 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.  

Judicial self-governance body 

In  the  reporting  period,  numerous  shortcomings  have  become  evident  in  the  independence, 
accountability  and  efficiency  of  the  High  Judicial  and  Prosecutorial  Council  (HJPC),  which 
have further significantly deteriorated trust in the judiciary. Corruption allegations against the 
HJPC  President  have  not  been  properly  investigated.  In  addition,  the  President  did  not 
distance himself from political interference from other branches of government and took part 
in  high-level  political  meetings.  This  significantly  undermines  the  independence  and 
impartiality  of  the  judiciary,  and  how  it  is  perceived  by  the  public.  The  HJPC  did  not  take 
adequate  follow-up  action  in  these  cases,  including  of  disciplinary  nature,  which  remains  a 
matter  of  serious  concern.  In  the  context  of  the  COVID-19  pandemic,  the  HJPC  failed  to 
promptly ensure the continuity of its own activities. It held its first online session only on 30 
April. The HJPC sent to relevant executive and legislative authorities guidance relative to the 
functioning of the judiciary on 22 March 2020, which were implemented through adoption of 
legislative  acts  at  the  level  of  entities  and  Brčko  District,  but  not  at  the  state  level.  The 
monitoring  of  gradual  liberalisation  of  COVID-19  measures  is  ongoing,  with  a  view  to 
establish  further  needs  for  assistance  to  the  entire  judiciary.  The  HJPC  should  monitor  the 
implementation  of  COVID-19-related  measures,  including  its  end  of  April  decision  on 
gradual liberalisation measures, to ensure continuous administration of justice. 

As  an  Opinion  key  priority,  Bosnia  and  Herzegovina  needs  to  adopt  the  new  Law  on  the 
HJPC  on  the  basis  of  the  2018  legislative  initiative  to  strengthen  the  independence  and 
accountability  of  the  HJPC  as  a  guarantor  of  the  independence  of  the  judiciary.  This  law 
should align with European Standards the HJPC’s composition, the election and disciplinary 
responsibility  of  its  members,  as  well  as  reform  the  appointment,  promotion,  performance 
appraisal,  disciplinary  responsibility,  conflict  of  interests  and  integrity  of  judicial  office 
holders, and establish a judicial remedy against all HJPC’s final decisions. These issues need 
to be addressed in the light of the European Commission’s recommendations and the findings 
of the Expert Report on the Rule of Law issues. The final draft law should be submitted to the 
Venice Commission for an opinion, before adoption.  

Independence and impartiality 

No measure was taken in 2019 to improve the independence and impartiality of the judiciary, 
which  needs  to  be  significantly  strengthened  in  line  with  European  standards,  including 
through  additional  constitutional  and  legal  safeguards.  Lack  of  impartiality  and  conflicts  of 
interest continued to be displayed by courts, in particular at the state level. 

The  rules  on  the  appointment,  promotion,  career  advancement,  conflict  of  interests  and 
disciplinary  responsibility  of  judges  and  prosecutors  do  not  sufficiently  safeguard  their 
independence. In particular, appointments and career advancement are not sufficiently based 
on merit. The practice of deviating from the order in which the candidates have been ranked 
during appointment procedures, notably in the case of managerial positions, continued to be 
the  rule  rather  than  the  exception  during  the  reporting  period,  and  is  therefore  a  matter  of 
serious  concern.  Efforts  are  also  needed  to  make  judicial  appointment  procedures  more 

17 

 
 
transparent.  Appointment  decisions  need  to  be  more  thoroughly  motivated,  according  to 
predetermined criteria. Multiple ad-hoc appointment procedures make the system vulnerable. 
Access  to  the  judicial  and  prosecutorial  profession  should  be  managed  though  the 
organisation  of  a  single  annual  examination.  In  addition,  first  access  to  the  judicial  or 
prosecutorial  profession  should  be  conditional  on  completing  a  specialised  preparatory 
programme for candidates, in line with the findings of the Expert Report on the Rule of Law 
issues. Judges and prosecutors throughout the country need to be independent and impartial, 
and  perceived  as  such.  The  new  Law  on  HJPC  should  be  urgently  finalised  and  adopted  to 
address these shortcomings. 

The  application  of  regulatory  safeguards  aiming  to  ensure  impartiality  is  not  consistent, 
notably for conflict of interests. There are no sufficient security features to prevent abuse of 
the random case allocation provided for by the case management system, especially in small 
courts,  where  reassignments  without  a  specific  justification  are  possible.  Judges  and 
prosecutors  remain  subject  to  internal  and  external  pressure,  including  politically  motivated 
threats and intimidation. Such practices need to be forcefully addressed. Dedicated sanctions 
for undue influence of the judicial office holders or public comments that would undermine 
their  independence  are  not  available.  Undue  influence  may  lead  to  disciplinary  or  criminal 
sanctions only in very specific cases. There are no established procedures carrying penalties 
against undue influence or threats to judicial independence. The existing reporting mechanism 
at the level of the HJPC, which may result only in an opinion on the reported cases of undue 
influence, is neither sufficient nor effective. The citizens’ and business world’s perception of 
judicial independence significantly worsened during the reporting period.  

Accountability 

There is no effective and transparent system for the submission, verification and processing of 
the  asset  declarations  of  judges,  prosecutors,  and  members  of  the  HJPC.  This  seriously 
affects the integrity of the judiciary. All courts and prosecutors’ offices have integrity plans, 
however  their  implementation  is  uneven.  The  process  for  recruiting  judges  and  prosecutors 
does  not  include  any  thorough  integrity  and  assets  verification  or  any  assessment  of  the 
candidates’ ethical and moral standards.  

Integrity  reforms  initiated  by  the  HJPC  have  met  resistance  from  within  the  judiciary,  in 
particular  with  regard  to  the  declaration  and  verification  of  assets  of  judicial  office  holders. 
This  is  worrying.  In  January  2020,  the  Court  of  Bosnia  and  Herzegovina  has  annulled  the 
HJPC rulebook on verification of asset  declarations of judicial office holders. This  decision 
seriously  undermines  the  integrity  objectives  of  the  justice  reform  and  raises  impartiality 
questions. The lack of a separate second instance jurisdiction to  review the decisions of the 
Court of Bosnia and Herzegovina further aggravates the issue.  

Decisive action must be taken to regain citizens’ trust in the judiciary, starting with a set of 
indispensable integrity-related amendments to the current Law on HJPC. These amendments 
should  be  urgently  adopted  by  the  legislator,  to  establish  a  credible  and  rigorous  system  of 
verification  of  asset  declarations  of  judges  and  prosecutors,  and  members  of  the  HJPC.  A 
functionally  and  financially  independent  structure  within  the  HJPC  Secretariat  should  be 
entrusted  with  the  verification  of  asset  declarations.  To  alleviate  concerns  about  potential 
abuse and manipulations, greater transparency must  be ensured through  publication of asset 
declarations and close external  monitoring. The asset declarations of management positions, 
in  particular  of  the  president  and  members  of  the  HJPC,  the  court  presidents  and  chief 
prosecutors,  must  be  submitted  and  processed  as  a  matter  of  priority.  Should  important 

18 

 
 
irregularities be detected that amount to a disciplinary case, the file has to be passed over to 
the office of the disciplinary prosecutor and other competent bodies for further investigation. 
The integrity-related amendments to the current Law on HJPC should also provide for access 
to information in order to crosscheck asset declarations, notably with the tax administration. 
Decisive action should also be taken immediately. Voluntary publication of asset declarations 
by  all  HJPC  members  and 
judicial  management  should  be  further  encouraged. 
Implementation  of  integrity  plans  and  code  of  ethics  must  be  stepped  up.  In  July  2020,  the 
HJPC  has  adopted  a  Rulebook  on  Internal  Organisation  and  Systematisation  of  Posts, 
providing  for  an  integrity  structure,  which  is  not  however  operational  with  respect  to  the 
verification of asset declarations.  

Disciplinary  procedures  continue  to  have  little  dissuasive  effect.  There  is  no  specific 
disciplinary measure for the violation of codes of ethics for judges and prosecutors. In 2019 
the  office  of  the  disciplinary  prosecutor  registered  46  complaints  against  47  judicial  office 
holders  (28%  more  compared  to  2018)  –  the  highest  number  ever;  it  completed  42  judicial 
proceedings (25 from 2019, and 17 from 2018). 37 cases resulted in disciplinary measures, of 
which 21 involved disciplinary plea bargaining. Two judicial office holders were dismissed. 
There  has  been  no  progress  in  providing  the  disciplinary  prosecutor  with  greater  autonomy 
and independence from the HJPC. The disciplinary panels are almost exclusively composed 
of  HJPC  members  without  clear  selection  criteria.  This  constitutes  a  potential  conflict  of 
interest,  notably  in  cases  where  the  members  of  the  HJPC  are  subject  to  disciplinary 
procedures.  There  are  no  rules  guaranteeing  full  independence  and  impartiality  of  the 
disciplinary  panels  or  the  right  to  judicial  review  of  their  decisions,  except  in  cases  of 
dismissals. In 2019, the disciplinary panels composed of HJPC members have ruled that the 
HJPC  President  and  members  may  not  be  subject  to  disciplinary  procedures.  This  is  an 
extremely worrying precedent.  The urgent  amendments  to  the current  Law on HJPC should 
provide  for  the  disciplinary  liability  of  all  members  of  the  HJPC,  including  the  President. 
Disciplinary background should be duly taken into account in the performance, appraisal and 
promotion of judicial office holders. The HJPC should consider suspending any appointment 
or promotion until the disciplinary proceedings have been concluded. Failure to submit asset 
declarations,  failure  to  declare  conflict  of  interests,  and  serious  violations  of  the  codes  of 
ethics  should  be  duly  sanctioned  and  accounted  for  during  appointment,  promotion,  career 
advancement  and  appraisal  procedures,  and  should  be  a  ground  for  disqualification  and 
negative  appraisal.  Urgent  amendments  of  the  current  Law  on  HJPC  should  provide  for 
dissuasive sanctions for breach of integrity obligations and an explicit judicial remedy against 
HJPC decisions concerning the career of judges and prosecutors.  

Professionalism and competence 

The appointment and career advancement of judges and prosecutors is not sufficiently based 
on  merit  and  relies  extensively  on  ethnic  criteria  or  other  considerations,  especially  for 
presidents of courts and chief prosecutors. Criteria for access to the judicial profession and in 
particular for promotions remain insufficient. This is a source of serious concern.  

In  May  2020,  by  decision  of  the  Court  of  Bosnia  and  Herzegovina,  the  criteria  on 
performance appraisal for all judges and prosecutors in force since January 2019, have been 
annulled. This precedent is a major setback for judicial reform. Performance appraisal criteria 
are  key  to  promotion  of  a  merit-based  career  of  judicial  office  holders.  This  decision  also 
affects  all  pending  and  future  appointments  and  challenges  the  competency  of  the  HJPC  to 
enact  the  evaluation  criteria  for  all  judges  and  prosecutors,  contrary  to  the  Commission’s 
recommendations  and  the  case  law  of  the  Constitutional  Court.  A  system  of  thorough  and 

19 

 
 
balanced  performance  appraisal  based  on  quality  criteria  must  continue  be  in  place  and 
consistently applied to all judges and prosecutors, in line with the European standards. 

Comprehensive  training  on  public  communication  and  media  relations  for  courts  and 
prosecutors’ offices is required to ensure transparency and public trust in the judiciary.  

Quality of justice 

The  justice  system  is  not  sufficiently  accessible  and  transparent.  Key  court  decisions  and 
confirmed  indictments  are  not  made  available  online,  in  particular  in  corruption  cases.  The 
HJPC received 118 requests for access to information in 2019, all of which were processed. 
The  HJPC  has  no  communication  strategy.  Transparency  and  communication  needs  to  be 
significantly improved in the judiciary’s interaction with legal professionals, justice users, the 
media  and  public  at  large.  The  HJPC  case  law  database,  which  contains  over  12,500 
decisions,  needs  to  be  systematically  populated  with  key  rulings  from  all  jurisdictions  to 
foster consistent case law across the country. The database also needs to become accessible to 
all citizens without charges. Dedicated case law departments should also be in operation in all 
the highest judicial instances.  

Case law lacks  consistency. The legal  status  and effectiveness  of the judicial panels  for the 
harmonisation  of  case  law  in  civil,  criminal  and  administrative  matters  need  to  be 
significantly strengthened. Only the harmonisation panel on criminal law met in the reporting 
period,  adopting  guidelines  on  two  issues.  Ultimately,  Bosnia  and  Herzegovina  needs  to 
establish a judicial body to ensure the consistent interpretation of the law and harmonisation 
of case law across the four legal orders in the country.  

There  are  1,011  judges  and  372  prosecutors,  including  78  court  presidents  and  19  chief 
prosecutors.  60%  of  the  total  number  of  judges  and  prosecutors  and  46%  of  managers  are 
women.  The  2019  budget  for  the  judiciary  is  EUR  137.3  million,  which  is  more  than  the 
2018 budget (EUR 130.5 million accounting for 0.76 % of GDP). In 2019, EUR 104.8 million 
was allocated to courts and EUR 29.6 million to prosecutors’ offices (compared to EUR 99.2 
million  and  EUR  28.6  million  in  2018).  The  funds  allocated  remain  insufficient  to  cover 
investment needs and to improve the judicial infrastructure, since over 70% of the budget is 
spent on salaries and compensations. 

Training  for  judges  and  prosecutors  remains  insufficient.  Significant  improvements  in  the 
duration  and  quality  of  mandatory  training  are  urgently  needed.  Its  content  should  not  be 
limited  to  legal  issues,  but  also  address  values  and  professional  skills.  Court  presidents  and 
chief prosecutors need to be more involved in identifying the training needs of their staff. The 
HJPC needs to strengthen the supervision of all judicial training activities based on the annual 
reports received from entity-level training centres. The coordination of donors’ support should 
be  significantly  improved.  The  entity-level  training  centres  are  observers  to  the  European 
Judicial Training Network (EJTN), however they should benefit from the expertise within the 
network in a more proactive manner. 

A case management system allows monitoring the activities and checking 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. 
The  HJPC  needs  to  step  up  its  oversight  on  the  basis  of  reliable  statistical  data  on  the 
performance of the judicial system, including on case reallocations.  

Efficiency  

20 

 
 
The  length  of  court  proceedings  in  2019  further  decreased  (418  days)  compared  to  2018 
(464  days)  in  non-utility  cases,  as  did  the  clearance  rate  at  103  %  (105  %  in  2018),  but 
remains very high. Weak trial management and lenient enforcement of procedural discipline 
by  judges  add  to  lengthy  proceedings.  Managerial  oversight  of  court  presidents/chief 
prosecutors needs to be increased. Legislation and implementing measures need to be adopted 
urgently to address the excessive length of proceedings.  

The  overall  backlog  for  pending  court  cases  amounts  to  2.1  million  cases,  out  of  which 
approximately  1.9  million  are  cases  of  unpaid  utility  bills.  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  in  the  entities 
and  the  Brčko  District  to  make  debt  collection  more  efficient.  The  backlog  for  non-utility 
cases slightly decreased by 3.7% compared to 2018. Annual quotas to reduce the backlog in 
connection  with  qualitative  performance  appraisal  criteria,  should  further  be  used  to  reduce 
the backlog of cases, without hampering the quality of justice. 

The use of court settlement and alternative dispute resolution methods, notably conciliation 
and  mediation,  needs  to  be  promoted  and  applied  in  line  with  European  standards  and  best 
practices. 

Domestic handling of war crime cases 

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)  is  assessed  as  satisfactory.  The  Prosecutor’s 
Office  of  Bosnia  and  Herzegovina  continues  to  closely  collaborate  with  the  Office  of  the 
Prosecutor  of  the  Mechanism,  processing  an  increasing  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  continues  to  assess  positively  the  work  of  the 
Prosecutor’s  Office  of  Bosnia  and  Herzegovina,  but  noted  that  a  much  lower  number  of 
indictments for war crimes were filed in 2019. 

The  revised  National  War  Crime  Strategy  was  adopted  by  the  Council  of  Ministers  on  24 
September  2020.  Its  adoption  was  pending  since  July  2018.  The  strategy  provides  the 
necessary framework for Bosnia and Herzegovina to process the backlog of war crimes cases 
more  efficiently,  by  providing  clearer  criteria  for  distribution  of  cases  to  lower    courts  and 
prosecutors’ offices and thus allowing the state-level Prosecutor’s Office to focus on the most 
complex  cases.  The  effective  implementation  of  the  revised  National  War  Crimes  Strategy 
should  start  with  no  delay.  Regional  judicial  cooperation  in  processing  war  crime  cases 
remains  largely  ineffective.  The  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  have  helped  to  reduce 
judicial  impunity  but  have  not  been  used  recently.  Cooperation  with  Serbia  has  led  to 
indictments being issued pursuant to  cases transferred from Bosnia and Herzegovina, which 
are  yet  to  lead  to  convictions.  Cooperation  with  Croatia  continued  to  face  a  number  of 
impediments and has not led to tangible results. A protocol with the Montenegro prosecutor’s 
office is in place but is not used.   

Out of the 214 yet unresolved cases, 89 proceedings for war crimes are pending before courts 
in Bosnia and Herzegovina due to the unavailability of the indicted persons. Holding multiple 
citizenships, these individuals are allegedly residing in neighbouring countries. This enables 
them to escape justice by taking advantage of the prohibition in the countries of the region to 

21 

 
 
extradite their own nationals for the criminal offences of genocide, crimes against humanity 
and  war  crimes.  They  are  also  benefiting  from  the  lack  of  progress  of  other  jurisdictions  in 
addressing the crimes in question. Serbia has failed to enforce the final sentence handed down 
in  Bosnia  and  Herzegovina  against  Novak  Djukić,  despite  basic  international  judicial 
cooperation tools which are applicable between the countries concerned.  

War  crime  cases  has  been  gradually  reduced,  however  the  processing  of  these  cases,  in 
particular the most complex ones, is subject to serious delays. The revised national war crimes 
strategy, whose adoption is  pending, should include new timelines for the completion of all 
war crimes cases  by 2023. With an estimated amount of 1,210 cases in  July 2013, the total 
number  of  unresolved  war  crime  cases  had  been  reduced  to  621  (-48.7%)  by  31  December 
2019; around 253 of these were complex cases. An estimated 214 cases (34,5%) are pending 
due to the unavailability of the suspects; they require reinforced regional cooperation. In 2019 
the number of confirmed indictments and the conviction rates remained stable in the entities 
and the Brčko District, while decreasing at the state level. The Prosecutor’s Office of Bosnia 
and Herzegovina should enhance its efforts to process the most complex cases and improve 
the quality of investigations and indictments. 

Fight against corruption  

Bosnia  and  Herzegovina  is  at  an  early  stage/has  some  level  of  preparation  in  the  fight 
against corruption. No progress was made in addressing the Opinion key priority 7 and 2019 
recommendations, which remain outstanding. The authorities and the judiciary have not taken 
action to address the findings of the Expert Report on Rule of Law issues on the fight against 
corruption.  Corruption  remained  widespread  and  all  levels  of  government  show  signs  of 
political  capture  directly  affecting  the  daily  life  of  citizens.  There  has  been  no  progress  on 
effective implementation of anti-corruption strategies and action plans. Lack of harmonisation 
of  legislation  across  the  country  and  weak  institutional  cooperation  and  coordination 
continued  to  hamper  the  fight  against  corruption.  The  track  record  on  prevention  and 
repression of high-level corruption remains very limited, due to operational inefficiency and 
political  interference.  The  authorities  need  to  ensure  appropriate  legislative  and  institutional 
follow-up to the outstanding GRECO recommendations, notably on political party financing 
and conflict of interest. 

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

  adopt the law on the prevention of conflict of interest at state level, and complete the legal 

framework on the protection of whistle-blowers;  

  demonstrate progress towards establishing a track record on the repression and prevention 
of high level  corruption, and ensure an effective  and independent  judicial process  in  the 
COVID-related corruption cases;  

  adopt  a  new  state-level  anticorruption  strategy  and  action  plan,  and  ensure  the  effective 
functioning and coordination of corruption prevention bodies at all levels of government. 

Track record 

In 2019, 51 investigations were initiated by the State Investigation Protection Agency (SIPA) 
into cases of corruption, of which 13 were finalised. 13 reports against 76 persons (68 natural 
and  8  legal  entities)  were  sent  to  the  competent  prosecutors’  offices.  The  trend  shows  that 
only a few investigations have been finalised. 

There were 181 indictments countrywide, with a decrease of 3.8% compared with 2018 while 

22 

 
 
the number of convictions was 221, a large majority of which were suspended sentences. The 
trend  shows  that  there  is  a  very  limited  number  of  final  convictions  in  high-profile  cases. 
During 2019, indictments were filed in 9 cases (10 in 2018). The HJPC has adopted criteria 
for  the  identification  of  high-level  corruption  cases.  Nevertheless,  data  on  final  convictions 
may not be technically retrieved from the Case Management System. This has to be remedied 
with  urgency.  Sanctions  are  not  sufficiently  effective,  dissuasive  and  proportionate.  Plea 
bargain agreements are frequent and sanctions are lenient because of the excessive 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.  

Efforts remain insufficient to establish a track record of proactive investigations, prosecutions 
and  final  convictions  for  corruption.  In  particular,  progress  in  high-level  cases  remains 
insignificant and needs to be seriously stepped up.  

In the area of conflict of interests, a state-level commission has not yet been established. As 
regards  asset  declarations,  585  public  officials  of  state-level  institutions  are  required  to 
submit  their  financial  reports  for  verification.  In  2019,  the  number  of  financial  reports  filed 
was 138; all other officials failed to submit their financial reports. In absence of the state-level 
commission, no reports were checked and no sanctions were imposed. A positive trend was 
recorded  in  the  Sarajevo  Canton,  where  478  out  of  740  office  holders  submitted  asset 
declarations. 230 out of 262 office holders who failed to submit declarations were sanctioned 
with misdemeanour warrants during the reporting period. Identified asset discrepancies have 
been referred for further investigation. Rules on  conflict  of interests  are  not  enforced in the 
Federation  entity  or  in  the  Brčko  District.  Asset  declarations  of  elected  officials  are  made 
available to the public through the website of the Central Election Commission, which has no 
obligation to check their accuracy. In Sarajevo Canton, asset declarations of office holders are 
published on the website of the cantonal anti-corruption office.  

The  Agency  for  Prevention  of  Corruption  and  Coordination  of  the  Fight  against  Corruption 
(APIK) granted administrative protection to whistle-blowers in one case in 2019, compared 
with  two  in  2018.  There  is  no  legislation  on  whistle-blower  protection  in  the  Federation 
entity. Legislation at all levels of government needs to be aligned with the EU acquis. 

Institutional framework 

Corruption Prevention  

The  institutional  framework  on  corruption  prevention  is  largely  in  place  and  dedicated 
corruption  prevention  bodies  have  been  set  up  in  almost  all  jurisdictions.  However,  the 
functioning and coordination of corruption prevention bodies among themselves and with the 
APIK  are  not  sufficiently  effective.  APIK  should  play  a  much  more  proactive  role  in 
implementing  GRECO  recommendations  and  aligning  with  international  standards.  During 
the  reporting  period,  APIK  has  finalised  a  framework  plan  for  the  prevention  of  corruption 
during the COVID-19 pandemic, which led to subsequent action plans agreed by the relevant 
levels of government, except the Republika Srpska entity.  

Corruption  prevention  bodies  at  the  cantonal  level  are  largely  set  up  on  an  ad-hoc  basis, 
without  full-time  professional  members  and  are  subordinated  to  the  cantonal  government. 
Their  independence  needs  to  be  significantly  strengthened,  as  do  human  and  material 
resources. The anticorruption office of the Sarajevo Canton made good progress. In 2019, the 
office  processed  372  reports  of  corruption,  of  which  219  were  sent  on  to  the  competent 
authorities  for  further  investigation  and  action.  No  judicial  follow-up  has  been  reported  in 

23 

 
 
these  cases.  The  Prosecutor’s  Office  of  Sarajevo  Canton,  following  the  publication  of  the 
Expert  report  on  the  rule  of  law  issues,  established  efficient  cooperation  with  the 
anticorruption  office  and  ensured  prosecutorial  follow-up  in  the  reported  cases.  The 
corruption  prevention  body  of  the  Sarajevo  Canton  has  advanced  a  mapping  of  corruption 
risks and adopted a methodology on public procurement monitoring in COVID-19 pandemic-
related measures. The methodology was followed up by the government of Canton Sarajevo. 
It  also  processed  70  reports  of  irregularities,  referring  more  than  20  reports  to  competent 
institutions  for  follow-up.  The  Brčko  District  has  designated  a  body  for  the  protection  of 
whistle-blowers, however it still needs to be rendered operational. 

Bosnia  and  Herzegovina  needs  to  introduce  a  comprehensive  and  effective  system  of 
electronic public procurement to foster transparency and reduce abuse of public resources. An 
enhanced monitoring system of possible abuses of the Law on Public Procurement during the 
COVID-19  pandemic  was  implemented  by  the  Public  Procurement  Agency  of  Bosnia  and 
Herzegovina and prosecutor’s offices throughout the country. 

Law enforcement 

The  criminal  justice  policy  throughout  the  whole  country  is  largely  ineffective  in  the  fight 
against  corruption.  This  is  in  part  due  to  inadequate  penalties  that  do  not  ensure  sufficient 
deterrence. Deep legal fragmentation and frequent conflicts of jurisdiction leading to transfers 
of  cases  slow  down  proceedings  and  reduce  efficiency.  The  police  is  not  proactive  in 
launching investigations.  

Special  Prosecution  Offices  were  established  at  the  state  level  and  in  the  Republika  Srpska 
entity.  However,  their  effectiveness  in  fighting  corruption  remains  very  weak.  Specialised 
departments at the Federation prosecutor’s office and at the Supreme Court have not yet been 
set up. Specialised departments in prosecutor’s offices must start to deal effectively with high-
level  corruption  cases  and  their  independence  must  be  significantly  strengthened.  Pressure 
and interference in ongoing investigations, especially in high level cases, has continued and is 
a source of major concern. 

The state level prosecutor’s office started an investigation in one case of alleged fraud related 
to  the  public  procurement  of  COVID-19  medical  equipment,  largely  reported  in  the  media. 
The  investigation  is  still  ongoing.  This  case  triggered  unprecedented  interference  with  the 
investigation.  Such  undue  pressure  on  the  independence  of  the  judiciary  is  worrisome.  The 
Court  of  Bosnia  and  Herzegovina  rejected  the  prosecutors’  request  for  custody  of  the 
suspects,  and  ordered  the  preventive  measure  of  prohibition  to  contact  other  suspects  or 
witnesses.  Contrary  to  its  prior  practice,  the  court  did  not  order  the  supervision  of  these 
preventive measures by the law enforcement agency.  

Legal framework 

The lack of harmonisation of legislation across the country and weak institutional cooperation 
and  coordination  continued  to  hamper  the  fight  against  corruption.  The  country  made  no 
progress  in  adopting a  comprehensive law on prevention of  conflict  of interest,  in  line  with 
international standards. The Federation entity needs to adopt legislation on conflict of interest 
as  well  as  on  the  effective  protection  of  whistle-blowers.  The  Brčko  District  needs  to 
introduce an effective system of monitoring and prevention of conflict of interest.  Republika 
Srpska entity needs to align its conflict of interest legislation with international standards.  

Lack  of  transparency  seriously  hinders  the  fight  against  corruption.  The  legislation  on 
political party financing needs to be further aligned with international standards, particularly 

24 

 
 
with pending GRECO recommendations. Legislation on freedom of access to information at 
state and entity level  needs  to  be further aligned with  international  and European standards. 
Data protection laws are interpreted in a way that protects private rather than public interests. 
There is no legislation to effectively prevent and address corruption in the private sector and 
no regulation of lobbying.  

None  of  the  GRECO  recommendations  have  been  implemented  in  their  entirety.  The 
authorities  need  to  ensure  appropriate  legislative  and  institutional  follow-up  to  fulfil  the 
outstanding  recommendations,  notably  on  political  party  financing  and  conflict  of  interest. 
The  Central  Election  Commission’s  Audit  Department  needs  stronger  capacities  to  monitor 
compliance with political party financing regulations. 

Strategic framework 

Anti-corruption strategies and action plans have been put in place across the country, but need 
to  be  urgently  updated  and  harmonised.  There  has  been  no  progress  on  effective 
implementation in 2019. The state-level anticorruption strategy and action plan have expired. 
New  strategic  documents  need  be  adopted  with  no  delay  and  their  implementation 
significantly improved. Anti-corruption strategies need to be harmonised across the country; 
adequate funding should be provided and monitoring mechanisms established to ensure their 
implementation.  

Fundamental rights  

The legislative and institutional framework on fundamental rights is largely in place. Limited 
efforts were made over the reporting period to address the Opinion key priorities 5 and 9-13 
on fundamental rights. Notably, the Constitutional Court repealed the provision on the death 
penalty  in  the  Republika  Srpska  entity  constitution,  and  the  first  LGBTI  Pride  Parade  took 
place peacefully in  Sarajevo. The  exercise of  freedom  of assembly remains restricted in  the 
Republika  Srpska  entity,  where  activists  have  been  subject  to  intimidation  and  judicial 
prosecution. Significant  reforms  are needed to  ensure that all citizens are able to effectively 
exercise  their  political  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  end  in  order  to  overcome  the  practice  of  ‘two  schools  under  one  roof’  and  ensure 
inclusive and quality education for all. Gender-based violence, ill-treatment of detainees and 
the protection of minorities, including the Roma4, are also issues of concern. The country also 
needs to develop a comprehensive strategic framework on human rights and on the protection 
of  minorities,  including  on  transitional  justice.  Last  year’s  recommendations  remain 
outstanding.                                                                                                                                               

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; 

  ensure full respect, protection and promotion of freedom of assembly and expression, and 

refrain from further actions that adversely impact the exercise of these rights. 

4  In  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. 

25 

 
 
                                                           
Bosnia  and  Herzegovina  is  not  an  observer  country  of  the  European  Union  Agency  for 
Fundamental  Rights.  The  country  should  already  apply  the  Agency’s  methodology  for  the 
collection of relevant data on fundamental rights. 

Bosnia  and  Herzegovina  has  ratified  all  major  European  and  international  human  rights 
instruments,  most  of  which  are  included  in  its  Constitution.  Bosnia  and  Herzegovina 
underwent  the  third  cycle  of  the  Universal  Periodic  Review  on  13  November  2019;  UN 
Member  States  issued  207  Recommendations,  of  which  the  country  accepted  204.  The 
country did not notify the Council of Europe as regards the state of disaster / emergency and 
the measures undertaken during such a period in derogation to the ECHR. 

The  European  Court  of  Human  Rights  (ECtHR)  delivered  21  judgments  concerning  379 
applications  in  2019 (up from  6 in  2018)  finding that Bosnia  and Herzegovina had violated 
rights guaranteed by the European Convention on Human Rights, most of them related to the 
right to a fair trial, protection of property, right to liberty and security, freedom of expression 
and non-discrimination. 1,784 applications were submitted to the Court during 2019, bringing 
the total number of applications pending before the court to 1,816. There are three groups of 
cases  under  standard  and  enhanced  supervisory  procedure,  concerning  electoral  rights, 
repossession of properties, and detention conditions for vulnerable persons. The Sejdić-Finci, 
Zornić,  Šlaku  and  Pilav  rulings  require  constitutional  amendments  to  ensure  the  equality  of 
political rights among all citizens; they have not been implemented. 

Bosnia  and  Herzegovina  has  no  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  in  the  absence  of  these  strategies,  the 
protection of human rights continues to be uneven across the country.  

The  Law  on  the  Ombudsman  has  to  be  amended  in  line  with  the  2017  re-accreditation 
recommendations, in order to improve the Ombudsman’s independence and effectiveness and 
designate  it  as  a  national  preventive  mechanism  against  torture  and  ill-treatment  –  an 
international  obligation  of  the  country;  the  House  of  Representatives  has  rejected  such 
amendments during the reporting period. The tripartite composition and consensual decision-
making  of  the  Ombudsman  institution  needs  to  be  revised  in  the  mid-term  to  ensure  its 
effective  functioning.  In  2019,  the  Ombudsman  received  3,218  complaints  and  issued  304 
recommendations  out  of  which  109  (35%)  were  implemented  by  public  and  private 
institutions, the same rate as in 2018 and 2017. The Ombudsman has not opened any minor 
offence proceedings for non-compliance with its recommendations in the past 5 years, despite 
having competence to do so. It also has not made use of its competence to initiate or intervene 
in administrative or judicial proceedings. During the state of natural disaster / emergency, the 
Ombudsman  called  upon  the  authorities  to  ensure  in  particular  the  protection  of  the  human 
rights of vulnerable categories of citizens and to safeguard freedom to provide information.  

On the right to life, in October 2019 the Constitutional Court repealed the provision on death 
penalty  in  the  Republika  Srpska  entity  constitution.  The  issue  was  listed  among  the  key 
priorities on fundamental rights in the 2019 Commission Opinion.  

As  regards  torture  and  ill-treatment,  the  Ombudsman  received  129  complaints  in  2019, 
down from 144 in 2018. Reports of ill-treatment of suspects and prisoners in police stations 
and  detention  facilities  are  processed  at  a  slow  rate  and  only  a  few  officers  are  punished. 
Bosnia and Herzegovina needs to fulfil its obligations under the Convention against Torture, 
including by adopting a state-level framework law clearly defining countrywide criteria on the 
rights  of  civilian  victims  of  war-time  torture,  which  remain  uneven  across  the  country.  In 

26 

 
 
August 2019, upon a petition of wartime sexual violence victims, the UN Committee against 
Torture condemned the practice of application of statute of limitations in compensation claims 
and  requested  Bosnia  and  Herzegovina  to  establish  an  effective  reparation  scheme  at  the 
national  level  to  provide  adequate  and  just  satisfaction  to  victims  of  torture.  The  country 
needs to ensure full compliance with this decision. 

Legislation  on  the  prison  system  is  neither  sufficiently  harmonised  throughout  the  country 
nor fully aligned with European and international standards. The Bosnia and Herzegovina law 
on  execution  of  criminal  sanctions  was  last  amended  in  2013  with  provisions  on  mutual 
cooperation,  specialised  professional  training  and  National  Preventive  Mechanism,  amongst 
others. While legislation on the execution of criminal sanctions has entered into force in 2018 
in  the  Republika  Srpska  entity,  similar  legislation  remains  to  be  adopted  in  the  Federation 
entity  to  address  long-standing  issues,  such  as  transfer  of  prisoners  across  Entity  borders, 
professionalisation of prison management and security staff and setting-up of a fully-fledged 
parole system. There is no countrywide strategy on the prison system. The State prison in East 
Sarajevo was opened in  July 2020, three  years after completion, but  is  not  yet  in  operation. 
Bosnia and Herzegovina should improve detention conditions in prisons and police detention 
facilities  and  bring  them  in  line  with  European  and  international  standards,  including  by 
introducing  social  reintegration  programmes  for  former  inmates  and  digitalisation.  The 
country  should  further  expand  the  use  of  alternatives  to  detention,  in  particular  in  the 
Republika  Srpska  entity.  Prison  system,  healthcare  and  social  care  services  lack  effective 
institutional  cooperation.  During  the  pandemic,  visits  to  inmates  were  suspended,  save  for 
defence attorneys. 

Bosnia  and  Herzegovina  lacks  a  countrywide  strategy  on  transitional  justice  to  ensure  a 
policy framework for dealing with the legacies of the past. The political environment remains 
divisive  and  not  conducive  to  reconciliation.  Well-documented  and  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  and 
domestic tribunals. Convicted war criminals are still glorified. All actors need to demonstrate 
full  cooperation  with  the  international  tribunals  by  acknowledging  and  respecting  their 
decisions. Revisionism and denial contradict the most fundamental European values. 

The unresolved fate of missing persons is a matter of concern. 7,532 people are still missing 
as  a  result  of  the  conflict,  of  which  194  were  identified  in  2019,  according  to  the  data 
provided by the Bosnia and Herzegovina Missing Persons Institute as of April 2020. Bosnia 
and Herzegovina needs to assume full responsibility and ownership of the process. While the 
Missing Persons Institute 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.  The  lack  of  local  forensic  capacity, 
especially  in  the  Federation  entity,  hampers  identification.  Further  efforts  are  needed  on  a 
regional scale to solve the issue of persons who disappeared in relation to the conflicts of the 
1990s. 

Bosnia and Herzegovina needs to bring its laws in line with EU data protection legislation. 
In July 2020 the country signed the Protocol 223 amending the Council of Europe Convention 
for the protection of individuals with regard to the automatic processing of personal data; it 
now needs to ratify it. The offence of unauthorised use of personal data is included in all four 
criminal  codes  in  the  country. The Personal  Data Protection Agency needs adequate human 
and financial resources to perform its tasks effectively. The Agency conducted 66 procedures 
ex officio in 2019, a decrease from 69 in 2018 and 45 in 2017. It received 131 complaints in 

27 

 
 
2019 compared to 140 in 2018 and 96 in 2017. The Agency conducted 16 inspections in 2019 
(42 in 2018 and 83 in 2017). It issued 25 minor offence orders in 2019 (15 in 2018 and 15 in 
2017).  In  2019  there  were  21  administrative  proceedings  against  decisions  of  the  Agency 
before the Court of Bosnia and Herzegovina – compared to 12 in 2018 and 2017. The Agency 
provided 376 expert opinions in 2019 (169 in 2018 and 180 in 2017) and 15 opinions on laws 
and by-laws in 2019 (37 in 2018). Following the introduction in the State Parliament’s rules 
of  procedure  of  an  obligation  to  consult  the  Agency  on  legislative  proposals,  such  a 
requirement is still not introduced at other levels of government.  In April 2020, the Agency 
prohibited authorities at all levels to publicly disclose the data of persons who are positive to 
COVID-19 and persons who received orders on isolation and self-isolation; it also stated that, 
while it is not illegal to publish a minimum of information on persons who violate the laws or 
certain prohibitions, it is however contrary to the law to proactively and generally publish data 
on persons violating restrictive measures 

Freedom of expression  

There is some level of preparation on freedom of expression. The country made no progress 
on addressing the Opinion key priority 12 on guaranteeing freedom of expression and of the 
media and the protection of journalists by ensuring the appropriate judicial follow-up to cases 
of  threats  and  violence  against  journalists  and  media  workers,  and  ensuring  the  financial 
sustainability of the public broadcasting system. Last  year’s recommendations remain valid. 
The legislative framework needs to be aligned with European and international standards and 
fully  enforced.  Political  influence  over  public  broadcasters  persists,  and  their  financial 
sustainability  has  not  been  secured.  The  law  on  the  public  broadcasting  system  remains 
unimplemented  and  entity-level  legislation  is  still  not  harmonised  with  this  Law.  Political 
pressure,  intimidation  and  harassment  towards  journalists,  including  physical  and  verbal 
attacks continued during the reporting period, without appropriate institutional follow-up. 

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

  ensure the protection of journalists and a systematic institutional follow-up on 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. 

Intimidation of journalists  

Serious  concern  persists  over  political  pressure,  intimidation  and  threats  against  journalists, 
and particularly women journalists. The authorities continue to downplay the intimidation of 
journalists, and their reaction remains weak. Public institutions do not collect data on threats 
and attacks against journalists and media workers. The BH Novinari association recorded 56 
cases  of  violation  of  journalists’  rights  in  2019,  including  9  cases  of  physical  assault,  21 
threats  out  of  which  8  death  threats,  and  10  cases  of  political  pressure.  29  additional  cases 
have been registered since the beginning of 2020. The Ombudsman received 18 complaints, 
up  from  9  in  2018.  In  July  2019,  the  Banja  Luka  court  condemned  in  first  instance  for 
attempted murder one of the assaulters of a journalist who had been reporting on the ‘Justice 
for  David’  demonstrations  in  August  2018.  Authorities  are  expected  to  act  swiftly  and 
demonstrate  zero  tolerance  for  threats  or  attacks  against  the  media,  including  by  ensuring 
effective  police  investigations  and  judicial  prosecution  leading  to  final  convictions  of 

28 

 
 
perpetrators.  

Legislative environment  

Defamation has been decriminalised since 2002, but politicians continue to use civil suits to 
intimidate journalists. Courts should step up their efforts to ensure an expedient processing of 
defamation  cases  and  consistency  of  case  law  on  damage  awards,  to  prevent  any  chilling 
effect  that  would  force  journalists  into  self-censorship.  Legislation  on  freedom  of  access  to 
information  remains  non-harmonised  across  the  country  and  is  still  not  in  line  with 
international  and  European  standards.  Legislation  on  hate  speech  still  needs  to  be  fully 
aligned with the ECtHR case law and the EU acquis. Legal provisions on data protection and 
on access to information are still interpreted in a way that protects private rather than public 
interests.  Legislation  prohibiting  the  transmission  of  information  that  may  cause  panic  or 
severely violate public peace and order was in force in the  Republika Srpska entity from 19 
March to 17 April 2020. Such legislation has a chilling effect on freedom of expression for 
both media and individuals, leading to the risk of self-censorship. 

Implementation of legislation/institutions  

The Communications Regulatory Agency (CRA) enjoys operational independence, but lacks 
full political and financial independence. The procedure to appoint its management needs to 
be improved. This would also help improve its public perception as a neutral and independent 
body.  The  CRA  was  active  during  the  COVID-19  crisis,  issuing  recommendations  and 
instructions.  

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  broadcasting  services  are 
exposed to political influence, in particular through politically controlled steering boards, with 
a  worrying  trend  of  self-censorship.  The  country  does  not  have  an  appropriate  model  for 
collecting fees, as provided for by the law. Entity broadcasters have substantial unpaid debts 
towards  the  state-level  broadcaster,  which  are  subject  to  lengthy  litigation.  Such  issues 
continue  to  pose  a  threat  to  the  financial  independence  and  sustainability  of  the  public 
broadcasting  system.  Bosnia  and  Herzegovina  also  needs  to  proceed  with  the  digital 
switchover, which is now overdue. (Also see Chapter 10 – Information society and media) 

Economic factors 

Bosnia and Herzegovina needs to adopt legislation on media ownership transparency and set 
up a detailed register that would give systematic insight into ownership structures and prevent 
hidden  media  concentration.  Local  public  broadcasters  are  not  included  in  the  public 
broadcasting  system  and  receive  funds  from  local  government  budgets,  with  strong  risks  of 
political pressure and influence in the absence of clear criteria for the distribution of subsidies. 
Bosnia and Herzegovina should adopt legislation on advertising in the media, in particular for 
publicly owned enterprises such as telecom companies. Media integrity is also harmed by the 
advertising practices of public companies and advertising agencies linked to political parties. 
The  lack  of  transparency  and  clear  criteria  in  the  distribution  of  subsidies  is  a  matter  of 
concern.  

Internet  

Freedom of expression online is still not specifically regulated across the country. The Press 
Council regulates online media and handles complaints. Self-regulation of online media is of 

29 

 
 
limited effect, and online platforms are often used to incite hatred and spread disinformation. 
Online  hate  speech  is  on  the  rise.  Criminal  prosecution  is  limited  to  the  offence  of  inciting 
religious and ethnic hatred through the internet or social networks. 

Professional organisations and working conditions  

Journalism in Bosnia and Herzegovina remains a precarious profession, with low wages and 
little job security, deteriorating even more during COVID-19 crisis. A significant number of 
journalists  work  without  an  adequate  contract  nor  guarantees  against  dismissals  or 
disciplinary  measures,  leaving  them  vulnerable  to  undue  influence  from  editors  or  owners. 
The employment rights provided by the entity-level labour laws are 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 many but they are weak and enjoy 
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  fostering  professionalism  and  integrity.  All  the  major 
media  outlets  have  committed  to  comply  with  the  Press  Council’s  press  and  online  media 
code as the basis of self-regulation, but their compliance remains uneven. 

Freedom of thought, conscience and religion  

The constitutional and legal guarantees of freedom of thought, conscience and religion have 
generally continued to be upheld. While religious tolerance has been symbolically promoted 
on some occasions, cases of discrimination, hate speech and hate crimes on religious grounds 
continue to  occur, as do incidents  targeting religious sites. Religious  communities generally 
adhered to COVID-19 restrictive measures, including in performing religious services. 

Freedom of assembly and association  

Freedom of assembly laws need to be harmonised across the country and brought in line with 
European standards, in particular when it comes to grounds for restriction and responsibility 
of organisers. The Brčko District adopted in July 2020 a law on freedom of assembly, largely 
in  line  with  European  standards.  Civil  society  organisations  have  also  reported  increasing 
attempts  by  authorities  to  restrict  peaceful  assemblies.  Members  of  the  ‘Justice  for  David’ 
movement  have  been  unable  to  organise  gatherings  in  Banja  Luka  ever  since  the  violent 
dispersal  by  the  police  in  December  2018.  Activists  are  on  trial  in  Banja  Luka  for,  among 
other things,  shouting ‘justice’ on the streets.  In September 2019, the first  Pride March was 
organised  successfully  in  Sarajevo,  with  a  counter  demonstration  held  the  day  before. 
Although the legislation remains restrictive, the Sarajevo Canton police acted professionally 
in facilitating both public assemblies. The second Pride March, planned for August 2020, took 
place online and in limited physical form due to the deterioration of the COVID-19 situation. 
In December 2019, the cantonal police violently dispersed environmental protests in Mostar. 
The authorities should refrain from actions that adversely impact the exercise of freedom of 
assembly,  and  adopt  measures  to  ensure  the  full  enjoyment  of  such  rights.  In  light  of  the 
COVID-19 pandemic, authorities imposed temporary measures restricting public gatherings. 

Freedom of association is generally upheld. However, activists dealing with sensitive issues, 
in particular women's rights, have been subject to threats, verbal abuse and physical attacks. 
Misuse  of  public  funds  to  support  associations  at  various  levels  of  government  has  been 
reported.  As  a  key  priority,  the  authorities  need  to  promote  a  conducive  and  enabling 
environment  for  civil  society,  free  from  corruption,  and  ensure  that  any  legislative 
development on freedom of association is subject to effective consultation. 

30 

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

Regarding  property  rights,  the  authorities  need  to  update  and  interconnect  the  entity-level 
cadastre and land registry databases. There is no legislative framework on handling restitution 
claims. Some cases related to repossession remain pending. The Commission for real property 
claims  of  displaced  persons  and  refugees  has  not  resumed  operations.  In  October  2019,  the 
ECtHR recognised a violation of the right to property in the case of Fata Orlović, and ordered 
the country to remove from the applicant’s land the church that was built there after the war. 
Implementation of the ruling is pending. 

Concerning  non-discrimination policies,  countrywide  human  rights  and  anti-discrimination 
strategies have  yet to be adopted. The  Law on the prohibition of discrimination aims at full 
alignment  with  the  EU  acquis,  but  it  is  not  applied  effectively,  and  there  is  no  adequate 
collection of reliable statistical data. The Ombudsman registered 206 cases in 2019, up from 
196  in  2018  and  174  in  2017.  Discrimination  remains  under-reported,  particularly  at  the 
workplace. The ECtHR  Sejdić-Finci case-law has still not been implemented. Disputes over 
education  continue,  whilst  systemic  solutions  for  ensuring  inclusive  and  non-discriminatory 
education  are  not  in  place.  The  common  core  curriculum  has  not  yet  been  completed  or 
applied  throughout  the  country,  and  the  availability  of  teaching  in  the  national  groups  of 
subjects remains limited. No progress was achieved in eliminating the ‘two schools under one 
roof’  phenomenon,  which  is  in  breach  of  a  2014  ruling  by  the  Federation  entity  Supreme 
Court. There was some progress in recognising the name of the Bosnian language in schools 
in  the  Republika  Srpska  entity.  In  December  2019,  the  Supreme  Court  of  the  Republika 
Srpska entity recognised the discrimination and violation of the right to education of Bosniak 
pupils  and  ordered  the  Vrbanjci  branch  school  to  introduce  subjects  from  the  Bosnian 
curriculum for them; these subjects remain not available for the school year 2020/2021. Due 
to  the  COVID-19  pandemic,  schools  were  closed  in  mid-March  and  online  education 
introduced  until  the  end  of  the  school  year.  Separate  online  platforms  for  the  Bosnian  and 
Croat language curriculums are used in the Herzegovina-Neretva and Central Bosnia cantons. 

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 and it still needs to be aligned with the EU acquis. Failure to identify acts as 
hate crimes and the high burden of proof still makes it difficult to establish intent, leading to 
few  indictments  and  convictions.  130  hate  incidents  were  recorded  and  1  conviction  was 
handed down in 2019, compared to 121 and 2 in 2018, and 175 and 1 in 2017. Five trials are 
ongoing. The case law on hate crimes is not consistent. The authorities need to take concrete 
measures  to  counter  hate  speech  in  the  printed  and  electronic  media,  as  well  as  in  official 
discourse.  There  is  a  lack  of  monitoring  mechanisms  and  enforcement  of  the  prohibition  of 
hate  speech  in  online  media.  Bosnia  and  Herzegovina  ratified  the  Council  of  Europe 
Convention  on  cybercrime  and  its  additional  protocol  in  2006,  but  its  implementation  has 
been slow. 

Equality between women and men is largely provided for in the legislation, which remains 
to  be  harmonised  across  the  country  and  effectively  enforced.  The  Republika  Srpska  entity 
further  aligned  its  legislation  on  protection  against  family  violence  with  the  Istanbul 
convention;  it  entered  into  force  on  1  January  2020.  The  country  has  a  2018-2022  gender 
action plan, as well as an action plan on women, peace and security. In May 2019, the EU and 
Bosnia and Herzegovina adopted a joint roadmap for action on the G7 partnership initiative 
for  the  implementation  of  UN  Resolution  1325  on  women,  peace  and  security.  Women  are 

31 

 
 
under-represented  in  politics  and  public  life.  Gender  impact  assessments  of  policy  and 
legislative  processes  are  not  carried  out,  although  they  are  required  by  law.  As  for  the  pay 
gap, despite the lack of official data, women are estimated to 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.  The  institutional  response  to  gender-based 
violence  needs  to  be  improved,  including  on  protective  measures,  victim  support,  legal  aid 
and  safe  accommodation.  Bosnia  and  Herzegovina  needs  to  accelerate  the  prosecution  of 
crimes of sexual violence, provide reparation to women who are victims of war crimes, and 
secure witness protection. 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. 
The  Ministry  for  Human  Rights  and  Refugees  and  the  Gender  Equality  Agency  have  been 
active in ensuring gender mainstreaming of measures taken during the COVID-19 pandemic. 
(Also see Chapter 19; on women victims of trafficking in human beings, see Chapter 24).  

As regards the rights of the child, Bosnia and Herzegovina needs to develop and adopt a new 
action  plan  on  child  protection.  In  2019,  the  Ombudsman  received  198  complaints  on 
children’s  rights  (216  in  2018,  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. Bosnia and Herzegovina is reforming its child protection system, moving 
towards  community-based  care.  Foster  care  and  alternative  solutions  for  children  should  be 
promoted,  and  measures  should  be  taken  to  prevent  family  separation.  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.  Not  all  children  are  covered  by 
compulsory health insurance, and marginalised groups, such as the Roma, face multiple forms 
of discrimination. The authorities need to collect precise and consistent data on child poverty 
rates  and  violence  against  all  children.  Unaccompanied  migrant  children  face  specific 
difficulties,  such  as  accessing  safe  accommodation  and  asylum  procedures.  533 
unaccompanied migrant children were identified in 2019, up from 324 in 2018. Only 304 of 
them  were  appointed  a  legal  guardian,  as  provided  for  by  law,  up  from  29  in  2018. 
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.  In  April 
2020, the Constitutional Court established that COVID-19 restrictions on movement imposed 
in  the  Federation  entity  on  persons  under  18  and  over  65  years  were  not  proportionate  and 
strictly time-limited. 

The legal framework on juvenile justice is in place, but entity-level laws 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 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 June 
2020, there were 39 minors in prisons. 

Persons  with  disabilities  remain  among  the  most  vulnerable  groups.  Multi-sectoral  and 
comprehensive  implementation  mechanisms  are  still  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 on the rights of 
persons  with  disabilities,  of  which  the  country  is  party.  Both  entities  adopted  strategic 
frameworks for advancement of the rights and status of persons with disabilities. Bosnia and 

32 

 
 
Herzegovina does not have a uniform definition of disability, nor 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. 
Children  with  disabilities  are  one  of  the  most  marginalised  and  excluded  groups,  facing 
stigma and discrimination. The quality of services is not adequate for their needs, especially 
in  health  and  education.  Many  are  placed  in  residential  institutions,  in  violation  of  the  UN 
Convention  on  the  Rights  of  Persons  with  Disabilities.  Institutionalisation  of  children 
negatively impacts their full, effective and equal participation in society and exposes them to 
mistreatment and abuse. A strategy on deinstitutionalisation is still missing. The management 
of the Pazarić care institution was dismissed in  November 2019 for alleged mistreatment of 
children and adults with disabilities; a criminal investigation is ongoing. (see also Chapter 28 
– Consumer and Health Protection) 

The  country  has  yet  to  adopt  an  action  plan  on  the  rights  of  lesbian,  gay,  bisexual, 
transgender and intersex (LGBTI) persons; work on its development resumed in 2019 and 
continued in 2020. The four criminal codes are harmonised to include hate crimes on grounds 
of  sexual  orientation  and  gender  identity;  the  prosecution  of  hate  crimes  and  hate  speech 
against LGBTI persons remains insufficient. The legal system fails to recognise the social and 
economic rights of same-sex couples, including the right to family life. The social inclusion of 
intersex  and  transgender  persons,  who  are  particularly  marginalised,  has  to  be  improved.  In 
September  2019,  the  first  pride  parade  was  held  in  Sarajevo  without  incidents  amid  heavy 
security;  over  2,000  participants  expressed  their  support  for  LGBTI  rights  and  other 
marginalised communities, as well as the right to freedom of assembly and expression of all 
citizens.  Events  related  to  the  second  Pride  March,  planned  for  August  2020,  took  place 
online and in limited physical form due to the deterioration of the COVID-19 situation. 

The  procedural  rights  of  suspects,  accused  persons,  witnesses  and  victims  are  generally 
upheld,  although  access  remains  uneven  across  the  country.  The  four  criminal  procedure 
codes  in  the  country  are  yet  to  be  further  harmonised,  and  their  enforcement  varies.  The 
practice is not fully in line with the ECtHR case law and with the EU acquis on the right to 
immediate  access  to  a  lawyer  while  in  police  detention.  No  progress  was  made  in  adopting 
measures to address systemic violations of the right to a fair trial within a reasonable time and 
the right to an effective remedy, as identified by the Constitutional Court.  

The  legal  framework  on  legal  aid  should  be  completed  by  adopting  laws  in  the  Federation 
entity and the Central Bosnia Canton. A countrywide assessment of legal aid needs should be 
carried out to determine and address the main gaps to ensure effective equal access to justice 
for  all  irrespective  of  places  of  residence.  Without  comprehensive  coverage  and  clear 
minimum  common  standards,  the  right  to  legal  aid  continues  to  be  upheld  unevenly,  to  the 
detriment of the most vulnerable.   

Respect for and protection of minorities and cultural rights 

While the legislative and institutional framework for the protection of minorities is largely in 
place,  its  implementation  is  limited.  Members  of  national  minorities  continue  to  have  low 

33 

 
 
participation  in  political  and  public  life.  Bosnia  and  Herzegovina  still  lacks  a  countrywide 
strategic  document  on  national  minorities.  In  2019,  the  Ombudsman  received  seven 
complaints concerning minority rights, up from four in 2018.  

The Roma (estimated at 58,000) are the most vulnerable and disadvantaged minority. Roma 
women in particular face multiple forms of discrimination. The social inclusion of the Roma 
requires  a  comprehensive  and  integrated  approach  based  on  reliable  data.  The  action  plans 
implementing  the  2005  Roma  strategy  require  appropriate  funding  from  competent 
institutions  at  all  levels  and  constant  monitoring,  including  by  the  Roma  Committee.  The 
government has started the preparations and should adopt a comprehensive Roma action plan 
encompassing  all  relevant  sectors  (housing,  employment,  education,  healthcare,  and  cross-
cutting issues). Further cooperation among all levels  of government  is  needed in  addressing 
Roma inclusion issues. As regards housing, the legalisation of informal settlements is ongoing 
but  uneven.  Discrimination  in  employment  is  rampant,  with  very  high  unemployment  rates. 
Compulsory  education  enrolment  rates  have  increased,  but  the  number  of  school  drop-outs 
remains very high. There are no segregated classes or schools. There is no teaching in and of 
the Romani language, and the awareness of Roma culture among 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. The Ministry of Human Rights and Refugees received 
12 complaints related to Roma and their access to social assistance and housing in 2019. The 
process  of  civil  registration  is  well  advanced.  This  accomplishment  needs  to  be  made 
residence 
sustainable  by 
requirements  for  birth  registration  and  for  access  to  healthcare  and  education  and  the 
recognition of documents for children born abroad. Prejudices and anti-gypsyism still hinder 
the  social  integration  of  the Roma.  The  Declaration  of  Western  Balkans  Partners  on  Roma 
Integration  within  the  EU  Enlargement  Process  (Poznań  Declaration)  was  endorsed  by  the 
government. The mapping of needs of Roma has to start; the government is working with the 
Regional  Cooperation  Council  on  mapping  and  consolidating  learning  models  on  Roma 
language  and  culture  in  view  of  including  them  in  the  education  curricula.  The 
implementation of the conclusions from the February 2020 seminar on the social inclusion of 
the Roma must be closely monitored and reported. The authorities, in cooperation with donors 
and  civil  society,  acted  during  the  COVID-19  pandemic  to  support  the  most  vulnerable, 
including the Roma.  

removing  outstanding  administrative  obstacles, 

including 

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 accommodation. The 2010 revised strategy for the implementation of Annex VII to 
the  Dayton  Peace  Agreements  has  not  yet  been  fully  implemented.  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.  

The country also needs to provide adequate humanitarian assistance and protection (including 
shelter,  food  and  medical  assistance)  and  effective  access  to  the  asylum  procedure  to  the 
asylum seekers and migrants present on its territory since 2018. (See also Chapter 24)  

2.2.2.  Chapter 24: Justice, freedom and security 

The  EU  has  common  rules  for  border  control,  visas,  residence  and  work  permits,  external 
migration and asylum. Schengen cooperation entails lifting border controls inside the EU. EU 

34 

 
 
Member  States  also  cooperate  with  Bosnia  and  Herzegovina  in  the  fight  against  organised 
crime and terrorism, and in judicial, police and custom matters and are supported by the EU 
Justice and Home Affairs Agencies. 

Bosnia and Herzegovina has some level of preparation to implement the EU acquis in this 
area.  No  progress  was  made  in  addressing  the  Opinion  key  priorities  7  and  8  on  the  fight 
against  organised  crime  and  the  management  of  migration  and  asylum.  The  2019 
recommendations  remain  outstanding.  The  country  has  several  strategies  in  place,  and 
legislation in some areas is broadly aligned with  the EU  acquis. However, legislation is not 
harmonised across the country, and institutional cooperation and coordination are weak. As a 
result, implementation is often unsatisfactory.  

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  (notably  by  finalising  cooperation  with 
to  prevent  radicalisation  and  facilitate 
Europol),  and  establishing  programmes 
disengagement from violent extremism; 

  take full political responsibility for the management of migration and ensure that refugees 
and migrants receive adequate protection and assistance; improve crisis response capacity 
and ensure effective coordination and adequate contingency planning; strengthen asylum 
procedures  to  provide  persons  in  need  with  international  protection;  increase  border 
surveillance, including human resources and equipment; improve the legal framework and 
implementation capacities for voluntary and forced returns; 

  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.   

Fight against organised crime 

Bosnia  and  Herzegovina  is  at  an  early  stage/has  some  level  of  preparation  on  the  fight 
against organised crime. No progress was made in addressing the Opinion key priority 7 on 
the  fight  against  organised  crime  and  the  2019  recommendations,  which  remain  valid.  The 
country  has  several  strategies  in  place,  notably  on  organised  crime,  trafficking  in  human 
beings and integrated border management. However, the legal framework is not harmonised 
across  the  country.  There  are  systemic  shortcomings  in  the  operational  cooperation  of  law 
enforcement agencies, due to the lack of harmonisation of criminal legislation in the country, 
exacerbated by weak institutional  coordination, 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.  A  proactive  approach  remains  fundamental  to  countering 
criminal infiltration of the political, legal and economic systems. Cooperation with Europol is 
still not operational. The country also needs to establish cooperation with Eurojust.  

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

  adopt  a  strategic  approach  towards  fighting  serious  and  organised  crime,  including  on 
cybercrime and trafficking in human beings, based on a threat assessment in line with the 
Europol methodology involving competent authorities from all levels of government;  

  strengthen  cooperation  among  law  enforcement  agencies,  notably  by  establishing 

35 

 
 
specialised multi-agency investigation teams for complex cases; improving mutual access 
to  databases  and 
information;  strengthening  financial 
investigations; and adopting standard operating procedures to run financial investigations;  

the  secure  exchange  of 

  establish  a  national  contact  point  for  cooperation  with  Europol,  sign  an  agreement  on 

operational cooperation with Eurojust, and establish a firearms focal point.   

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. There are 481 police officers per 100,000 inhabitants in 
the country, compared with the EU average of 326 in 2017, according to Eurostat.   

The legal framework on the fight against organised crime is only partially aligned with the 
EU  acquis.  The  absence  of  progress  in  establishing  asset  management  capacity  at  the  state 
level  is  of  particular  concern.  Extended  and  third-party  confiscations  are  possible  under 
criminal legislation, but they are rarely used. Bosnia and Herzegovina should strengthen the 
capacity  to  collect,  record,  report  and  analyse  appropriate  data  on  organised  crime.  The 
country  should  step  up  the  fight  against  transnational  organised  crime  networks.  The 
legislation on trafficking in human beings needs to be further aligned with the EU acquis, 
notably for sanctions.  The country needs to  further align its  legislation on  cybercrime with 
the acquis.   

Legislation on the  civil  possession of weapons  needs to  be further aligned with  the acquis. 
The  legislative  framework  on  explosives  for  civil  use  and  the  transport  of  dangerous  goods 
need to be completed and aligned with the EU  acquis across the country. Further alignment 
with  marking  and  deactivation  standards  is  needed.  Legislation  on  anti-money  laundering 
and counter terrorism financing need to be aligned with the EU acquis.  

The  country  has  several  strategies  in  place,  notably  on  combating  organised  crime  and 
trafficking in human beings. However, there is no coordination and consistency in developing 
and  implementing  these  strategies.  Bosnia  and  Herzegovina  should  systematically  monitor 
and assess the impact of existing strategies before adopting new ones. Concrete results-based 
indicators should be in place. The country should produce a new serious and organised crime 
threat  assessment  (SOCTA),  followed  by  strategic  and  operational  plans  of  actions.  In 
January 2020, Bosnia and Herzegovina adopted a 2020-2023 strategy to counter trafficking 
in  human  beings.  The  country  still  lacks  a  strategic  framework  to  address  cybercrime;  a 
strategy  is  only  in  place  in  the  Republika  Srpska  entity.  The  country  should  adopt  a  new 
strategy for the control of small arms and light weapons, and an action plan to implement 
the  roadmap  for  a  sustainable  solution  to  arms  control  in  the  Western  Balkans.  The  related 
legislation  is  not  fully  in  line  with  the  EU  acquis  and,  in  some  cases,  regulations  from  the 
former Yugoslavia are still applied. 

Implementation and enforcement capacity 

In 2019, there were 55 investigations into organised crime with 417 suspects, 25 indictments 
with 134 accused and 26 sentences with 91 convicted. In 18 cases, plea bargain agreements 
were  concluded  with  68  individuals.  As  regards  cybercrime,  in  2019  there  were  117 
investigations  in  cybercrime,  including  online  child  sexual  abuse,  against  129  individuals, 
compared to 104 investigations against 137 individuals in 2018. The number of convictions in 
2019 is still very low (23 convictions for 28 individuals) with almost 50% being suspended 
sentences (10 convictions for 15 individuals).  

36 

 
 
The capacity to effectively dismantle criminal organisations is seriously hampered by to the 
lack  of  harmonisation  of  criminal  legislation  in  the  country,  which  is  exacerbated  by  weak 
institutional coordination. As a result, there is a systemic lack of operational cooperation and 
a  very  limited  exchange  of  intelligence,  creating  many  opportunities  for  criminal 
organisations.  

There is no overall policy for carrying out financial investigations on a systematic basis and, 
where those were conducted, results have been insignificant. Guidelines on the mandatory use 
of financial investigations for  corruption, organised and economic crime  have been  adopted 
within the state-level Prosecutor’s Office. Authorities need to adopt and implement standard 
operating procedures on the conduct of financial investigations. 

The Financial Investigation Unit within SIPA needs to become more efficient in fulfilling its 
tasks  and  competences  stipulated  by  the  Law  on  anti-money  laundering  and  terrorism 
financing.  As  regards  financial  crime  in  2019,  28  reports  against  246  persons  (220  natural 
persons, 21 legal entities and 5 unidentified individuals) were sent by SIPA to the competent 
prosecutors’ offices. Cooperation and  exchange  of crime-related data between domestic law 
enforcement  agencies  and  with  other  countries  of  the  region  need  to  be  improved.  In  2019, 
there were 53 investigations of money laundering involving 200 individuals, 37 indictments 
against 60 suspects, and 36 convictions against 47 defendants. 

The value of asset confiscations in 2019 amounted to EUR 11.8 million for 106 cases (first 
instance and final convictions), compared to EUR 9.7 million for 116 cases in 2018. The 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. The freezing of assets needs to be used 
more  systematically  and  the  management  of  frozen  assets  needs  to  be  improved.  Data 
collection and analysis on asset seizure and confiscation needs to be further developed; data 
should be used as a tool to improve the effectiveness of management. 

As  regards  anti-money  laundering,  in  May  2020  the  European  Commission  has  adopted  a 
delegated  regulation  that  removed  Bosnia  and  Herzegovina  from  the  EU  list  of  high-risk 
countries (see Chapter 4 - Free movement of capital). 

Proactive investigations that start with intelligence-led policing remain rare, compared with 
those  launched  on  the  basis  of  reports  received.  The  poor  cooperation  between  law 
enforcement agencies seriously affects the quality of investigations.  

Arrangements for practical cooperation between prosecutors’ offices and the police are in 
place,  but  require  structural  improvements  to  guarantee  a  more  effective  judicial  follow-up, 
including through enhanced cooperation between the police and prosecutors. The weaknesses 
in cooperation been exposed in particular in the investigation initiated by the case of alleged 
fraud  related  to  the  public  procurement  of  COVID-19  medical  equipment.  The  poor 
cooperation  between  the  SIPA  and  the  state  level  prosecutor’s  office  is  cause  of  major 
concern  given  its  serious  impact  on  investigations,  especially  in  the  cases  of  high-level 
corruption.   

The  system  of  electronic  exchange  of  data  from  the  records  of  police  authorities  and 
prosecutor's  offices needs to  be fully  functional  and ready for used by all  signatories of the 
2009 Agreement. Forensic capacity is fragmented as the state and entities develop their own 
capacity. 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 

37 

 
 
fingerprint information system (AFIS) needs to be put in place as the existing one is outdated. 
This is a commitment which is outstanding since several years already. There is no effective, 
coordinated and consistent countrywide approach on using undercover investigators.  

On cooperation with Europol there has been some progress but the Agreement on operational 
and  strategic  cooperation  with  Europol,  which  is  in  force  since  March  2017,  remains 
unimplemented.  Bosnia  and  Herzegovina  is  yet  to  establish  a  national  contact  point,  as 
required in the agreement. This will allow the deployment of the respective liaison officers in 
the  Hague  and  Sarajevo.  Despite  the  lack  of  deployment  and  internal  political  situation, 
Bosnia and Herzegovina is willing to cooperate with Europol and requested additional SIENA 
connections;  it  should  continue  the  roll-out  of  SIENA  connections  across  the  country.  In 
2019, the number of new cases increased by 44% compared to 2018. In 2019, the number of 
messages increased by 44% compared to 2018. For the time being, the country’s participation 
in  Europol’s  analysis  projects  has  been  put  on  hold  and  the  use  of  Europol  products  and 
services has been very limited.  

In  2019,  Bosnia  and  Herzegovina  participated  in  the  annual  planning  of  operational  actions 
under  the  EU  Policy  Cycle  /  EMPACT  (European  Multidisciplinary  Platform  against 
Criminal  Threats)  priority  on  the  facilitation  of  illegal  immigration  (FII).  The  country 
committed to participate in two operational actions together with EU Member States to fight 
migrant  smuggling  by  criminal  groups  in  2020.  Bosnia  and  Herzegovina  participated  in  21 
operational  actions  of  the  EU  policy  cycle  in  firearms,  facilitated  illegal  immigration, 
organised  property  crime  and  trafficking  in  human  beings.  The  country  should  establish  a 
National  EMPACT  Coordinator  and  strengthen  cooperation  with  EU  Member  States  and 
neighbouring  countries  to  dismantle  organised  smuggling  networks.  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.  

In 2019, 61 potential victims of trafficking in human beings were detected, compared to 36 
in 2018 and 83 in 2017. The number of convicted perpetrators in 2019 was 34, compared to 
48 in 2018 and 17 in 2017. Bosnia and Herzegovina still lacks a national referral mechanism 
for  victims  of  trafficking.  The  witness  protection  programme  requires  improvements, 
notably  in  out-of-process  protection.  The  authorities’  capacity  to  effectively  tackle 
cybercrime,  including  online  child  sexual  abuse,  and  to  respond  to  cyber  security  threats 
remains  inadequate.  The  law  enforcement  authorities  must  ensure  adequate  tools  and 
sufficient  well-trained  staff  to  detect,  trace  and  prosecute  cybercrimes.  As  regards  arms 
control, in 2019 a total of 1,361 pieces of weapons, 296 pieces of mine-explosive materials, 
18,910 pieces of ammunition, and 1 kg of explosives were seized and a total of 3,479 pieces 
of  weapons  and  weapons  parts  pieces  were  destroyed.  This  compares  with  2,500  pieces 
destroyed  in  2018,  and  10,800  pieces  destroyed  in  2017.  Data  collection  is  neither  uniform 
nor  in  compliance  with  international  standards.  The  records  prescribed  by  law  often  do  not 
contain all the necessary data. Bosnia and Herzegovina still needs to establish a firearms focal 
point.  A  working  arrangement  with  CEPOL  is  in  force  since  2014;  cooperation  continues, 
despite participants in residential activities decreasing from 18 in 2018 to 13 in 2019.  

Cooperation in the field of drugs  

Institutional set-up and legal alignment 

The legal framework at various levels of government is only partly in line with the EU acquis, 
notably  on  minimum  rules  on  drug-related  criminal  offences  and  sanctions.  The  legislation 

38 

 
 
provides for the entire quantity of drug seized to be preserved as material evidence for court 
proceedings,  rather  than  just  a  sample.  The  country  should  adopt  legislation  designating  a 
national  correspondent  to  enhance  cooperation  with  the  European  Monitoring  Centre  for 
Drugs and Drug Addiction (EMCDDA). Coordination among competent agencies needs to be 
improved. Bosnia and Herzegovina should establish a focal point for drug issues for the entire 
country and introduce an early warning system.  

Bosnia  and  Herzegovina  has  a  2018-2023  strategy  on  supervision  over  narcotic  drugs, 
prevention  and  suppression  of  the  abuse  of  narcotic  drugs,  but  there  is  no  action  plan  to 
implement it. The Republika Srpska entity has its own strategy and action plan on drugs for 
2016-2021. Bosnia and Herzegovina needs to adopt instructions for the establishment of the 
early warning system and the book of rules on the use of cannabis for the medical purposes. 

Implementation and enforcement capacity 

In 2019 there were 2,359 reported crimes  related to  drug abuse, 2,018 orders to  conduct  an 
investigation, six judgments rejecting charges, 1,210 filed indictments, 2,479 indictments with 
plea  agreement,  33  acquittals,  100  fine  convictions,  one  conviction  without  a  sentence,  18 
convictions with reprimand, 1,207 convictions with suspended sentence and 433 convictions 
with  prison  sentence.  Bosnia  and  Herzegovina  remains  a  country  of  transit  and  a  final 
destination  for  drugs.  The  adoption  of  amendments  to  the  list  of  criminalised  psychoactive 
substances,  prepared  by  the  Commission  for  the  suppression  of  abuse  of  narcotic  drugs,  is 
pending  with  the  Council  of  Ministers.  A  flexible  mechanism  is  needed  to  regularly  update 
this list. Professional capacity and cooperation with civil society needs to be improved. More 
funds  are  needed  for  harm  reduction  programmes  and  the  social  reintegration  of  addicted 
persons.  Bosnia  and  Herzegovina  cooperates  with  the  EMCDDA.  Data  reporting  on 
epidemiological trends needs to be aligned with the EMCDDA treatment demand indicators. 
A Commission for drugs destruction is in place but the destruction of drugs takes place very 
rarely – only twice in 2019. The lack of secure storage prior to destruction is of concern.  

Fight against terrorism  

Institutional set-up and legal alignment  

Anti-terrorism legislation is largely aligned with the EU acquis and relevant international law. 
Criminal  legislation  needs  to  be  amended  to  ensure  stricter  sanctions  for  the  offence  of 
training and travelling abroad for terrorist purposes as well as for online terrorist content.  

A new law on anti-money laundering and terrorism financing in line with the standards of the 
EU acquis (fourth AML directive) needs to be adopted. Only the Republika Srpska entity has 
a  law  on  the  protection  of  critical  infrastructure  while  other  levels  of  government  are  still 
lacking such legislation.  

A strategy and a framework action plan for the prevention of and fight against terrorism for 
2015-2020 are in  place  and are being overseen by a supervisory body. The dismissal  of the 
chairperson in February 2020 caused a disruption in its activities. A follow-up strategy should 
be adopted in line with EU policy, especially on preventing and countering violent extremism. 
A  policy  dialogue  on  counter-terrorism  between  the  EU  and  Bosnia  and  Herzegovina  takes 
place  regularly.  In  November  2019,  Bosnia  and  Herzegovina  and  the  EU  signed  an 
implementing arrangement to the 2018 joint action plan on counter-terrorism for the Western 
Balkans.  It  sets  out  concrete  steps  for  enhanced  cooperation  in  countering  terrorism  and 
preventing  violent  extremism.  Bosnia  and  Herzegovina  submitted  its  first  report  on  the 
implementation of the arrangement in July 2020. The Ministry of Security needs to appoint a 

39 

 
 
contact point for the implementation of this arrangement. Implementation needs to continue. 

The  capacities  and  effectiveness  of  the  Counter  Terrorism  Task  Force  and  the  Counter-
Terrorism Section of the state-level Prosecutor’s Office need significant strengthening.  

Implementation and enforcement capacity  

Since 2015, there have been no reports of citizens of Bosnia and Herzegovina departing for 
conflict zones. Bosnia and Herzegovina has effectively handled the repatriation, re-admission 
and prosecution of its citizens who travelled to Syria and Iraq as well as their children born 
there. Of the 50 returned foreign terrorist fighters, 25 men were indicted, tried and convicted 
for  terrorism-related  offences  in  swift  and  efficient  proceedings  at  the  Court  of  Bosnia  and 
Herzegovina. In December 2019, the authorities organised the first repatriation of a group of 
citizens of Bosnia and Herzegovina from Northern Syria consisting of 7 men, 6 women and 
12 children; the men were arrested and prosecuted upon arrival.  

Shortcomings still exist regarding the implementation of counter-terrorism laws as well as the 
structured  and  efficient  cooperation  between  competent  agencies  at  the  various  levels  of 
government. Those sentenced for terrorism-related crimes serve their terms in entity prisons 
that  are  often  inadequate  to  hold  this  type  of  prisoners.  The  high-security  state  prison 
completed  in  2017  was  opened  in  July  2020  but  is  not  yet  in  operation.  Very  limited 
assistance is available, in prison or upon release, for disengagement from violent extremism. 
A  reintegration  programme  for  former  foreign  fighters  and  their  family  members  started  in 
September  2019.  Comprehensive  approaches  are  required  to  address  challenges  posed  by 
returning/repatriated foreign terrorist fighters and family members, including disengagement, 
rehabilitation  and  reintegration,  both  in  prison  and  outside  of  prison.  Lenient  sentences 
combined  with  the  absence  of  a  probation  service  and  systematic  disengagement  assistance 
may still represent a security risk. 

The country’s capacity to investigate and prosecute the financing of terrorism and to counter 
terrorist  content  online  needs  to  be  further  developed.  An  asset  recovery  office  and  a 
beneficial  ownership  register  on  legal  persons  are  yet  to  be  established  while  targeted 
trainings  have  been  regularly  delivered  until  the  outbreak  of  the  COVID-19  pandemic. 
Coordination,  cooperation  and  intelligence  sharing  between  security  agencies  need  to  be 
improved.  

A  multi-disciplinary  mobile  team  of  experts  is  supporting  local  authorities  to  handle 
challenges posed by citizens who have returned from foreign conflict zones and by ongoing 
radicalisation tendencies. It will be important to ensure the continuity of the work conducted 
by this mobile team. 

Further improvements are needed, especially in cooperation between the entities, e.g. on the 
identification  of  a  firearms  focal  point,  or  in  the  collaboration  with  the  EU  internet  referral 
unit (IRU) at Europol to deal with terrorist content online. The agreement with Europol needs 
to be implemented fully and the long overdue establishment of a National Contact Point needs 
to be completed without further delay. 

Institutions  responsible  for  labour,  social  welfare,  education,  youth  and  health  at  various 
levels of government need to be more effectively included in preventive efforts, as does civil 
society. Bosnia and Herzegovina is participating in the implementation of the Western Balkan 
Counter  Terrorism  Initiative  (WBCTi)  as  part  of  the  umbrella  of  the  Integrative  Internal 
Security Governance (IISG). 

40 

 
 
Legal and irregular migration  

The  recently-proposed  new  pact  on  migration  and  asylum  stresses  that  in  comprehensive 
partnerships,  migration  should  be  built  in  as  a  core  issue,  based  on  an  assessment  of  the 
interests of the EU and its partner countries. The new Pact calls for tailor-made support for the 
Western Balkans to make sure that they are well equipped as future Member States to respond 
to  shared migration challenges.  In the Western Balkans, EU support on migration promoted 
the creation of new or more robust institutions, laws and procedures in  the areas of asylum, 
protection  and  border  management,  as  well  as  the  transposition  of  complex  and  demanding 
EU acquis. 

Institutional set-up and legal alignment 

The  legislation  on  foreigners  is  broadly  in  line  with  the  EU  acquis;  it  needs  to  be  further 
aligned  as  regards  access  to  rights,  notably  for  vulnerable  migrants.  A  new  strategy  and 
action plan on migration and asylum needs to be put in place. The country needs to develop a 
realistic contingency plan to cope with the additional influx of migrants and refugees. 

Bosnia and Herzegovina has concluded readmission agreements with the EU and Schengen 
associated countries, all the Western Balkan countries, Turkey, Russia and Moldova, as well 
as implementation protocols with 16 EU Member States. Their implementation is satisfactory 
overall. Negotiations  on  readmission agreements  with  countries of high  migratory  risk have 
not started yet. 

Implementation and enforcement capacity 

The  numbers  of  persons  irregularly  entering  Bosnia  and  Herzegovina  has  increased 
significantly  since  2018.  In  2019,  the  authorities  detected  29,302  migrants  on  the  border  or 
through  in-land  activities,  compared  to  23,977  in  2018.  Overall,  the  top  three  declared 
countries of origin were Pakistan, Afghanistan and Iraq. By late August 2020, approximately 
10,000 migrants and asylum seekers were present in the country. Some 6,500 are sheltered in 
7 EU-funded temporary reception centres in the Una-Sana and Sarajevo cantons. However, 
facilities remain insufficient to ensure shelter and protection to those in need. 

The competent offices and agencies of the Ministry of Security (Sector for Immigration and 
Readmission;  Service  for  Foreigners’  Affairs)  are  significantly  understaffed  and  partly 
underequipped. The authorities at all levels of governance have proven unable to coordinate 
their  efforts  and  allocate  suitable  premises  for  reception  centres  to  relocate  asylum  seekers 
and migrants from the most affected local communities.  

As a consequence of the inefficient inter-institutional coordination, since June 2019 the local 
authorities  in  Una-Sana  Canton  have  introduced  restrictions  on  the  maximum  number  of 
migrants  in  the  canton,  and  have  been  forcibly  deporting  migrants  and  refugees  to  the 
unsuitable  location  of  Vučjak.  Following  constant  advocacy,  the  Vučjak  site  was  closed  in 
December  2019  and  the  approximately  700  persons  present  there  were  relocated  to  a  new 
facility opened in Blažuj near Sarajevo with EU assistance.  

Una-Sana cantonal authorities have repeatedly attempted to prevent the entry of migrants and 
refugees  in  the  canton  by  restricting  freedom  of  movement  or  not  allowing  them  to  access 
reception facilities, leading to significant protection risks, in particular for the most vulnerable 
ones.  These  counterproductive  actions,  coupled  with  reports  of  police  violence  as  well  as 
intimidation  of  humanitarian  partners,  also  stretched  the  scarce  resources  available  to  cope 
with the humanitarian needs. Further restrictions were introduced in August 2020.  

41 

 
 
The  response  to  migratory  flows  remains  inadequate  and  shows  significant  institutional  and 
coordination weaknesses. Most of the responsibilities have fallen upon the Una-Sana Canton 
and Sarajevo Canton. Political inaction and negative rhetoric, undermine the timely provision 
of  protection  and  assistance  in  line  with  international  standards.  Bosnia  and  Herzegovina 
should  take  over  full  responsibility  for  the  management  of  reception  centres  and  adopt 
effective contingency plans to cope with possible future increases. 

Crisis  response during the COVID-19 outbreak  was overall satisfactory, preventing  a larger 
spread and more severe consequences for the migrant population. An emergency tent camp in 
Lipa  near  Bihać  was  opened  in  April  2020  as  a  preventive  measure  to  provide  essential 
hygiene and health services and reduce vulnerability to COVID-19 for around 1,000 persons 
staying  outside  accommodation  centres  in  the  Una-Sana  Canton.  By  end  August,  it 
accommodates  1,500  persons.  Humanitarian  partners  are  present  to  implement  the  EU 
financial assistance and to monitor that international standards are respected. The response to 
migratory flows leaves ground for improvement. More efficient inter-agency cooperation and 
coordination  mechanisms  are  necessary  to  improve  border  surveillance  and  the  registration 
and identification of migrants (see below on Schengen and external borders). The operation 
and  communication  centre,  within  the  Sector  for  Protection  and  Rescue  of  the  Ministry  of 
Security,  should  pro-actively  coordinate  the  response  to  the  migration  crisis.  The  relevant 
entity, cantonal and municipal authorities should participate in the process.  

The  protection  of  vulnerable  groups  of  migrants,  such  as  unaccompanied  and  separated 
children, pregnant women, single parents, persons with disabilities, sick persons and victims 
of  violence,  must  reach  a  more  adequate  level.  They  need  to  be  identified  and  referred  to 
competent bodies to receive assistance and services in line with international standards. Only 
the  authorities  of  the  Una-Sana  and  Sarajevo  cantons  are  providing  access  to  legal 
guardianship  and  facilitating  access  to  education  to  unaccompanied  children;  over  570 
identified.  Adequate 
unaccompanied  children  were 
accommodation does not suffice to address all the needs.  

registered;  many 

remain  not 

On  voluntary  and  forced  return,  the  return  framework  for  migrants  irregularly  staying  in 
Bosnia and Herzegovina requires improvements, as it is mostly based on assistance of foreign 
donors.  Both  the  legal  framework  and  its  implementation  require  additional  improvements. 
There was an improvement in the mechanisms for collecting, sharing and analysing statistics 
on migration in the Information System for Migration. The number of third-country nationals 
returned to Bosnia and Herzegovina in 2019 under various readmission agreements amounted 
to  783,  compared  to  652  in  2018  and  324  in  2017.  There  are  reports  of  violent  collective 
expulsion (pushbacks) of migrants and asylum seekers back into Bosnia and Herzegovina. 

Cooperation  needs  to  be  improved  on  identification  and  return  procedures.  In  2019,  329 
foreigners were returned to neighbouring countries following readmission agreements (193 to 
Serbia,  136  to  Montenegro),  compared  to  643  in  2018.  Implementing  these  readmission 
agreements  has  become  more  challenging  in  the  context  of  the  increased  migratory  flow. 
Bosnia and Herzegovina should also increase efforts to establish readmission agreements with 
the countries of origin and further improve the mechanisms for assisted voluntary return and 
reintegration.  In  2019,  837  foreigners  returned  to  their  countries  of  origin  via  assisted 
voluntary return, compared to 735 in 2018. 

Bosnia and Herzegovina has one immigration detention centre in East Sarajevo (Lukavica) 
for persons awaiting expulsion from the country, with a maximum capacity of 120 persons. 

42 

 
 
Bosnia  and  Herzegovina  continued  to  satisfactorily  implement  the  readmission  agreement 
with  the  EU  and  implementing  protocols.  1,495  citizens  of  the  country  returned  from  EU 
Member States in 2019, out of 3,610 who received an order to leave (a return rate of 41%).  

Asylum  

Institutional set-up and legal alignment 

The legislation on asylum is broadly in line with international standards and the EU  acquis. 
Further alignment is needed in particular on interview techniques, access to rights  and legal 
aid,  as  well  as  on  the  definition  of  asylum-seekers  and  refugees.  Inter-agency  cooperation 
needs to be further improved. 

Implementation and enforcement capacity 

Serious obstacles remain to ensure an effective access to asylum procedures. The Service for 
Foreigners’  Affairs  and  the  Border  Police  have  insufficient  capacity,  in  terms  of  staff  and 
facilities,  to  register  asylum  intents  expressed  upon  entry  in  the  country.  This  has  been  an 
issue since 2018.  

The  Sector  for  Asylum  of  the  Ministry  of  Security  has  very  limited  human  resources  and 
operational capacity, with only four employees working on the registration and assessment of 
asylum  claim;  this  is  insufficient  to  ensure  access  to  the  asylum  procedure  to  the  increased 
number  of  asylum  seekers  across  the  country.  The  number  of  interviewers  and  registration 
sites is insufficient. Increasing human capacity, including interpreters and cultural mediators, 
is needed in order not to rely only on external international support.  

The asylum legislation needs to be better implemented, in particular to ensure the systematic 
respect  of  procedural  guarantees  for  asylum  seekers.  Their  rights  as  asylum  seekers  are  not 
guaranteed  evenly  across  the  country,  as  their  access  to  services  varies  depending  on  the 
reception  centres’  location.  The  access  to  asylum  procedures  and  mechanisms  should  be 
strengthened  to  ensure  faster  processing  of  their  claims  and  ensure  that  persons  in  need  of 
international  protection  may  receive  it.  As  the  authorities  have  not  yet  taken  over  the  legal 
responsibility  for  the  main  reception  centres  in  the  Una-Sana  Canton,  these  centres  are  not 
recognised as valid residential addresses for asylum applications; applicants thus fall in a legal 
limbo,  with  protection  risks.  The  system  for  collecting  and  storing  biometric  identifiers 
requires additional improvements, especially for inter-agency information exchange. In 2019, 
784  individuals  applied  for  international  protection,  of  which  3  persons  were  granted  the 
status of refugee (for the first time since 2014), 8 persons were granted subsidiary protection, 
9  individual  applications  were  rejected  on  merit,  and  138  applications  by  388  persons  were 
closed  as  the  applicants  left  or  attempted  to  leave  the  country  or  failed  to  show  up  for  an 
interview.  As  of  mid-August,  only  180  persons  applied  or  managed  to  apply  for  asylum  in 
Bosnia and Herzegovina in 2020, substantially less than the previous year. 

The  Asylum  Centre  in  Delijaš  near  Sarajevo  has  a  capacity  of  154  beds  (which  can  be 
expanded to 300) but is only partially used, mainly due to its remote location and poor access 
to basic services. As of June 2020, there are 30 asylum seekers in the centre. 

The  country  still  has  no  agreement  with  the  European  Asylum  Support  Office  (EASO), 
which  provides  however  assistance  to  the  sector  for  asylum  of  the  Ministry  of  Security. 
Cooperation with EASO should be strengthened, including via a joint roadmap.  

Visa policy  

Legislation on visa is broadly aligned with the EU acquis. Bosnia and Herzegovina maintains 

43 

 
 
visa-free regimes with Azerbaijan, Bahrain, Kuwait, Oman, Qatar, Turkey, Russia and China. 
Bosnia and Herzegovina implements a 'zero' visa-issuing policy on the state border. In order 
to ensure a well-managed migration and security environment, the country needs to fully align 
with the EU visa policy.  

The  security  features  of  visas  and  travel  documents  are  broadly  aligned  with  EU  standards. 
The  control  over  passport  procurement  and 
issuing  processes  requires  additional 
improvement. The IT infrastructure of the consular network abroad require improvement, as 
Bosnia  and  Herzegovina  has  no  technical  capacities  for  gathering  biometric  data  from  visa 
applicants.  

The visa-free regime with the EU continued to be smoothly implemented. Between 2018 and 
2019, the number of refusals of entry in the Schengen+ area decreased by 20% (4,270 in 2019 
compared  to  5,320  in  2018),  while  the  number  of  nationals  from  Bosnia  and  Herzegovina 
found  irregularly  in  the  EU  increased  by  10%  (from  3,915  to  4,290).  In  2019,  first  time 
asylum  applications  (1,570)  decreased  by  12%  compared  to  2018  (1,780).  The  asylum 
recognition  rate  decreased  to  5.1%  in  2019  (compared  to  7.66%  in  2018).  255  asylum 
applications were lodged in the first quarter of 2020, 42% less than in the same period of 2019  
Bosnia  and  Herzegovina  continued  good  cooperation  on  readmission  of  its  own  and  third 
country nationals. The return rate in 2019 decreased to 40% (compared to 54% in 2018), with 
1,495 nationals effectively returned. Fluctuations in return rates in recent years are the result 
not of underperformance in cooperation, which remains good, but rather of the processing of 
backlog  cases.  Attention  should  continue  for  the  successful  reintegration  of  returnees.  The 
Commission’s third report under the visa suspension mechanism of July 20205 concluded that 
Bosnia and Herzegovina continues to meet the visa liberalisation benchmarks. 

In the context of the COVID-19 pandemic, Bosnia and Herzegovina, through the Ministries of 
Foreign Affairs and Security, successfully organised and enforced repatriation procedures by 
air  and  land  for  both  EU  and  domestic  citizens.  Repatriation  procedures  were  conducted  in 
line with all necessary medical and security crisis restrictive measures in place. 

Schengen and external borders  

Institutional set-up and legal alignment 

The  state-level  border  police  is  responsible  for  managing  the  state  border.  The  legal 
framework  for  border  control  is  partly  aligned  with  the  EU/Schengen  acquis  and  is 
implemented smoothly. The country adopted a new integrated border management (IBM) 
strategy  and  its  action  plan  for  2019-2023,  in  line  with  the  EU  acquis.  Bosnia  and 
Herzegovina  has  yet  to  establish  a  national  coordination  centre  (NCC)  in  line  with  the 
EU/Schengen acquis and best practices for information sharing and coordination between all 
relevant law enforcement agencies.  

Implementation and enforcement capacity 

Following the increased influx of refugees and migrants in 2018 and in 2019, the authorities 
have  redeployed  available  border  guards.  However,  the  response  remains  inadequate.  The 
Border Police remains understaffed, with  412 vacant  positions out  of 2,646 (15.54%) at  the 
end of 2019. Specialised training is regularly provided to improve the quality of border checks 

5 COM(2020) 325 final 

44 

 
 
                                                           
and other operations in the field but further improvements are needed.   

The  IBM  strategy  for  2015-2018  was  implemented  satisfactorily.  However,  it  failed  to 
provide tools to effectively address the increased arrival of migrants and asylum seekers. The 
Border  Police  and  the  Service  for  Foreigners’  Affairs  further  improved  their  risk  analysis 
capacity through certification of trainers using Frontex risk analysis methodologies. The Joint 
Risk Analysis Centre based their analytical documents on the most recent Common Integrated 
Risk  Analysis  Model  (CIRAM)  II.  Its  coordination  capacity  needs  additional  improvement 
through  an  enhanced  information  exchange  process  with  local  risk  analysis  centres.  Further 
improvements  on  infrastructure  and  equipment  are  needed  at  border  crossing  points. 
Border  surveillance  resources  remain  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,  given  the  length  of  the  border.  Risk  analysis-led 
border surveillance requires further improvement.  

Inter-agency  cooperation,  such  as  between  the  Border  Police  and  customs  at  the  border 
crossing  points,  is  at  satisfactory  level,  but  information  exchange  needs  to  be  further 
improved. The central investigation office of the Border Police has executive powers across 
the country. The combined efforts of the Border Police with other agencies in fighting human 
smuggling  resulted  in  higher  detection  rates.  The  Border  Police  has  adequate  expertise  for 
detecting forged documents and access to relevant databases. 

On  international  cooperation,  the  country  is  a  signatory  to  a  number  of  agreements  with 
neighbouring  countries.  The  Border  Police  cooperates  with  the  European  Border  and  Coast 
Guard Agency (Frontex) and Interpol at a satisfactory level. Bosnia and Herzegovina needs to 
sign  and  ratify  the  Status  Agreement  with  the  EU,  initialled  in  January  2019.  Joint 
operational plans will then need to be developed with Frontex, providing for the deployment 
for  European  border  and  coast  guard  in  the  country  at  its  border  with  the  EU  to  carry  out 
operational  activities  together  with  the  country’s  Border  Police.  Bosnia  and  Herzegovina 
participates in the Western Balkan Risk Analysis Network (WB-RAN) led by Frontex. 

In the context of the COVID-19 pandemic, joint coordinated crisis response actions taken by 
agencies  engaged  on  the  borders  of  Bosnia  and  Herzegovina  demonstrated  good  level  of 
cooperation and coordination. Adequate measures undertaken by the Coordination Body for 
Protection and Rescue in Bosnia and Herzegovina implemented by the Border Police and 
other institutions and agencies contributed to a low number of infected individuals. Adequate 
border  and  customs  control  measures  enabled  the  provision  of  essential  goods  and  medical 
equipment  in  a  crisis  situation.  These  actions  demonstrated  some  tangible  results  of  proper 
implementation of the integrated border management policy in the country. 

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.  

In 2019, the Ministry of Justice recorded a total of 4,532 requests for judicial cooperation in 
civil  matters.  It  is  estimated  that  60%  of  them  originate  from  EU  Member  States,  primarily 
Croatia, Slovenia, Austria, Germany and Italy. In 2019, there were a total of 3,979 requests 
for  judicial  cooperation  in  criminal  matters.  The  statistics  on  enforcement  of  foreign 
judgments (transfer of convicted persons and take-over of enforcement of criminal sentences) 
have  remained  stable,  with  52  cases  in  2019  compared  to  57  in  2018,  with  an  average 

45 

 
 
completion rate of six months.  

The  country  needs  to  accede  to  certain  instruments  developed  within  the  framework  of  the 
Hague conference on private international law such as the Convention of 19 October 1996 on 
jurisdiction, applicable law, recognition, enforcement and co-operation in respect of parental 
responsibility  and measures for the protection of children and the Protocol  of 23 November 
2007 on the law applicable to maintenance obligations.  

Bosnia and Herzegovina does not  have a  cooperation agreement  with  Eurojust;  it appointed 
four contact points for relations with Eurojust. With the entry into force of the new Eurojust 
regulation  in  December  2019,  Bosnia  and  Herzegovina  needs  to  relaunch  negotiations  with 
the Commission for an agreement on operational cooperation with Eurojust. As a prerequisite 
to this, Bosnia and Herzegovina needs to adopt a new law on personal data protection in line 
with  the  acquis  and  to  strengthen  the  operational  capacity  of  the  Personal  Data  Protection 
Agency. Moreover, the  Prosecutor’s Office needs to  adopt  by-laws,  notably to  better define 
how the parties to a case can access their personal data via the Prosecutor’s Office website. 

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

3. 

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  takes  place  in  two  processes:  the  Economic  Reform 
Programme exercise and the below assessment of compliance with the economic criteria for 
accession.  Each  enlargement  country  prepares  an  Economic  Reform  Programme  (ERP) 

46 

Table :201720182019Bosnia and Herzegovina - Key economic figuresGDP per capita (% of EU-28 in PPS)1)30.231.032.032.0Real GDP growth 2.03.03.32.7Economic activity rate of the population aged 15-64 (%), total54.154.554.255.5      female41.742.741.844.4      male66.466.166.466.4Unemployment rate aged 15-64 (%), total27.721.118.916.4      female30.923.821.019.7      male25.819.417.614.2Employment (annual growth %)1.07.72.52.5Nominal wages (annual growth %)1.11.63.14.3Consumer price index (annual growth %)0.41.31.40.6Exchange rate against EUR1.961.961.961.96Current account balance (% of GDP)-6.5-4.2-3.6-3.5Net foreign direct investment, FDI (% of GDP)2.02.02.52.6General government balance (% of GDP)-0.92.62.21.9General government debt (% of GDP)37.035.033.632.8Notes: 1) EurostatSource: national sources2011-16 average 
 
 
annually,  which  sets  out  a  medium-term  macro-fiscal  policy  framework  and  a  structural 
reform  agenda  aimed  at  ensuring  competitiveness  and  inclusive  growth.  The  ERPs  are  the 
basis for country-specific policy guidance jointly adopted by the EU and the Western Balkans 
and Turkey at ministerial level in May each year. 

3.1.  The existence of a functioning market economy 

Bosnia and Herzegovina has made limited progress and is at an early stage of establishing a 
functioning market economy.  

The  quality  of  economic  governance  suffered  from  delays  in  government  formation  and 
insufficient cooperation at entity and state levels, paralysing among others progress towards 
improving the business environment which is held back by significant weaknesses including 
in  market  entry  and  exit  procedures,  the  rule  of  law  and  supervisory  and  regulatory 
institutions.  Economic  growth  benefitted  from  strong  domestic  demand,  reflecting  sizeable 
inflows of workers remittances and low inflation. The public sector remained oversized. The 
financial  sector  remained  stable  and  lending  increased,  while  unemployment  has  declined, 
partly due to a substantial labour force outflow. However, the economic impact of COVID-19 
led to a sharp drop in economic activity and a marked deterioration in the labour market.  

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

  Increase the transparency and efficiency of the public sector, in particular by establishing 
an adequate institutional and regulatory framework for a better, de-politicised governance,  
and by improving the efficiency and management of publicly owned enterprises to reduce 
their burden on tax-payers; 

  Reinforce country-wide analytical and policy-formulating capacities and publish complete 

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

  Streamline  and  harmonise  business  registration  and  licencing  procedures,  in  particular 
between entities, to improve the business environment and create a single economic space;  

  Support  formal  employment  by  reducing  the  tax  wedge,  especially  for  low-income 

earners, and other disincentives to work. 

Economic governance  

The  consensus  on  economic  policy  essentials  continued  to  be  impeded  by  persistent 
political  stalemates  and  a  lack  of  political  ownership.  Politically  driven  delays  in 
government  formation led to  numerous postponements and interruptions  of agreed and long 
overdue  reform  projects.  The  country’s  IMF  arrangement  has  remained  on  hold  since  July 
2018,  on  account  of  announced  budgetary  measures  which  were  not  in  line  with  key 
programme objectives. There was only limited implementation of the policy guidance jointly 
adopted at the Economic and Financial Dialogue with the EU in May 2019. The quality of the 
2020  Economic  Reform  Programme  points  to  continued  significant  weaknesses  in 
administrative coordination and policy formulation. Cooperation between the various levels of 
government and institutions has remained severely impeded. The authorities responded to the 
outbreak  of  the  COVID-19  crisis  by  announcing  national  emergency  and  economic  support 
measures. The government requested financial support from the IMF (EUR 330 million from 
the  Rapid  Financing  Instrument)  and  the  EU,  which  approved  EUR  250  million  of  macro-
financial  assistance  in  the  form  of  a  loan  to  cover  the  increased  external  and  budgetary 
financing needs.  

47 

 
 
Macroeconomic stability  

international  environment, 

Economic growth decelerated during 2019, although domestic demand remained solid. 
Following  average  growth  of  3%  over  2014-
2018,  economic  growth  slowed  down  to  2.7% 
in  2019  and  declined  further  to  2%  in  the  first 
quarter  of  2020.  This  slowdown  reflected  a 
deteriorating 
the 
lack  of  reforms  due  to  continued  political 
stalemates,  and  an  outflow  of  skilled  workers. 
The  main  growth  driver  was  private 
consumption  benefitting  from  an  increasing 
inflow  of  workers  remittances,  accounting  for 
some 8% of GDP and providing a financial lifeline to many low-income households, but also 
low  inflation  supporting  real  disposable  income.  External  demand  decelerated,  reflecting 
weakening growth of some of the country’s main export markets, but also resulting from tariff 
hikes  by  Kosovo,  a  key  export  market  for  certain  commodities.  Investment  picked  up  but 
remained  subdued,  reflecting  a  poor  business  environment  and  high  political  uncertainties. 
Some  empiric  evidence  points  to  an  accelerating  flow  of  outward  migration,  which  –  if 
continued  –  would  have  significant  negative  effects  on  growth  potential  in  the  medium  and 
long  term.  Per  capita  GDP6  stood  at  some  31%  of  the  EU-28  average  in  2018,  largely 
unchanged  from  previous  years.  The  COVID-19  crisis  hit  the  economy  in  a  phase  of 
downswing. International forecasts are surrounded by a high degree of uncertainty but expect 
a temporary drop in output by some 3-5% in 2020, followed by a moderate recovery in 2021. 

External  imbalances  have  widened  during  2019,  largely  reflecting  weaker  external 
demand.  After  a  slight  drop  in  the  current 
account  deficit  during  the  last  five  years,  to 
3.6% of GDP in 2018, the deficit remained at 
a  similar  level  (3.5%  of  GDP)  in  2019,  but 
deteriorated in the first quarter to 4.8% of the 
annualised  GDP.  The  trade  deficit  continued 
to be largely financed by inflows of transfers, 
such  as  remittances.  Net  foreign  direct 
stable, 
investment 
accounting for 2.7% of GDP in 2019 and 3% 
in  the first  quarter of 2020, mainly  as  a result of reinvested earnings. Net  foreign  exchange 
reserves  rose  to  about  7.9  months  of  imports  at  the  end  of  2019,  compared  to  7.2%  a  year 
before. Short-term debt accounts for only 0.1% of foreign exchange reserves.  

remarkably 

remained 

The monetary policy regime has supported stability. The currency board arrangement with 
the euro as the anchor currency was maintained. This approach has served the economy well 
so  far.  However,  it  also  implies  that  the  burden  of  adjustment  to  external  shocks  has  to  be 
accommodated  by  other  policy  areas,  in  particular  a  responsible  fiscal  policy,  necessitating 

 This designation  is  without  prejudice  to positions on status, and is line  with UNSCR  1244/1999 and the ICJ 
Opinion on the Kosovo declaration of independence. 
6 Expressed in purchasing power standards. 

48 

-4-20246201420152016201720182019Graph : Bosnia and Herzegovina -Real GDP growth and contributions Priv. cons.Gov. cons.Gross Capital FormationNet exportsreal GDP growthSource: Macrobond, own calculations% y-o-y 
 
                                                           
the build-up of sufficient fiscal buffers and a stronger emphasis on medium-term stability, and 
structural reforms to improve the functioning of markets. The Central Bank has responded to 
the  COVID-19  crisis  among  others  by  coordinating  with  the  country’s  banking  sector 
representatives  and  supervisory  agencies  a  6-month  moratorium  on  loan  repayment  of 
households and corporations and has announced to a take any additional measures necessary 
to protect the economy from the pandemic’s negative economic effects. 

Consumer  price  inflation  decelerated  during  2019,  benefitting  from  low  import  prices 
and  low  domestic  price  pressures.  Average  consumer  price  inflation  dropped  to  0.6%  on 
average  in  2019,  compared  to  1.4%  the  year  before.  In  the  first  half  of  2020,  average 
consumer prices were 0.6% lower than a year before. Besides low prices for imported energy, 
price  declines  for  clothing  and  footwear  contributed  to  the  low  overall  inflation  rate. 
However,  the  inflation  measure  suffers  from  an  outdated  consumer  basket  and  insufficient 
cooperation among key data providers.  

general 

registered 

The  general  government  accounts  continued  to  register  surpluses,  but  the  quality  of 
public spending has remained low. Due to the weaknesses of country-wide fiscal data, the 
country’s overall fiscal position is difficult to assess. In 2019, public finances appear to have 
benefited from solid revenue growth, reflecting rising domestic demand but also measures to 
improve tax collection. At the same time, spending has remained contained, partly as a result 
of delays in government formation. As a result, 
the 
a 
government 
preliminary fiscal surplus of 1.9% of GDP. The 
spending  structure  continues  to  be  dominated 
by  the  public  sector’s  wage  bill  and  transfer 
payments.  The  level  of  public  investment 
remained 
to 
low, 
administrative  weaknesses,  such  as  inadequate 
project  appraisal,  weak  project  management 
and  lack  of  transparency  during  execution. 
Notwithstanding some progress on improving the financing of the pension system, the overall 
quality  of  public  finances  remained  very  low,  with  substantial  spending  inefficiencies, 
particularly  in  the  health  sector,  and  a  poor  targeting  of  social  transfers.  Some  progress  has 
been  made  in  preparing  the  restructuring  of  the  railway  company  in  the  Republika  Srpska 
entity,  which  could  reduce  the  fiscal  burden  of  this  company  to  the  country’s  taxpayers. 
Public  debt  declined  slightly  in  2019,  to  32.2%  of  GDP  by  end-2019,  partly  reflecting 
constraints  in  accessing  foreign  capital  markets.  Fiscal  rules  are  only  applied  in  one  of  the 
country’s two entities. In the context of the COVID-19 crisis, the authorities have announced 
additional short-term measures amounting to some 2¼% of GDP.  

largely 

very 

due 

Overall, the country’s macroeconomic policy mix suffered from an insufficient medium-
term  orientation  and  a  missing  focus  on  growth-enhancing  policy  measures.  While 
macroeconomic  stability  has  been  preserved  overall,  fiscal  policy  is  insufficiently  geared 
towards growth enhancing measures. This orientation of fiscal policy towards maintaining the 
status-quo  does  not  sufficiently  use  one  of  the  country’s  key  macroeconomic  policy  tools, 
given  that  the  country’s  currency  board  regime  limits  the  room  for  monetary  policy.  An 
insufficient  degree  of  cooperation  among  the  various  fiscal  policy  stakeholders,  the  limited 
role of the country’s fiscal council and the lack of conflict resolution mechanism contribute to 
the  limited  effectiveness  of  fiscal  policy  with  respect  to  enhancing  the  country’s  growth 
potential. At the beginning of the COVID-19 crisis, the authorities have started to coordinate 

49 

01020304050-20246201420152016201720182019Graph : Bosnia and Herzegovina -Fiscal developmentsPrimary balance (lhs)Interest (lhs)GG balance (lhs)Public Debt (rhs)Source: National sources% ofGDP 
 
their  activities,  among  others  by  establishing  a  country-wide  task  force  to  coordinate  their 
socio-economic response to the crisis. 

Functioning of product markets  

Business environment  

Market  entry  and  exit  regulations  have  remained  largely  unchanged  and  barriers  to 
entering and leaving product markets remain high. Efforts continued to facilitate business 
registration. Some steps have been taken to strengthen the support for foreign investors. The 
number  of  registered  companies  increased  by  2.5%  compared  to  2018,  in  particular  in  the 
group of smaller companies with 0-9 employees. However, in order to be able to operate in 
the whole country, multiple registrations are still required, increasing costs of establishing a 
company. According to international rankings, the business environment has remained largely 
unchanged,  although  due  to  faster  progress  in  other  countries,  Bosnia  and  Herzegovina’s 
ranking  actually  declined  slightly.  Entrepreneurial  outcomes  have  remained  weak,  while 
political  interventions  are impeding the functioning of markets  and institutions. Overall,  the 
country's  attractiveness  for  doing  business  is  hampered  by  still  numerous  and  lengthy 
procedures and political interference required for entering or leaving the product market.  

The rule of law and the functioning of the judiciary continue to be a crucial weakness. 
Improvements  in  this  area  have  remained  very  limited.  Among  others,  important  issues  are 
contract enforcement, in particular settling commercial disputes, a substantial backlog in court 
cases, and problems with establishing property rights, in particular real estate registration in 
some  areas.  Insufficient  cooperation  and  coordination  among  the  various  stakeholders  is  a 
major impediment to the rule of law and a proper functioning of the judiciary, impeding the 
establishment  of  a  level  playing  field  on  a  country-wide  level,  with  wide-ranging  negative 
effects on the country’s business environment. The resource endowment and independence of 
numerous regulatory and supervisory institutions continues to be insufficient.  

The informal economy remains large, at some 25-35% of GDP. It provides (unregistered) 
employment  and  income  but  also  distorts  competition  and  erodes  the  base  for  taxation  and 
social  security  contributions.  Despite  some  limited  progress  in  addressing  the  informal 
economy,  such  as  improving  the  degree  of  registration  in  the  labour  market  by  increasing 
labour market controls, the informal sector may still account for up to one third of GDP. The 
resulting narrow tax base requires rates for taxes and social security contributions to be higher 
than  would  otherwise  be  necessary.  This  also  adds  to  a  significant  fiscal  burden  on  labour, 
which in turn impedes formal employment and negatively affects Bosnia and Herzegovina’s 
international competitiveness.  

State influence on product markets  

State influence on the economy remains high. Countrywide public spending continues to be 
at a high level of some 40% of GDP, while the quality of the provided services is rather low, 
especially  in  the  areas  of  health  and  education.  State-owned  companies  as  well  as  state 
subsidies and guarantees, which lead to substantial contingent liabilities, are a heavy burden 
on  public  finances  and  thus  the  country’s  taxpayers.  According  to  a  recent  survey,  publicly 
owned  enterprises  account  for  about  one  quarter  of  public  employment  and  11%  of  total 
employment.  Many  of  those  companies  are  characterised  by  low  productivity,  while  at  the 
same time they offer wages which are some 40% higher than in comparable private industries. 
Furthermore, in order to remain in operation, many public companies rely on state support or 
delay due payments to the social security systems or to private suppliers, creating substantial 

50 

 
 
liquidity imbalances in  other areas of the  economy. Public procurement, which  represents  a 
significant share of public spending and thus plays an important role for the private economy, 
is  managed  on  the  base  of  overly  complex  procedures  which  facilitate  corruption  and  still 
contain a preference for domestic suppliers, which is incompatible with the EU acquis. 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  level  of  officially  recorded  state  aid  remained  low,  but  indirect  state  support 
undermines  a  level  playing  field.  Although  official  data  on  recorded  state  aid  points  to  a 
relatively low and declining level of support of some 0.9% of GDP7, 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 
only partial alignment of legislation with international and European standards and by the lack 
of  procedural  and  fiscal  independence  of  the  authority  responsible  for  its  control.  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 not complete and restructuring efforts have made little 
progress. Attempts to sell earmarked public companies have been largely unsuccessful during 
the  last  year.  The  due  diligence  procedures  for  two  local  telecommunication  companies  has 
been completed. Strategic sectors such as transport and energy are still dominated by poorly 
managed and often inefficient state-owned companies. The share of the private sector in the 
country’s value added has remained rather stable over the last 5 years. The non-state sectors 
create  some  80%  of  the  country’s  gross  value  added  and  generate  a  similar  share  of  the 
country’s employment.  

Functioning of the financial market  

Financial stability 

Overall, the financial sector remained largely stable despite some negative effects from 
COVID-19, but a high degree of complexity and fragmentation in the institutional and 
regulatory  set-up  is  hampering  banking  supervision.  A  significant  share  of  the  sector’s 
asset  portfolio  is  euro-indexed,  which  underlines  the  importance  of  a  stable  exchange  rate 
under  the  currency  board  arrangement.  The  sector  consists  of  a  few  large,  mainly  foreign 
owned banks, accounting for some two thirds of the sector, a limited number of smaller, local 
banks and two state-owned development banks. The number of banks (23) is high in relation 
to  the  market  size.  The  overall  capital  adequacy  ratio  was  at  some  18%  by  end  of  the  first 
quarter  of  2020,  well  above  the  regulatory  minimum  of  12%.  Banking  sector  profitability 
continued to deteriorate, with a return-on-equity ratio (ROE) dropping to 9.6%, while returns-
on-average  assets  (ROAA)  also  slightly  dropped  to  1.2%  at  the  end  of  the  first  quarter  in 
2020. Some banking sector soundness indicators continued to slightly improve. For example, 
the ratio of non-performing loans (NPLs) has further declined, from 7.9% in 2019 to 6.6% in 
the first quarter. However, there are big differences among the countries’ 23 banks, with some 
pockets  of vulnerability  remaining, in  particular  in  the case of some smaller local  banks.  In 
particular,  there  is  a  notable  difference  between  foreign  and  domestic  banks  in  terms  of 

7 Latest data from 2018 

51 

 
 
                                                           
soundness indicators, with the former being more successful in reducing NPLs or improving 
loan provisioning. The central bank’s analytical capacities are still limited and financial sector 
supervision suffers from the fragmented and decentralised institutional set-up. In response to 
the  COVID-19  crisis,  the  Central  Bank  has  reassured  households  and  corporations  on  the 
stability of the country’s financial sector.  

Access to finance 

Lending has increased but small firms’ access to finance remains constrained.  Credit to 
GDP increased slightly during the last five years from 58% of GDP (in 2014) to close to 60% 
in 2019. After a near standstill in bank lending in the aftermath of the financial crisis, lending 
to  corporations and households has recovered and has increased in  2019 by some 4.2% and 
7.5%, respectively. However, the pick-up of growth to corporations is less dynamic, pointing 
to  difficulties  in  the  private  sector  to  develop  bankable  projects.  In  particular,  it  is  still 
difficult for SMEs and micro enterprises to access finance. Interest rate spreads for consumer 
loans  have  markedly  declined,  dropping  during  the  last  5  years  from  above  6  percentage 
points  to  around  4  percentage  points.  However,  this  level  is  still  relatively  high,  suggesting 
either still high risk-premia and/or a lack of competition. The size of the non-financial sector 
and of the capital  markets  has remained small, with  a market  capitalisation of the country’s 
bond and stock markets of about 23% of GDP. The use of venture capital has continued to be 
very limited.  

Functioning of the labour market  

Despite  improving  labour  market  indicators,  significant  underlying  challenges  remain. 
The  increase  in  the  number  of  registered  employees  slowed  down  during  2019  to  2.3%  on 
average. In the first quarter of 2020, the year-on-year increase came down to 1.3%, while in 
the second quarter, the number of registered employees was 2.2% lower than a year before. In 
2019,  the  largest  increases  were  in  the  service  sector,  in  particular  the  wholesale  and  retail 
sector. The number of unemployed declined by 9% in 2019. However, here too the situation 
deteriorated in 2020, with the decrease in the number of unemployed slowing down to 6.2% 
year-on-year  in  the  first  quarter,  before  turning  to  a  3%  increase  in  the  second  quarter. 
However,  the  overall  impact  of  the  COVID-19  on  the  labour  market  was  still  limited, 
although  due  to  the  high  share  of  informal  employment,  the  administrative  data  might  not 
reflect to the whole picture. The actual number of persons, participating actively in the labour 
market is declining, as only a part of the unemployed appears to find a job, while many others 
seem  to  leave  the  labour  market,  either  to  work  abroad  or  by  not  registering  any  longer  as 
looking for a job.  According to  the internationally  comparable  Labour Force Survey  (LFS), 
the  annual  unemployment  rate  has  declined  to  15.7%  in  2019,  compared  to  18.4%  a  year 
before, but it remains high. Preparations to publish quarterly LFS data are still ongoing. Key 
factors  for  the  persistently  high  unemployment  are  a  lack  of  adequate  employment 
possibilities in  the economy, but  also  a mismatch of education curricula  with  labour market 
needs.  One  additional  factor,  which  could  contribute  to  the  relatively  low  labour  market 
participation is a high tax wedge, in particular for low-wage earners. Draft legislation on the 
Personal Income Tax as well as on social security contributions with a view to reduce the tax 
wedge  has  been  prepared,  but  has  not  been  adopted  yet.  The  labour  market  participation  of 
women  and  the  youth  is  still  low,  while  unemployment  rates  of  those  two  groups  are 
significantly higher than for men in core working age cohorts. Long-term unemployment has 
remained  high,  with  according  to  the  2019  LFS  survey  about  77.3%  of  the  unemployed 
looking for a job for more than one year. During the last year, the authorities have continued 
to implement active labour market measures, although the coverage is relatively low and the 

52 

 
 
measures’ efficiency is  not  sufficiently  rigorously  evaluated. These support the employment 
of  vulnerable  or  disadvantaged  groups.  The  still  substantial  discrepancy  between 
unemployment  data  according  to  administrative  and  according  to  survey  based  data  has 
somewhat  narrowed  but  is  still  significant,  pointing  to  the  need  to  improve  the  country’s 
labour market statistics. 

loss  of  qualified 

Brain drain increasingly becomes a challenge. Labour mobility within the country is low, 
while  brain  drain  towards  neighbouring  and  in  particular  EU  countries  seems  to  be 
labour 
substantial.  The 
through  emigration  has  supported  relatively 
high  increases  of  nominal  wages  in  some 
sectors  (e.g.  +10%  in  the  construction  sector). 
This has a positive effects on income while, in 
absence  of  adequate  productivity  gains  high 
wage growth erodes the countries’ international 
competitiveness  position.  Wages  in  the  public 
sector  are  also  relatively  high,  in  particular 
when 
sector's 
productivity, which among others crowds out qualified labour from the private sector.  

account 

taking 

into 

the 

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

Bosnia and Herzegovina has made limited progress, and remains at an early stage in terms 
of  capacity  to  cope  with  competitive  pressure  and  market  forces  in  the  EU.  The  overall 
quality level of education has remained low, while measures to improve the transport and 
energy  infrastructure  have  remained  insufficient.  The  extent  of  structural  adjustment  has 
been limited, although there has been some diversification in the country’s trade structure. 

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

  Improve 

the  quality  of  education  and 

training, 

in  particular,  accelerate 

the 

modernisation of curricula with a view to better alignment with labour market needs;  

  Increase  public  investment,  in  particular  by  focusing  on  transport  and  energy 

infrastructure and on improving environmental standards;  

  Support  trade  integration  with  the  EU  and  CEFTA,  among  others  by  supporting 
alignment with European safety and quality standards, such as envisaged in the context 
of the Regional Economic Area (REA) initiative.  

Education and innovation  

Investment  in  education  has  remained  inadequate  to  address  the  challenges.  Public 
spending for formal education accounts for some 4.2% of GDP in 2018. When adding private 
and foreign spending, the overall amount stands at nearly 5% of GDP. Despite this significant 
spending, in particular when taking into account the number of students, the outcome of this 
investment  fails  to  provide  the  country’s  labour  force  with  the  skills  and  knowledge, 
necessary for a smooth integration in the labour market. This contributes to a particularly high 
youth unemployment rate (33.8% in mid-2019 according to LFS), twice the country’s overall 
unemployment  rate.  Innovation  policy  is  impeded  by  the  large  number  of  stakeholders 
involved and the low degree of cooperation and coordination, leading to a low efficiency of 

53 

20304050600102030402013201420152016201720182019Graph : Bosnia and Herzegovina -Labour market trends (15-64 age group)Unemployment rate (lhs)Participation rate (rhs)Employment rate (rhs)Source: BiH Agency of Statistics 
 
the overall system.  The  absence of an efficient  funding system is  another factor, preventing 
the country’s innovation policy from achieving better results for the funds spent. 

Access  to  early  childhood  education  and  care  is  still  low, while  school  enrolment  rates 
have dropped in most  sections of the education system, partly a result of demographic 
dynamics,  such  as  declining  birth  rates  and  emigration  of  young  families.  Teaching 
curricula  continue  to  be  outdated  and  are  still  not  sufficiently  aligned  with  the  country’s 
needs.  Furthermore,  the  country’s  education  system  is  very  complex  and  highly  fragmented 
and poorly coordinated, leading to varied standards within the country. This results in a lack 
of common standards for various levels of education, as well as in differences in the quality of 
teacher training and performance evaluation. The country participated for the first time in the 
2018 PISA study. Results indicate that the students’ performance ranks not only well below 
the  OECD  average,  but  is  also  low  when  compared  with  countries  in  the  region,  such  as 
Serbia,  Montenegro  and  Albania.  The  country’s  illiteracy  rate  continues  to  be  one  of  the 
highest  in  the  region  with  around  3%,  largely  as  a  result  of  a  relatively  high  illiteracy  rate 
among women. Also missing is sufficient support and training to provide women with skills 
required for entrepreneurship. 

Physical capital and quality of infrastructure  

Investment  in  the  country’s  capital  stock  remained  impeded  by  the  delays  in 
government  formation  and  administrative  weaknesses.  Gross  capital  formation  rose  by 
some  6.2%  in  real  terms  in  2019,  compared  to  4.7%  the  year  before,  largely  driven  by 
investment  in  housing.  Public  investment  remained  low,  resulting  from  the  delays  in 
government  formation,  but  also  suffering  from  difficulties  in  planning,  adopting  and 
implementing investment projects. The persistent political uncertainty also impeded a stronger 
increase in private fixed investment, which remained at close to 2½% of GDP, when taking 
the  annual  average.  Some  strategic  foreign  investment  in  the  oil  processing  and  tourism 
industry  took  place  during  the  last  year,  which  however  was  largely  neutralised  by  lower 
inflows  towards  the  end  of  the  year.  Environmental  standards  are  low  and  often  neglected, 
leading  to  high  levels  of  pollution,  impeding  the  health  (and  thus  productivity)  of  the 
country’s labour force and constituting another factor supporting the brain drain. Overall, the 
insufficient  momentum  in  investment  and  neglect  of  environmental  standards  hampers 
improvement in the country’s growth potential and labour productivity.  

Transport and energy infrastructure investment was also negatively affected by political 
uncertainties. The delays in government formation not only affected planned  investment in 
transport  and  energy  infrastructure,  but  also  impeded  access  to  international  finance. 
Furthermore,  necessary  steps  for  modernising  the  regulation  of  the  energy  and  transport 
markets  were  further  delayed.  As  a  result,  the  markets  for  electricity  and  gas  remain 
fragmented and dominated by key incumbent companies. Furthermore, the absence of a single 
or sufficiently harmonised regulatory framework and inadequate cooperation and coordination 
among  the  various  stakeholders  often  leads  to  delays  of  planned  investment  projects.  As  a 
result,  infrastructure  connections  with  neighbouring  countries  as  well  as  the  country’s 
digitalisation  have  remained  low.  In  March  2019,  the  EU  Energy  Community  opened  an 
infringement  procedure  against  Bosnia  and  Herzegovina  over  state  aid  to  the  Tuzla  7  coal 
power plant.  

Sectoral and enterprise structure  

Some  structural  change  from  the  public  sector  to  trade  and  manufacturing  has  taken 
place.  During  the  last  five  years,  there  has  been  an  increase  in  the  share  of  value-added  of 

54 

 
 
trade  and  manufacturing  (from  19%  and  11%  of  GDP  in  2014  to  21%  and  12¼%  in  2019, 
respectively),  while  the  share  of  the  public  sector  (administration,  health  and  education)  in 
value  added  shrank,  from  18½%  of  GDP  to  16½%.  In  terms  of  employment,  the  share 
increased slightly in  trade and transport, while it declined in  manufacturing, agriculture  and 
energy production. However, the extent of the informal sector might mask important changes. 
The  company  structure  registered  some  increase  in  the  share  of  medium-sized  companies, 
employing  between  50-249  employees.  However,  the  majority  of  new  companies  are  micro 
companies (0-9 employees), which are often trading companies with lower value added. Some 
95% of all companies are in the group of small and micro businesses, i.e. with less than 50 
employees.  Access  to  finance  in  terms  of  bank  loans  has  slightly  improved  during  the  last 
year, although for many micro and small companies gaining access to credits is still difficult. 
Support  schemes  are  in  place  for  small  and  medium-sized  enterprises,  but  benefitting  from 
those schemes is often cumbersome.  

Economic integration with the EU and price competitiveness  

The  volume  of  international  trade  declined  slightly  in  2019,  while  the  country  and 
commodity  structure  diversified.  International  trade  slightly  declined  during  2019,  mainly 
due to weaker commodity exports, dropping by about 3.4% in nominal terms in 2019, while 
imports increasing in nominal terms by 1.2%. About one third of this drop in exports is due to 
a sharp decline in trade with Kosovo, but also weaker exports to key trading partners, such as 
Germany, Croatia and Turkey, played an important role. The trading structure shifted slightly 
in  favour  of  trade  with  Serbia,  but  also  other  countries,  such  as  Austria,  France  and 
Switzerland.  Exports  to  the  EU-28  accounted  for  73%  of  total  exports  in  2019,  which  is 
slightly higher than a year before. Exports to CEFTA countries rose slightly during 2019, by 
about half a point to 16.6% of total exports, as increases in exports to some CEFTA countries, 
such  as  Serbia,  were  largely  compensated  by  the  tariff-hike  driven  sharp  drop  in  exports  to 
Kosovo. The country’s openness to trade increased over the last years, with a rise in the share 
of  total  exports  and  imports  in  GDP  from  about  88%  in  2014  to  nearly  95%  in  2019. 
However, when taking into account the country’s relatively small economic size, these ratios 
are  still  relatively  low.  The  range  of  export  commodities  is  not  very  sophisticated.  While 
some further progress has been achieved in addressing non-tariff barriers to trade with the EU, 
such  as  required  phyto-sanitary  and  sanitary  standards,  overall  compliance  with  these 
requirements remains a problem. 

The  integration  of  the  country’s  financial  and  capital  markets  with  the  EU  is  rather  low, 
although a large part of the banking sector is owned by European banks. About two thirds of 
the country’s stock in FDI is originating from EU countries. Annual FDI inflows largely show 
a  similar  pattern.  Despite  a  relatively  high  wage  growth,  the  country’s  overall  international 
competitiveness appears intact.  

55 

 
 
The country’s nominal effective exchange rate appreciated markedly during the last 5 years, 
mainly  due  to  exchange  rate  movements  of  the  US  dollar,  the  Turkish  lira  and  the  Russian 
rouble. However, in real terms, the effective exchange rate remained more stable, benefitting 
from  the  country’s  low  inflation  rate,  in  particular  when  using  the  CPI  as  indicator  for 
inflation. 

4. 

GOOD NEIGHBOURLY RELATIONS AND REGIONAL COOPERATION  

Good neighbourly relations and regional cooperation form an essential part of Bosnia and 
Herzegovina’s  European  integration  process  and  contribute  to  stability,  reconciliation  and  a 
climate conducive to addressing open bilateral issues and the legacies of the past.  

Bosnia and Herzegovina remains committed to regional cooperation and plays a constructive 
role in building a more stable and secure region through participation in around 35 regional 
organisations and initiatives, such as the Central European Free Trade Agreement (CEFTA), 
the Energy Community, the Transport Community, and the Regional Cooperation Council, of 
which  it  hosts  the  seat.8  Bosnia  and  Herzegovina  hosted  the  SEECP  Summit  in  July  2019, 
concluding its one-year chairmanship, and completed chairmanship of MARRI in June 2019. 
In 2020, the country presides over the US-Adriatic Charter and the CEFTA Agreement.  

During  the  COVID-19  crisis,  inclusive  regional  cooperation  has  proven  to  be  essential.  By 
establishing green lanes for the transport of emergency goods, the region has proved it is able 
to address common challenges swiftly and efficiently. Inclusive regional organisations  – the 
Regional  Cooperation  Council,  the  Transport  Community,  and  CEFTA  –  have  been 
instrumental  in  responding  to  the  COVID-19  crisis.  These  achievements  need  to  be  turned 
into sustainable improvements. 

Building  on  the  results  of  the  previous  summits  with  the  region,  the  July  2019  Western 
Balkans  summit  in  Poznan  focussed  on  strengthening  regional  cooperation  in  the  fields  of 
economy  and  trade,  the  digital  agenda,  connectivity,  security,  fight  against  corruption, 
promoting reconciliation and youth. The summit endorsed a number of achievements in these 
fields,  in  particular the  clean energy transition  declaration signed in  Podgorica, the regional 
roaming  agreement  signed  in  Belgrade,  a  substantial  connectivity  package  and  the  Roma 
integration  declaration.  It  was  also  the  occasion  to  kick-start  the  preparation  of  a  Green 

8 Bosnia and Herzegovina also 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),  the  Regional  School  of  Public 
Administration  (ReSPA),  the  Regional  Youth  Cooperation  Office  in  the  Western  Balkans  (RYCO),  the  South 
East European Cooperation Process (SEECP) and the Western Balkans Fund. 

56 

0255075201120122013201420152016201720182019Graph : Bosnia and Herzegovina -Exports of goodsEUCEFTAOtherSource: WiiW% ofGDP0255075201120122013201420152016201720182019Graph : Bosnia and Herzegovina -Imports of goodsEUCEFTAOtherSource: WiiW% ofGDP 
 
 
                                                           
Agenda for the Western Balkans.  

At  the  Zagreb  Summit  on  6  May  2020,  EU  and  Western  Balkans  leaders  agreed  that 
deepening regional economic integration has to be a prominent part of recovery efforts of the 
Western Balkans. To do so, Bosnia and Herzegovina needs to continue playing a constructive 
role  in  building  a  common  regional  market,  which  will  be  critical  to  increase  the 
attractiveness and competitiveness of the region. It will help Bosnia and Herzegovina to speed 
up the recovery from the aftermath of the pandemic – notably to attract investors looking for 
diversification of supply and shorter value chains. Such a common regional market has to be 
inclusive,  based  on  EU  rules  and  built  on  the  achievements  of  the  regional  economic  area 
multiannual action plan. 

Bosnia and Herzegovina continues to closely cooperate with Croatia, Montenegro and Serbia 
under  the  Sarajevo  Declaration  Process  aiming  at  sustainable  solutions  for  some  74,000 
people who became refugees and displaced persons as a result of the armed conflicts in  ex-
Yugoslavia  during  the  1990s.  Within  the  framework  of  the  Regional  Housing  Programme 
(RHP) in 2019 approximately 450 units were built out of 1,200 housing units repaired in total. 
Significant  challenges  remain  with  regard  to  the  economic  and  social  integration  and 
wellbeing for many families, required to ensure the sustainability of return.  

The  issue  of  missing  persons  is  a  matter  of  concern.  Further  efforts  on  a  regional  scale  are 
needed to establish the unresolved fate of 7,206 people still missing as a result of the conflict, 
of which 242 were identified in 2019.  

In April 2019 Bosnia and Herzegovina also signed a regional agreement on roaming fees at 
the Western Balkans digital summit in Belgrade, enabling “roam like at home” (RLAH) as of 
July 2021.   

Bosnia and Herzegovina generally maintains good bilateral relations with other enlargement 
countries and neighbouring EU Member States.  

Relations  with  Albania  are  friendly  and  without  open  issues,  with  occasional  high-level 
bilateral  visits.  The  countries  initialled  an  agreement  on  cooperation  in  the  EU  accession 
process and an agreement on economic cooperation. Trade flows remain low.  

There  are  no  official  relations  with  Kosovo,  as  Bosnia  and  Herzegovina  does  not  recognise 
Kosovo’s independence and the two maintain a strict visa regime. An initiative to simplify the 
visa  procedure  for  all  citizens  of  Kosovo  is  still  pending.  The  100%  tariffs  on  goods 
originating from Bosnia and Herzegovina and Serbia, imposed by Kosovo in November 2018, 
were lifted in April 2020; the flow of goods has since resumed.   

Concerning Montenegro, bilateral relations are good. There are no bilateral border issues but 
the  agreed  border  demarcation  is  yet  to  be  physically  marked  on  the  terrain.  Protocols  on 
cooperation in search for missing persons and on the non-statutory trafficking of persons were 
signed between the two countries in October 2019.  

Regarding North Macedonia, relations are good and several bilateral agreements are in place, 
including on cooperation on EU integration.  

Bilateral  relations  with  Serbia  are  overall  good  and  stable  although  without  concrete  steps 
forward in tackling outstanding issues. A protocol on determining the tri-border point between 
Bosnia  and  Herzegovina,  Serbia  and  Montenegro  was  signed  in  May  2019  in  Sarajevo;  it 
represents a good basis for negotiations on a bilateral border agreement. To this aim, the two 
countries also need to reach an agreement on two river dams on the Drina river and a portion 

57 

 
 
of  the  Belgrade-Bar  railway  which  crosses  into  Bosnia  and  Herzegovina’s  territory.  In 
December 2019 the two countries also signed a cooperation agreement on the construction of 
the  Sarajevo-Belgrade  highway.  In  June  2020,  3,449  citizens  of  Serbia  cast  their  vote  at  11 
polling stations in Bosnia and Herzegovina for the Serbian parliamentary elections.   

Turkey is a strong international supporter of Bosnia and Herzegovina’s development and EU 
integration.  Exchanges  at  high  level  are  frequent.  Turkey  committed  to  finance  the 
construction of Sarajevo-Belgrade highway.   

Relations  with  Croatia  are  overall  good,  although  affected  by  outstanding  bilateral  issues. 
Bilateral visits took place at foreign ministers’ level. The 1999 border demarcation agreement 
has not been ratified by either side and there are open issues concerning land and sea borders. 
The implementation of the 2001 succession agreement is affected by open issues on private 
properties and acquired rights. Bosnia and Herzegovina established a State-level coordination 
body to dispute Croatia’s plan to build a facility for radioactive waste and spent nuclear fuel 
storage at Trgovska Gora, near the border. There is no agreement on dual citizenship. 35,547 
citizens  of  Croatia  cast  their  vote  at  polling  stations  in  Bosnia  and  Herzegovina  for  the 
Croatian  presidential  elections  in  December  2019  and  January  2020,  and  21,898  for  the 
parliamentary elections in July 2020. 

5. 

ABILITY TO ASSUME OBLIGATIONS FROM MEMBERSHIP  

5.1.  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. 

Bosnia and Herzegovina is at an early stage of preparation in the area of free movement of 
goods.  There  was  no  progress  in  this  area.  Major  steps  need  to  be  taken  to  align  the 
legislative  framework  with  the  EU  acquis,  in  particular  on  technical  requirements  for 
products, conformity assessment and on market surveillance. 

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

  establish  a  list  of  technical  regulations  in  force  and  start  to  repeal  countrywide  the 
domestic  legislation  that  conflicts  with  the  EU  legislation,  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. 

General principles  

Regarding  the  general  principles,  the  legislative  and  institutional  framework  for  the  free 
movement  of  goods  is  not  in  place.  Bosnia  and  Herzegovina  does  not  have  a  coherent 
countrywide approach, nor does it have a strategy or action plan for alignment with the EU 
acquis.  No  steps  were  taken  to  comply  with  commitments  under  the  Stabilisation  and 
Association Agreement (SAA) or to repeal conflicting regulations at all levels. 

Non-harmonised area  

No plans were made or steps were taken to ensure that legislation and administrative practices 
for  the  non-harmonised  area  are  in  compliance  with  Articles  34-36  of  the  Treaty  on  the 
Functioning of the European Union and relevant case law of the European Court of Justice. 

58 

 
 
No specific body was established or empowered to fulfil the obligation of notifying 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  they  are  not 
aligned with the EU acquis and remain uneven and fragmented. The relevant administrative 
structures  involve  institutions  set  up  at  both  state  and  entity  levels,  and  the  coordination 
between them remains weak. There is still no countrywide strategy to put in place the quality 
infrastructure,  which  would  help  Bosnia  and  Herzegovina  to  have  a  coherent  countrywide 
approach. 

On standardisation, the Institute for Standardisation of Bosnia and Herzegovina (ISBIH) is a 
full member of the European Telecommunications Standards Institute 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.  It  is  also  a  full  member  of  the  International  Standardisation  Organisation. 
Between  1  April  2019  and  8  June  2020  ISBIH  adopted  2,244  European  standards  (ENs)  as 
national  standards.  On  8  June  2020,  the  percentage  of  European  standards  adopted  stood  at 
88,76%.  However,  conflicting  ex-Yugoslav  mandatory  standards  have  still  not  been 
withdrawn in a systematic manner across the country, and there is no countrywide register of 
current legislation.  

The  Institute  for  Accreditation  of  Bosnia  and  Herzegovina  (BATA)  is  the  single  national 
accreditation  body.  It  is  a  full  member  of  the  International  Laboratory  Accreditation 
Cooperation  and  an  associate  member  of  the  European  Cooperation  for  Accreditation. 
However,  BATA  is  understaffed,  with  21  employees  out  of  the  28  required  under  the 
implementing  legislation.  There  are  137  conformity  assessment  bodies  in  Bosnia  and 
Herzegovina:  77  testing  laboratories,  2  medical  and  8  calibration  laboratories,  4  product 
certification body and 46 inspection bodies. The Law on Accreditation is not aligned with the 
EU acquis, and the designation of conformity assessment bodies and conformity assessment 
procedures are still not applied consistently throughout the country.  

The  Institute  of  Metrology  of  Bosnia  and  Herzegovina  (IMBiH)  participates  in  technical 
committees, European development programmes and cooperation projects with EU metrology 
institutes. It is an associate member of the General Conference on Weights and Measures, the 
International  Bureau  of  Weights  and  Measures  (BIPM),  the  International  Organisation  of 
Legal Metrology, and the European Cooperation in Legal Metrology. It is also a signatory of 
the  Mutual  Recognition  Agreement  of  the  International  Committee  for  Weights  and 
Measures, and a full member of the European Association of National Metrology Institutes. In 
the  reporting  period,  IMBiH  published  five  new  calibration  and  measurement  capabilities 
(CMC) in frequency, time and pressure in key inter-comparison database in BIPM. Metrology 
institutes need to cooperate and coordinate their activities in implementing the legislation in 
this area. The appointment of the members of the Metrology Council has been pending since 
2012. The Institute of Metrology remained understaffed, having 53 of the 72 members of staff 
required under the implementing legislation. 

Over the reporting period, the Market Surveillance Agency and the inspection bodies of the 
entities and the Brčko District implemented 21 checks as part of proactive surveillance, and 
26 were initiated on reactive surveillance. As a result of 210 product safety inspections, 6,222 
unsafe  products  were  withdrawn  from  the  market  (of  which  4,473  were  destroyed),  and 

59 

 
 
businesses  brought  9,337  products  into  compliance  with  safety  requirements.  The  market 
surveillance system is still largely based on mandatory standards and pre-market control. The 
law on market surveillance is still not aligned with the EU acquis.  

Harmonised area: sectoral legislation  

On  the  ‘new  and  global  approach’  and  ‘old  approach  product  legislation’,  Bosnia  and 
Herzegovina  started  to  adopt  legislation  designed  to  align  with  the  EU  acquis  on  electrical 
equipment,  machinery,  electromagnetic  compatibility,  lifts,  personal  protection  equipment, 
non-automatic weighing instruments and pressure equipment, as well as fertilisers. However, 
this legislation is  not applied across the country, as the legislative framework is  fragmented 
and the Republika Srpska entity implements its legislation separately. 

No  progress  was  made  on  aligning  the  legislation  with  the  EU  acquis  on  Registration, 
Evaluation,  Authorisation  and  Restriction  of  Chemicals  (REACH)  or  on  strengthening 
administrative capacities in this area. On the pricing of medical products, the conditions for 
refusing  to  add  products  to  the  reimbursement  list  are  designed  to  be  aligned  with  the  EU 
acquis.  On  civil  explosives,  Bosnia  and  Herzegovina  still  lacks  a  comprehensive  legal 
framework  on  the  transport  of  dangerous  goods.  Legislation  on  returning  cultural  objects 
unlawfully removed from the territory of an EU Member State has not yet been aligned with 
the EU acquis.  

As response to COVID-19, upon joint initiative by the Permanent Secretariat of the Transport 
Community  and  the  CEFTA  Secretariat,  Bosnia  and  Herzegovina,  alongside  all  the  other 
governments in the Western Balkans, has successfully implemented measures to facilitate the 
transport and trade of essential goods within the region. 

5.2.  Chapter 2: Freedom of movements 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.  

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  field  of  free  movement  of 
workers. However, no progress was made in the reporting period.                                            

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

  start developing a countrywide database on vacancies;  

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

with EU Member States.  

Regarding  access  to  the  labour  market,  the  legislation  in  place  does  not  differentiate 
between  EU  workers  and  other  foreigners,  non-Bosnia  and  Herzegovina’s  citizens.  This 
legislation  prohibits,  like  the  anti-discrimination  law  and  labour  laws,  direct  or  indirect 
discrimination  on  grounds  of  race,  skin  colour,  language,  religion,  age,  national  or  social 
origin, sexual orientation. At the same time, employment in 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 and meet certain conditions to do so. 

The laws of the entities’ and the Brčko District on the employment of aliens still need to be 
fully harmonised with the state-level  Law on Aliens, especially when it comes to regulating 
the issuance/approval of a residence permit on the grounds of employment.  

60 

 
 
Bosnia and Herzegovina still lacks a countrywide database of vacancies.  

As  regards  the  coordination  of  social  security  systems,  Bosnia  and  Herzegovina  has  9 
international  bilateral  agreements  on  social  security  in  place,  (of  which  6  are  with  EU 
Member  States)  and  an  additional  16  agreements  (of  which  12  with  EU  Member  States), 
which  have  been  implemented  on  the  basis  of  succession  from  the  former  Yugoslavia.  The 
new  agreement  on  social  security  between  Bosnia  and  Herzegovina  and  Switzerland  is 
currently in final stage of the ratification. The country’s system of coordinating social security 
schemes  remains  fragmented,  with  limited  administrative  capacities  and  lack  of  formal 
cooperation among relevant authorities covering all levels of government. 

There has been no progress on the European Health Insurance Card. 

5.3.  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 open to competition since 2017. 

 Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  regarding  the  right  of 
establishment  and  freedom  to  provide  services.  No  progress  was  made  in  this  area  in  the 
reporting  period.  The  existing  legislation  remains  to  be  aligned  with  the  Services  Directive 
and provide for the mutual recognition of foreign qualifications for regulated professions. A 
countrywide strategy for development of postal services needs to be adopted in order to create 
a consistent regulatory framework that is aligned with the EU 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;  

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

postal market to competition.  

The legislation on right of establishment and freedom to provide cross-border services is 
not aligned with the EU Services Directive. No progress was made on developing a horizontal 
law enshrining the principles of the Directive and on reviewing the sector-specific legislation 
to  identify  laws  that  need  to  be  aligned  with  the  Services  Directive.  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  and  having  strong  coordination 
between administrative bodies at all levels.  

The legal framework for  postal services is partly aligned with the EU  acquis. A new state-
level  law  on  postal  services,  still  being  prepared,  needs  to  be  adopted,  and  a  state-level 
strategy for developing postal services needs to be elaborated, in order to ensure a consistent 
regulatory  framework  aligned  with  the  EU  acquis.  The  legal  framework  for  providing 
universal postal services across the country remains to be harmonised and the postal market 
need  to  be  fully  opened  up  to  competition.  The  institutional  and  financial  independence  as 

61 

 
 
well as the administrative capacities of the Agency for Postal Traffic should be strengthened 
to enable it to perform its regulatory function. 

The  current  legislation  still  does  not  provide  for  the  mutual  recognition  of  foreign 
qualifications  for  regulated  professions  as  required  by  the  EU  acquis  in  this  area.  The 
general roadmap for alignment with the relevant EU acquis remains to be implemented. The 
legislative  framework  in  this  area  needs  to  be  completed  and  aligned  with  the  EU  acquis. 
Significant  efforts  still  have  to  be  made  to  establish  an  adequate  institutional  framework, 
including e-government facilities and national contact points assisting citizens requesting the 
recognition of their professional qualifications. 

5.4.  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.  

Bosnia  and  Herzegovina  is  moderately  prepared  in  the  area  of  free  movement  of  capital.  
There  was  limited  progress  in  the  implementation  of  EU  rules  on  the  free  movement  of 
capital  and  payment  system  alignment  with  that  of  the  EU.  The  newly  introduced  payment 
clearing system created some of the preconditions required to join the Single Euro Payment 
Area.  The  2019  recommendations  were  therefore  only  addressed  to  a  limited  extent  and 
remain valid.  

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

  continue  removing  unjustified  restrictions  incompatible  with  the  EU  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. 

As  regards  capital  movements  and  payments,  the  country  continues  to  apply  full  current 
account convertibility.  Long-term capital transactions are mostly liberalised, but 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 are subject to limitations on investment in foreign 
securities.  

The  state-level  law  on  the  policy  of  foreign  direct  investments  does  not  provide  equal 
treatment of foreign and domestic natural persons for the acquisition of property. Entity laws 
on foreign investments still stipulate that a maximum of 49% of foreign ownership is allowed 
for companies operating in media affairs and the military industry unless, in case of justified 
interest,  the  entity  government  issues  a  decision  to  exceed  49%  of  the  founding  capital  for 
such a share in a company operating in the sectors under restriction. The restriction therefore 
remains in force and might not be in line with the requirements of the EU acquis on the free 
movement of capital.  

For the acquisition of real estate by foreign natural persons, reciprocity is required unless the 
matter  is  regulated  by  an  international  agreement.  Farmland  cannot  be  owned  by  foreign 
natural  and  legal  persons.  The  Stabilisation  and  Association  Agreement  (SAA)  obliges  the 
country to adjust its legislation on the acquisition of real estate so that from 2021 nationals of 
EU Member States are treated in the same manner as nationals of Bosnia and Herzegovina.  

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There was no progress in privatising companies of strategic interest where entity governments 
retain majority shares and management rights.  

As regards the payment systems, in June 2019, the Central Bank of Bosnia and Herzegovina 
(CBBH)  modernised  its  payment  system  by  introducing  a  new  gyro  clearing  system.    All 
interbank transactions up to a certain limit, namely KM 10,000, go through the new system. 
To  adhere  to  the  SEPA  (Single  Euro  Payment  Area)  schemes  for  communities  of  banks  or 
financial institutions outside the European Economic Area, among others, relevant legislation 
will need to be adopted to align with the Payment Service Directive II, the Electronic Money 
Directive II and the Single Euro Payment Area (SEPA) Regulation. 

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.  

Regarding  anti-money  laundering,  Bosnia  and  Herzegovina  needs  to  adopt  a  law  on  anti-
money-laundering  and  countering  the  financing  of  terrorism  in  line  with  international 
standards, and further align with the EU acquis on anti-money laundering and countering the 
financing  of  terrorism.  The  Commission  has  adopted  a  delegated  regulation  that  removed 
Bosnia and Herzegovina from the EU list of high-frisk third countries.  However, Bosnia and 
Herzegovina  should  maintain  its  efforts  to  increase  the  effectiveness  of  its  anti-money-
laundering  and  countering  terrorist  financing  framework,  notably  on  the  transparency  of 
beneficial ownership. 

Bosnia  and  Herzegovina  is  behind  schedule  on  adopting  its  new  law  on  anti-money 
laundering  and  terrorist  financing  and  the  establishment  of  an  asset  recovery  office  was 
delayed. Bosnia and Herzegovina needs to establish a beneficial ownership register on legal 
persons.  Bosnia  and  Herzegovina  also  needs  to  improve  its  track  record  of  financial 
investigations, prosecutions and convictions for related offences, make a more consistent use 
of  legal  provisions  on  asset  confiscation,  notably  by  setting  up  an  asset  recovery  office.  
Preventive measures, supervisory action and sanctions in case of breaches – especially in the 
non-financial sector – also still need to be implemented.  

5.5.  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. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  area  of  public  procurement. 
There  was  serious  backsliding  resulting  from  the  extension  of  preferential  treatment  for 
domestic  bidders  in  awarding  public  contracts  during  the  reporting  period,  in  breach  of  the 
commitments  of  Bosnia  and  Herzegovina  towards  the  EU.  The  country  needs  to  align  its 
legislation  with  the  EU  acquis  in  the  area  of  public  procurement  and  utilities  and  start  the 
alignment process for concessions where the legal framework is highly fragmented and needs 
to be harmonised to eliminate overlaps, inconsistencies and uncertainties. Recommendations 
from last year were not addressed and remain valid. 

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

  withdraw  the  decision  on  preferential  treatment  of  domestic  bidders  in  awarding  public 

contracts to ensure compliance in this area with the SAA; 

  adopt the new law on public procurement; 

63 

 
 
  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. 

Institutional set-up and legal alignment 

The current  legal framework, enacted in  2014,  is  partially in  line with  the EU  acquis. The 
Public  Procurement  Law  aims  at  ensuring  compliance  with  the  principles  of  non-
discrimination, competition, transparency and equal treatment. However, the principle of non-
discrimination is not applied as the government of Bosnia and Herzegovina adopted, in May 
2020,  a  decision  on  obligatory  application  of  domestic  preferential  treatment  for  domestic 
bidders at the rate of 30% for a one-year period starting on 1 June 2020. The decision is in 
breach of the SAA, which bans any preferential treatment for domestic bidders as of 1 June 
2020 (following the transitional period with  gradual  reduction of preferences). Furthermore, 
the  law  covers  exemptions,  which  are  not  covered  by  the  EU  acquis.  The  country  needs  to 
further align with the 2014 Public Procurement Directives, including the Directive on public 
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.  All  legal  and  financial  instruments  used  for  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. 

The implementation of the 2016-2020 strategy for the development of public procurement 
has been delayed.  

The Public Procurement Agency (PPA) of Bosnia and Herzegovina is the body authorised 
to initiate, implement and monitor public procurement reform in all sectors. Its administrative 
capacities are insufficient.  Each  contracting  authority needs to  be staffed with  officials who 
have the relevant skills and expertise. 

Implementation and enforcement capacity 

In  2019,  Bosnia  and  Herzegovina’s  public  procurement  market  represented  8.7%  of  the 
country’s GDP, slightly below the 2018 level. The average number of bids per tender was 2.0 
in 2019, compared to 2.3 in 2018.  

On  monitoring  the  awarding  and  implementation  of  contracts,  the  Public  Procurement 
Agency is the body authorised to initiate, implement and monitor public procurement reform 
in all sectors. However, the PPA’s administrative capacities are insufficient to fulfil its tasks. 
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 (11.47% of the value 
of all contracts awarded in 2018, and even lower in 2019 at 8.55%. The Agency’s monitoring 
role should be strengthened to enable it to identify potential weaknesses and irregularities in 
procurement procedures. 

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  contracting  authorities in  the country is collected. The e-procurement system was 
enhanced  with  additional  functionalities  during  2019.  The  use  of  electronic  procurement 
enables any interested person to download tender documents. 

The  capacity  to  manage  public  procurement  processes  is  weak.  Specialised  procurement 

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functions  need  to  be  established  in  each  contracting  authority  and  be  staffed  with  officials 
who have the relevant skills and expertise. There was no new development in integrity and 
conflicts of interests. 

Efficient remedy system  

The right to legal remedy is 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 EU 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  EU  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  implementation 
capacity  of  the  Procurement  Review  Body,  with  offices  in  three  locations  (Sarajevo,  Banja 
Luka and Mostar), remains in the hands of 34 staff, which is insufficient to address efficiently 
the  high  number  of  complaints  submitted.  A  formal  mechanism  to  co-ordinate  the  three 
Procurement Review Body offices and ensure consistent decision-making and legal certainty 
is still missing. 

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. 

Following the declaration of the state of natural or other disaster by the Council of Ministers 
of  Bosnia  and  Herzegovina, on  17  March  2020  PPA  issued  an  opinion  on  urgent 
procurement procedures to be applied for COVID-19 specific public procurement, clarifying 
two  exemptions  under  available  Public  Procurement  Law  (PPL)  to  be  applied  in  extreme 
urgency  cases.  After  issuing  the  opinion,  PPA  noted  certain  misuses  of  emergency 
procurement procedures and warned the contracting authorities to act in line with the PPL.  In 
order  to  prevent  violations  of  PPL  provisions  related  to  misuse  of  COVID-19  related 
procurement procedures, PPA stepped up its monitoring activities of such procedures. 

5.6.  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.  

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  field  of  company  law, 
corporate  accounting  and  audit.  Limited  progress  was  made  in  the  area  of  electronic 
registration  of  companies  in  the  Republika  Srpska  entity  and  the  Brčko  District.  However, 
there was no progress made towards the establishment of a central registry of businesses, the 
connection  of  the  business  registers  with  each  other  throughout  the  country  or  towards 
ensuring  equal  level  of  harmonisation  in  these  fields  across  the  country.  There  was  no 
progress  either  towards  establishing  a  single  countrywide  competent  authority  for  the 
oversight  of  statutory  auditors.  Recommendations  from  last  year  were  not  addressed  and 
remain valid. 

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

65 

 
 
  review  the  existing  legislation  in  the  area  of  company  law  with  a  view  to  identifying 

amendments needed to complete alignment with the EU acquis; 

  improve the connection and coordination of company registers between both entities and 

the Brčko District.  

Company  law  at  all  levels  of  government  remain  to  a  limited  extent  aligned  with  the  EU 
acquis  in  this  field.  No  central  registry  of  businesses  has  been  set  up  in  Bosnia  and 
Herzegovina  nor  has  any  cross-entity/Brčko  District  connection  been  made  between  the 
companies’  registers.  In  the  reporting  period,  the  Republika  Srpska  entity  created  the  legal 
basis  for  the  electronic  registration  of  limited  liability  companies,  which  will  become 
operational once all the technical  conditions are met. The Brčko District  adopted legislation 
regulating  the  registration  of  business  entities,  including  the  procedure  of  electronic 
registration.  A  set  of  laws  to  simplify  the  registration  process  of  business  entities  in  the 
Federation entity is still pending adoption. 

The legislation on corporate accounting and auditing remains partially aligned with the EU 
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. Bosnia and Herzegovina still needs to align its 
legal framework in the area of non-financial reporting in line with the Directive on disclosure 
of  non-financial  and  diversity  information  by  certain  large  undertakings  and  groups.  The 
state-level  Accounting  and Audit  Commission  of Bosnia and Herzegovina acts  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.  Public  audit  oversight  is  performed  by  the  Public  Oversight  Board  in  the 
Federation  entity,  by  the  Ministry  of  Finance  in  the  Republika  Srpska  entity  and  by  the 
Accounting  and  Auditing  Board  in  Brčko  District.  However,  Bosnia  and  Herzegovina  still 
needs to designate a single countrywide competent authority with ultimate responsibility for 
the oversight of statutory auditors, in line with EU acquis requirements.  

5.7.  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 
programmes and broadcasting. 

Bosnia and Herzegovina is moderately prepared in the area of intellectual property law. No 
progress was made in this area during the reporting period. Significant efforts are required, in 
particular to improve enforcement and coordination. 

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

  implement the strategy on enforcement of intellectual property rights; 

  adopt the amendment to the Law on Patents. 

With  regard  to  copyright  and  neighbouring  rights,  the  legislative  framework  is  largely 
aligned with the EU acquis. Further alignment is needed, in particular in  the area of orphan 
works and collective rights management. 

The  Institute  for  Intellectual  Property  of  Bosnia  and  Herzegovina  (IIP)  operates  as  an 

66 

 
 
independent  administrative  body.  The  Institute’s  development  strategy  gives  it  the  role  of 
coordinator  in  the  system  of  enforcing  intellectual  property  rights.  Copyright  works  and 
related rights were deposited and registered in the IIP. 

Five organisations  in  the country  are authorised for the collective management of copyright 
and related rights. However, in August 2019 IIP issued a decision on conditional revocation 
of  the  license  for  collective  management  of  musical  works  authors'  rights  from  the 
Association  of  Composers  –  Music  Makers  (AMUS).  AMUS  has  12  months  to  remedy 
identified deficiencies. 

In the area of industrial property rights, the legislative framework is designed to be broadly 
aligned  with  the  EU  acquis.  Further  alignment  is  needed,  in  particular  for  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,  for  which  it  still  has  to 
adopt the relevant amendments to the Law on Patents.  

Regarding  enforcement,  the  Indirect  Taxation  Authority  received  108  requests  for  customs 
measures based on protected trademarks and issued 51 decisions on temporary retention and 
seizure  of  goods.  The  State  Investigation  and  Protection  Agency  investigated  49  cases  of 
which  14  were  closed.  It  submitted  22  reports  on  activities  to  Bosnia  and  Herzegovina 
Prosecutors Office. In February 2020, the Council of Ministers adopted a decision to establish 
an  Interagency  Co-operation  Body  for  the  Acquisition  and  Enforcement  of  IPRs  in  the 
country. 

The administrative  and judicial  capacity of the  enforcement  institutions remains insufficient 
and  their  cooperation  needs  to  be  strengthened.  Bosnia  and  Herzegovina  has  adopted  a 
strategy  for  this  that  has  yet  to  be  implemented.  The  country  still  does  not  have  a  reliable 
system for the collecting and analysing of data nor for exchanging data 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 
campaigns, across all enforcement institutions. Prosecutors, judges and court panels handling 
cases involving intellectual property law need to be more specialised to handle these cases in 
a more efficient and consistent manner. 

5.8.  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. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  area  of  competition  policy. 
There was  no progress in  this area in  the reporting period. Bosnia and  Herzegovina should 
further  align  its  legislative  framework  in  the  area  of  competition  and  State  aid  with  the 
relevant  part  of  the  EU  acquis.  Recommendations  from  last  year  were  not  addressed  and 
remain valid. 

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;  

67 

 
 
  ensure  that  the  State  Aid  Council  is  operationally  independent  and  obtains  adequate 

financing.  

Antitrust and mergers 

The legislative framework on antitrust and mergers is broadly aligned with the EU 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 EU acquis. Implementing legislation needs to be further aligned with the EU acquis.  

As for the institutional framework, the Competition Council is an operationally independent 
body responsible for implementing the  Law on Competition.  The Competition Council may 
issue  requests  for  information,  carry  out  dawn  raids  and  impose  fines  and  remedies  if  it 
identifies  a  breach  of  competition  rules.  It  can  prohibit  mergers,  or  authorise  them,  with  or 
without conditions, and provide opinions on draft legislation that may affect competition. A 
leniency programme for companies providing information on cartel cases is in place. Parties 
may appeal the Competition Council decisions before the court. 

The  functioning  of  the  Competition  Council  is  significantly  impeded  by  tight  procedural 
deadlines  and  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. 

Regarding  enforcement  capacity,  the  Competition  Council  is  composed  of  six  members 
assisted  by  20  staff.    The  staff’s  level  of  expertise  needs  to  be  further  developed  through 
relevant  training.  On  implementation,  in  2019  the  Competition  Council  took  49  decisions, 
including  7  on  prohibited  agreements,  3  on  abuse  of  dominant  position  and  16  authorising 
concentrations.  No  fines  were  imposed.  The  Competition  Council  should  continue  to 
strengthen the enforcement of competition rules. The judiciary’s capacity to handle complex 
competition cases is improving and it needs to be further reinforced. 

State aid 

As regards State aid, the legislative framework  is  partially  aligned  with  the EU  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 by the governments 
of the entities and of the Brčko. The implementing legislation is not developed evenly across 
the country and remains to be aligned with the EU acquis. A regional aid map still remains to 
be drawn up.  

As  for  the  institutional  framework,  the  State  Aid  Council  is  responsible  for  ensuring  the 
consistent  implementation  of  the  Law  on  the  State  Aid  System.  The  State  Aid  Council  is 
composed  of  eight  members  appointed  by  the  Council  of  Ministers  and the  governments  of 
the  entities  and  of  the  Brčko  District.  As  in  the  case  of  the  Competition  Council,  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. 

68 

 
 
Under  the  Law  on  the  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 assessments of state aid granted if there are sufficient indications that the aid was 
illegally granted.  

The  enforcement  capacity  of  the  State  Aid  Council  is  insufficient.  With  only  six  staff 
members,  its  secretariat  is  not  in  a  position  to  fulfil  its  tasks.  Staff  expertise  needs  to  be 
developed through relevant training. On implementation, the State Aid Council issued only 
one (positive) decision over the reporting period. A vast 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  existing  State  aid  schemes  still  have  to  be  aligned  with  EU  State  aid  rules,  in 
accordance with obligations arising from the SAA. Bosnia and Herzegovina needs to ensure 
that all State aid measures granted are transparent.  

In April 2020, the State Aid Council published the Manual on application of State aid rules 
and a notification on application of the State aid law in the context of COVID-19 pandemic, 
designed to be aligned with the European Commission’s guidelines set out in the Temporary 
Framework of 18 March 2020. 

Liberalisation 

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

5.9.  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.   

Bosnia and Herzegovina has some level of preparation / is moderately prepared in the area 
of financial services. There was some progress in implementing last year’s recommendations. 
Efforts  continued  towards  further  alignment  of  legislation  with  the  EU  acquis,  but  further 
steps are needed to significantly improve coordination in supervision and enforcement within 
the sector. The overall level of preparedness in the securities market remains low. Last year’s 
recommendations remain largely valid.  

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

  sign a Financial Stability Memorandum of Understanding; 

  amend legislation on compulsory traffic insurance to liberalise its insurance market; 

  demonstrate  improvements  in  the  coordination  between  corrective  and  enforcement 

powers of supervisory bodies (including banking agencies).    

As  regards  banks  and  financial  conglomerates,  the  banking  sector  appears  adequately 
capitalised and liquid. The overall capital adequacy ratio was at some 18% at the end of 2020, 
well above the regulatory minimum of 12%. However, the fragmented market contributes to 
an only moderate profitability for the banking sector. Strategies on fully implementing Basel 
III  are  in  place  in  both  entities.  One  of  the  remaining  issues  is  to  adopt  a  common 
methodology for determining systemically important banks.  

69 

 
 
The deposit insurance system is operational, but the amount of insured deposits is not in line 
with the requirements of the EU acquis. The adoption of the Law on Deposit Insurance at the 
end of May 2020 enhances the bank resolution framework and ensures automatic membership 
in the deposit insurance scheme.  

To  be  complete,  the  legal  framework  must  notably  strengthen  supervisors’  corrective  and 
enforcement  powers  and  introduce  consolidated  supervision  of  banking  groups  across  the 
entities. 

The  ratio  of  non-performing  loans  declined  to  6.6%  of  the  outstanding  loan  portfolio  at  the 
end  of  Q1  2020.  All  banks  have  completed  asset  quality  reviews  on  the  basis  of  which 
banking  agencies  have  approved  plans  to  address  identified  weaknesses,  including  risk 
management and supervisory practices. A Financial Stability Memorandum of Understanding 
to improve cooperation and information sharing for bank supervision, crisis preparedness and 
management, and systemic risk oversight has been prepared but not yet signed by the relevant 
parties, including the Central Bank, the Deposit Insurance Agency and banking agencies.  

In response to the COVID-19 emergency, in spring 2020 banking agencies have announced a 
six-month loan repayment moratorium for restructuring credit arrangements with aggravated 
circumstances due to COVID-19. Banks have also been asked to consider additional customer 
relief and not to pay dividends or bonuses. The Banking agencies, in a coordinated manner, 
amended  decisions  related  to  liquidity,  credit  and  FX  risk  as  well  as  capital  calculation  in 
order  to  ease  the  requirements  and  assist  banks  to  deal  with  the  COVID-19  consequences, 
thus stimulating lending activity.   

Bosnia and Herzegovina made some progress on insurance and occupational pensions. The 
Insurance Agency of Bosnia and Herzegovina strengthened its supervisory and coordination 
role  by  organising  regular  meetings  of  its  Management  Board  and  by  providing 
recommendations for the harmonisation and alignment with the EU acquis of draft insurance 
legislation submitted to it by both  entities. In line with the Management Board's opinion, in 
July 2019 the Republika Srpska entity amended its law on insurance companies, to improve 
corporate governance and harmonise capital requirements in accordance with the EU  acquis 
and with the other entity. Both entities amended rulebooks on the establishment and operation 
of  insurance  companies'  branch  offices  in  inter-entity  business  operations,  with  a  view  to 
implementing  the  protocol  on  cooperation  and  information  exchange  between  the  entities 
insurance agencies.   

Preparations  for  the  harmonised  transposition  of  the  Solvency  II  qualitative  requirement 
(governance  and  risk  management  for  and  effective  supervision  of  insurers)  have  been 
initiated through awareness raising activities in the Federation entity and an impact analysis 
performed by the Insurance Agency of the Republika Srpska entity.   

Bosnia and Herzegovina has still not amended the legislation on compulsory traffic insurance 
to  liberalise  its  insurance  market.  Relevant  by-laws  have  not  been  adopted  in  a  harmonised 
way  across  the  country,  preventing  the  formation  of  a  single  economic  space  for  insurance 
services.  

The  Republika  Srpska  entity  adopted  amendments  to  legislation  on  voluntary  pensions  to 
increase long-term savings through collective pension plans. There were no developments on 
aligning  the  legislation  governing  the  financial  supervision  of  institutions  for  occupational 
retirement provision with the EU acquis.  

70 

 
 
No progress has been made in terms of financial market infrastructure. Legislation is not in 
line with the EU acquis, including the Settlement Finality Directive. 

As far as securities markets and investment services  are concerned, coordination between 
the  entities  needs  to  be  improved  to  ensure  consistent  alignment  with  key  areas  of  the  EU 
securities  market  acquis,  such  as  market  manipulation  and  market  abuse  rules.  There  is  no 
regulated market in the meaning of markets in the financial instruments acquis. Since the end 
of 2019, the Federation entity Securities Commission has lost the quorum of three members 
required  to  operate  even  in  technical  mandate  (under  which  this  Commission  had  operated 
since 2009), making it unable to perform its regular duties. As a result, all requests for capital 
increase, mergers and acquisitions have come to a halt. 

Regarding  investment  funds,  the  Republika  Srpska  entity  amended  its  Law  on  Investment 
Funds  to  further  align  it  with  the  Prospectus  Regulation  and  to  better  protect  investors  and 
operators of management companies. The definition of investment services is not in line with 
the EU acquis. 

5.10.  Chapter 10: Information society and media 

The  EU  supports 
for  electronic 
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 

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparations  in  the  area  of  information 
society  and  media.  No  progress  was  achieved 
last  year’s 
recommendations.  The  legislation  and  strategic  framework  are  not  in  place  and  not  aligned 
with the EU acquis. No progress was made on introducing the European emergency number 
112. 

implementing 

the 

in 

In April 2019, Bosnia and Herzegovina signed the Regional Roaming Agreement, which will 
enable “roam like at home” as of 1 July 2021. 

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

  adopt  a  law  on  electronic  communications  and  electronic  media  in  line  with  the  EU 

acquis;  

  complete phase two of the digital switchover and adopt a framework strategy for access to 

the broadband network; 

  adopt  a  law  on  electronic  identity  and  trust  services  for  electronic  transactions  with  a 

single supervisory body for the whole country in line with the EU acquis. 

Regarding  electronic  communications  and  information  and  communication  technology, 
the  country  made  no  progress  in  adopting  a  new  law  on  electronic  communications  and 
electronic media in  line  with  the 2018 EU regulatory  framework. No progress  was made in 
introducing  the  European  emergency  number  112  throughout  the  country.  Bosnia  and 
Herzegovina remains the only country in the region that does not have a broadband strategy, 
even though it introduced the 4G network in 2019. The Communications Regulatory Agency 
still  lacks  financial  independence  and  no  efforts  were  made  to  improve  the  procedure  for 
appointing its management to ensure full political independence. 

There are 67 internet providers and 3,080,859 internet users (87.25% penetration rate), with a 
penetration  rate  of  20.05%  for  broadband  internet.  Bosnia  and  Herzegovina  signed  the 
Regional  Roaming  Agreement  in  Belgrade  in  April  2019,  which  will  enable  “roam  like  at 

71 

 
 
 
home” as of 1 July 2021 and lead to a further decrease of the price of roaming services.  

As  for  information  society  services,  the  2017-2021  Policy  for  Development  of  the 
Information  Society  remains  in  place,  but  Bosnia  and  Herzegovina  made  no  progress  in 
adopting a countrywide strategy and an associated action plan. Bosnia and Herzegovina needs 
to adopt a law on electronic identity and trust services for electronic transactions with a single 
supervisory  body  for  the  whole  country  in  line  with  the  EU  acquis.    At  the  same  time,  no 
progress  has  been  made  in  ensuring  the  interoperability  of  the  electronic  signature  system 
throughout the country. 

In October 2019, the Office for Supervision and Accreditation of Certifiers established within 
the Ministry of Communication and Transport registered the first trust service provider. The 
country made no progress in adopting a countrywide strategy on the security of networks and 
information systems and in designating a countrywide single point of contact responsible for 
coordination  and  cross-border  cooperation.  Bosnia  and  Herzegovina  needs  to  establish  a 
network of Computer Security Incident Response Teams to facilitate strategic cooperation and 
the exchange of information. 

As regards audio-visual policy, Bosnia and Herzegovina needs to adopt a law on electronic 
communications  and  electronic  media  in  compliance  with  the  EU  acquis.  No  progress  has 
been  made  in  adopting  legislation  on  media  ownership  transparency,  including  a  register  of 
ownership structures, as well as legislation on advertising in the media. The country made no 
progress in completing the second phase of the digital switchover project, and  therefore failed 
to  meet  the  international  deadline  for  it  does  not  fulfil  its  obligations  under  the  Geneva 
agreement GE-06 to meet the international deadline for switching-off analogue broadcasting 
in line with the Geneva agreement GE-06. 

The  three  public  service  broadcasters  remain  exposed  to  strong  political  influence,  in 
particular  through  politically  controlled  steering  boards,  with  a  worrying  trend  of  self-
censorship. The country has not introduced a suitable model to collect broadcasting fees that 
would  ensure  the  public  broadcasting  system’s  financial  sustainability  and  political 
independence. The Public Services Broadcasting Corporation, as prescribed by the respective 
law, is yet to be established. The financing of local public broadcasters from the public budget 
also needs to be brought in line with the EU  acquis, as it constitutes State aid  and provides 
opportunities for political pressure and influence. 

5.11.  Chapter 11: Agriculture and rural development 

The  common  agricultural  policy  (CAP)  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  is  at  an  early  stage  of  preparation  in  the  area  of  agriculture  and 
rural  development.  There  was  limited  progress  overall  in  implementing  last  year’s 
recommendations.  While  the  development  was  encouraging  on  quality  policy,  progress  on 
implementing  the  2018-2021  strategic  plan  and  state-level  legislation  on  wine  and  organic 
farming has yet to materialise. The recommendations from 2019 were not fully implemented 
and remain valid.  

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

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

72 

 
 
prepare a new post-2021 strategic plan for rural development; 

  adopt state-level laws on organic production and wine; 

  harmonise across the country the legislation on quality policy. 

Concerning  horizontal  issues,  there  was  no  progress  in  establishing  the  necessary  
administrative  structures  required  for  the  common  agricultural  policy  (CAP),  including  a 
paying  agency,  nor  was  there  any  progress  in  developing  elements  of  an  integrated 
administration and control system, a land parcel identification system or a farm accountancy 
data  network.  Further  efforts  are  needed  to  better  coordinate  the  sector  and  strengthen 
administrative  capacity  at  all  levels  of  the  government.  An  agreement  on  setting  up  the 
necessary  institutional  structures  so  the  country  can  benefit  from  the  Instrument  for  Pre-
accession  Assistance  for  Rural  Development  (IPARD)  is  still  pending.  Direct  payments  are 
yet  to  be  aligned  with  the  EU  rules  by  decoupling  them  from  production.  Farm  advisory 
services remain to be developed in a harmonised way across the country.  

As regards sector-specific common market organisation schemes, the country still needs to 
prepare and set up the regulatory framework in line with the EU acquis. The state-level law 
on  wine  has  not  been  adopted  yet.  A  register  of  grapes  and  wine  producers  or  a  vineyard 
cadastre  still  has  to  be  set  up.  Overall,  it  is  important  that  the  country  ensures  reliable 
countrywide statistics, particularly on the number and size of households, as well as on farms 
producing grapes. 

As  for  rural  development,  no  progress  was  made  in  harmonising  rural  development 
programmes and support measures across the country. The country has yet to deliver the first 
report  on  the  implementation  of  its  2018-2021  Strategic  Plan  for  Rural  Development  – 
Framework Document,  providing a performance  measurement that can be used to  prepare a 
new post-2021 policy document.  

On  quality  policy,  the  country  continued  to  strengthen  its  implementing  legislation  and 
necessary  structures  for  the  implementation  and  control  of  quality  schemes.  However,  it  is 
important  that  the  country  continues  to  further  improve  and  harmonise  its  legal  framework 
with  relevant  EU  acquis  in  order  to  advance  in  this  area,  in  particular  as  regards  wine  and 
spirit drinks, and to ensure a clearer distribution of competences.    

As for organic farming, the country has yet to prepare and adopt the state level-law required 
by  the  EU  acquis  and  subsequently  ensure  that  regulatory  frameworks  across  the  different 
levels  of  the  government  are  harmonised  with  it.  Support  measures  remain  unevenly 
implemented across the country. 

5.12.  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 the quality 
of  seeds,  plant  protection  material,  protection  against  harmful  organisms  and  animal 
nutrition. 

Bosnia and Herzegovina has some level of preparation in this area. Limited progress was 
made in the reporting period in terms of compliance with the EU rules and requirements for 
the export to the EU of poultry meat and poultry meat products, as well as industrial eggs. The 
country should pursue further alignment with significant developments of the EU acquis and 
strengthen  its  administrative  capacities,  in  particular  those  regarding  official  controls  and 

73 

 
 
laboratories.  The  Commission’s  recommendations  of  2019  were  not  fully  implemented  and 
remain valid.  

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

  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 against rabies. 

In the area of general food safety, food safety rules and specific rules for feed, Bosnia and 
Herzegovina has complied with the EU rules and requirements for exporting poultry meat and 
poultry  meat  products,  as  well  as  industrial  eggs,  increasing  the  number  of  its  products  of 
animal  origin  that  are  EU  compliant  and  therefore  eligible  to  access  the  EU  market.  It  is 
important that the country further works on aligning with the EU requirements for the export 
of other commodities, like table eggs and other categories of meat, such as bovine, ovine and 
caprine  meat.  Further  alignment  of  its  legislation  needs  to  be  accelerated,  notably  the  state-
level regulatory framework and particularly the laws on food and veterinary medicine, where 
there have been significant developments of the EU acquis. Effective implementation of the 
legislation is key. Fully implementing the hygiene package in a harmonised manner across the 
country remains a challenge.  

The full national reference laboratories system is still not in place in Bosnia and Herzegovina. 
The country has  yet to design and adopt the state-level strategy for the laboratory testing of 
samples, as required by the official food and feed controls system. 

Bosnia  and  Herzegovina  continued  to  implement  its  veterinary  policy  on  the  control, 
prevention  and  eradication  of  communicable  animal  diseases,  including  measures  against 
brucellosis  and  rabies.  In  the  light  of  recent  outbreak  of  rabies  in  a  hunting  dog,  it  is  very 
important that the country continue with its rabies vaccination campaign until this disease is 
considered  eradicated.  The  country  should  intensify  its  animal  disease  control  measures, 
particularly  surveillance,  and  ensure  sustainable  resources  for  these  measures  in  a  long  run. 
Nevertheless, due to budgetary constraints these remain a challenge in the long term. 

The country's residue monitoring plan is being implemented. However, the country has to step 
up  its  efforts  to  improve  the  level  of  its  effectiveness.  The  country’s  laboratories  generally 
have  satisfactory  capacities.  There  is  still  need  for  more  staffing,  equipment  and  accredited 
laboratory  methods  for  diagnosing  animal  diseases.  It  is  important  that  Bosnia  and 
Herzegovina works on setting up its central animal identification and registration systems for 
sheep, goats, pigs and equine. 

With  regard  to  the  placing  on  the  market  of  food,  feed  and  animal  by-products,  the 
country’s official food and feed control system is yet to fully align with the EU acquis and be 
effectively implemented. At all levels of the government, administrative capacities need to be 
strengthened. This is particularly true for the inspection services and laboratories, for which 
inter-laboratory  comparative  tests  need  to  be  introduced.  The  country  needs  to  step  up  its 
efforts to further align, in particular its state-level regulatory framework, with the significant 
developments  of  the  EU  acquis,  notably  with  the  new  Animal  Health  Law  and  official 

74 

 
 
controls.  A  countrywide  strategy  for  management  of  animal  by-products  remains  to  be 
effectively implemented.  

In  the  area  of  phytosanitary  policy,  the  country  continued  to  improve  its  implementing 
legislation. The legal framework, notably at state level, has yet to be further aligned with the 
significant developments of the EU acquis, particularly as regards the new Plant Health Law 
and official controls.  

The  country's  programme  for  special  surveillance  of  quarantine  pests  for  potatoes  has  been 
implemented. The registration of plant operators in a single phyto-registry remains functional. 
No progress has been made on issuing plant passports. The OECD seed schemes are yet to be 
adopted.  The  country  has  not  yet  fulfilled  the  EU  acquis  requirements  of  setting  up  its 
laboratories  as  reference  laboratories  providing  phyto-sanitary  controls.  The  principles  of 
integrated  pest  management  remain  to  be  implemented  in  a  harmonised  manner  across  the 
country.  

On genetically modified organisms (GMOs), further efforts are required, notably to ensure 
alignment  with  the  EU  acquis,  harmonise  legislation  across  the  country  and  ensure  its 
effective  implementation.  Inspection  services  at  all  levels  of  government  are  to  be 
strengthened.  The  country  has  to  work  on  setting  up  its  reference  laboratory  for  testing, 
controlling and monitoring the presence of GMOs in food and feed. 

5.13.  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  is  at  an  early  stage  of  preparation  in  this  area.  There  was  no 
progress  in  the  reporting  period.  Major  steps  need  to  be  taken  to  develop  a  countrywide 
fisheries policy document and implement it effectively across the country in line with the EU 
acquis. The Commission’s recommendations of 2019 were not implemented and remain valid.  

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 EU acquis; 

  harmonise  across  the  country  the  methodology  for  data  collection  for  fish  and  fishery 

products, and establish relevant statistics. 

Bosnia and Herzegovina is yet to develop its framework policy and legislation on inland and 
marine fisheries, which is needed to prepare for the EU’s common fishery policy (CFP). The 
effective  countrywide  implementation  of  the  CFP  should  be  ensured  in  line  with  the  EU 
acquis.  

Institutional  capacity  constraints  and  weak  administrative  structures  remain  a  challenge. 
Current  legislation  has  not  been  harmonised  across  the  country.  There  are  still  no  specific 
structural actions for fisheries.  

Measures for resource and fleet management are lacking, and the administrative capacity to 
implement  such  measures  is  weak.   In  that  context,  the  country  needs  to  make  progress  as 
regards  the  setting-up  of  the  system  for  management  and  control  of  fishing  activities  in 
alignment with the EU's CFP. A fleet register is yet to be in place and properly managed. The 

75 

 
 
collection  of  data  on  catches  and  landings  per  type  of  fishery  needs  to  be  improved  and 
harmonised  across  the  country.  Furthermore,  the  system  of  collecting  statistics  on  fish  and 
fishery products has to be improved and harmonised across the country. 

Concerning market policy, marketing standards for certain fishery products are in place.  

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  Organisation  (FAO).  Bosnia  and  Herzegovina  is  also  a  party  to  the  Malta 
MedFish4Ever Declaration.  

5.14.  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.  

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  area  of  transport  policy.  No 
progress was made in addressing last year’s recommendations. The country needs to further 
align with and implement effectively the EU 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 EU acquis 
and  the  relevant  international  agreements,  and  establish  the  appropriate  administrative 
structures. Road maintenance regulations have to be improved, both in terms of efficiency and 
of effectiveness. 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.  Alignment 
with  the  EU  acquis  on  rail  passenger  rights  is  pending.  Bosnia  and  Herzegovina  has  taken 
over  the  responsibility  for  air  traffic  control  of  its  national  skies  in  December  2019.  Last 
year’s recommendations have not been sufficiently addressed and remain valid. 

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

  develop  enforcement  capacity  to  reduce  road  traffic  fatalities  and  make  progress  on 

establishing a national system for continuous road crash data collection; 

  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. 

As  regards  the  general  EU  transport  acquis,  Bosnia  and  Herzegovina  is  implementing  its 
framework  transport  strategy  for  the  period  up  to  2030.  The  strategy  determines  the 
procedures  and  programmes  to  be  carried  out  in  the  short,  medium  and  long  term 
(administrative reforms, regulatory alignment, capacity building and investment programmes) 
as well as the relevant distribution of responsibilities, the time frame and success indicators. A 
draft  implementation  report  for  2016-2018  was  updated  with  the  progress  achieved  in  2019 
and sent for consideration to the Council of Ministers in early 2020. 

Transport remains insufficiently developed and the speed of structural adjustment and reforms 

76 

 
 
is slow. The necessary investments are being delayed by limited borrowing capacity, financial 
constraints  due  to  delays  in  securing  agreed  external  financing  and  lack  of  focus  on  key 
priorities  and  of  coordination  and  cooperation  between  government  levels.  There  was  no 
progress  in  completing  key  sector  reforms  and  the  2019  recommendations  remain  valid. 
Further  efforts  are  required  to  ensure  full  alignment  with  the  Intelligent  Transport  Systems 
(ITS) Directive and secure implementation of relevant national laws. An overall strategy for 
ITS is yet to be adopted and resources should be allocated for its implementation. 

Bosnia  and  Herzegovina  continues  to  actively  participate  in  the  EU  strategy  for  the 
development  of  the  Danube  Region  as  well  as  the  EU  strategy  for  the  Adriatic  and  Ionian 
Region. 

The country is moderately prepared for road transport, but it only made limited progress in 
the  reporting  period,  in  particular  in  maintaining,  developing  and  improving  infrastructure. 
The Law on safety in road transport has reached a good level of alignment with the EU acquis 
through  recent  amendments.  Implementation  remains  a  concern,  in  particular  as  regards  the 
improvement  of  road  safety.  Bosnia  and  Herzegovina  still  records  a  substantial  number  of 
accidents  and  fatalities.  In  September  2019,  the  Council  of  Ministers  adopted  a  decision  on 
establishing  the  Road  Safety  Council.  There  is  lack  of  progress  in  developing  a  strategic 
framework  for  the  implementation  of  ITS  on  the  core  road  network,  which  includes 
transposing  the  relevant  EU  legislation  (the  Interoperability  Directive)  into  national 
legislation. Bosnia and Herzegovina urgently needs to establish a countrywide system for the 
continuous  collection  of  road  crash  data.  Regulatory  measures  are  now  in  place  to  regulate 
access  to  the  international  road  transport  market  and  to  the  occupation  of  road  transport 
operator, including a functional system to license such operators. 

The legislation and organisational arrangements for roadworthiness testing are in place. The 
national  limits  on  the  maximum  weights  and  dimensions  for  road  vehicles  have  been 
harmonised with the EU requirements.  

For years, Bosnia and Herzegovina has failed to adopt a countrywide law on the international 
transport  of  dangerous  goods  by  road.  The  country  needs  to  strengthen  its  mechanisms  for 
monitoring  implementation  of  the  relevant  international  rules  and  EU  legislation,  including 
those on transportable pressurised equipment, roadside checks of vehicles and road safety.  

On rail transport, Bosnia and Herzegovina is moderately prepared, but it only made limited 
progress  in  the  period  covered  by  this  report,  in  particular  when  it  comes  to  developing, 
maintaining and improving infrastructure. 

Nearly half of the railway infrastructure is unsafe, outdated and unreliable, and cannot enable 
suitable  international  transit  on  the  network.  There  is  lack  of  progress  in  developing  a 
strategic framework for implementation ITS on the core rail network. Further efforts are also 
needed  regarding  the  adoption  of  the  multiannual  maintenance  plan  for  the  entire  core 
network.  As  regards  reconstruction  and  new  construction  of  railway  sections,  Bosnia  and 
Herzegovina should aim at using contemporary TSI and EU standards. 

To a large extent, the law is aligned with the EU railway  acquis, particularly with regard to 
the first, second and third EU railway Directives packages. Further revision is needed to align 
with  the  fourth  EU  railway  package  of  2016  and  proceed  with  an  opening  of  the  railway 
market. Alignment with the EU acquis on rail passenger rights is also pending. Further efforts 
are needed to increase independence of the railway regulator and build its capacity.  

The two vertically integrated, entity-owned railway companies have not yet fully completed 

77 

 
 
the  process  of  separating  the  infrastructure  management  from  the  railway  undertaking 
functions.  Both  companies  are  performing  profitable  freight  transport  operations  but  suffer 
from  overstaffing,  financial  problems  affecting 
infrastructure, 
organisational  problems  and  low  levels  of  passenger  traffic,  in  particular  subsidised  local 
commuter transport. Network statements are prepared but not published. In December 2019, 
the  Republika  Srpska  entity  government  adopted  an  action  plan  for  the  financial  and 
operational restructuring of the Republika Srpska Railways.  

the  reconstruction  of 

The Railway Accident Investigation Body is operational and delivering investigation reports. 
Further efforts are needed to increase its independence and builds its capacity. 

Negotiations on protocols concerning the railway border crossing procedures between Bosnia 
and Herzegovina and Croatia did not proceed in 2019 due to Croatia’s reluctant approach.  

On  maritime  transport,  Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  and  it 
made no progress in the reporting period. Bosnia and Herzegovina has no maritime shipping 
fleet  or  maritime  ports,  relying  fully  on  the  port  of  Ploče  in  Croatia.  Although  Bosnia  and 
Herzegovina  has  to  align  at  some  stage  with  the  entire  EU  maritime  acquis,  maritime 
transport is not a priority on the agenda, given that the country has other priorities of greater 
importance it has to deal with. 

Inland  waterway  transport  is  at  an  early  stage  of  preparation,  with  little  progress  in  the 
reporting  period.  The  Republika  Srpska  entity  adopted  a  Law  on  inland  navigation.  Apart 
from  that,  the  legislative  and  regulatory  framework  is  rudimentary  and  should  be  further 
aligned with the EU acquis. 

Further efforts are needed to develop the institutional, legal and regulatory setup of waterway 
transport in Bosnia and Herzegovina. To ensure the safety of navigation on inland waterways, 
more  needs  to  be  done  to  harmonise  with  European  and  international  regulations  in  this 
sector. 

Functional navigation on the Sava River has not been restored yet. It has been delayed by a 
lack  of  funds  to  demine  the  Bosnia  and  Herzegovina  bank  (right  bank).  This  means  that 
designs  by  Croatia  cannot  be  completed,  designs  by  Bosnia  and  Herzegovina  cannot  be 
prepared  and,  therefore,  interventions  to  restore  the  navigation  route  are  not  possible.  This 
also  slows  down  the  reconstruction  of  Brčko  Port  on  the  Sava  River,  as  normalising  of  the 
river navigation is not at the horizon yet. 

The  preparation  of  civil  aviation  is  at  a  good  level  and  some  progress  was  made  in  the 
reporting period. The 2009 Law on Civil Aviation is being revised so that it becomes aligned 
with the requirements of the European Common Aviation Area (ECAA).  

The  European  Aviation  Safety  Agency  (EASA)  continued  its  cooperation  with  Bosnia  and 
Herzegovina’s  Directorate  for  Civil  Aviation  to  address  some  open  findings  concerning  the 
implementation of the first transitional phase of the ECAA.  

Bosnia  and  Herzegovina’s  Air  Navigation  Services  Agency,  responsible  for  air  traffic 
management and control, took over responsibility for air traffic control of its national skies in 
December  2019.  The  Agency  is  operational,  but  seriously  lacks  human  resources  to  ensure 
sustainable long-term functioning. EU rules on ground handling have been implemented, but 
further efforts are needed to improve their application. More efforts are needed for accident 
investigations and air traffic security.  

Bosnia  and  Herzegovina  has  partially  aligned  with  the  EU  Regulation  on  Passenger  Rights, 

78 

 
 
fulfilling  its  obligation  under  the  ECAA  Agreement.  Bosnia  and  Herzegovina  needs  to 
progress in adopting the rules on the protection of the rights of disabled persons and persons 
with reduced mobility in accordance with the EU Regulation. 

Regarding combined/intermodal transport, Bosnia and Herzegovina is at an early stage of 
preparation.  The  country  has  not  started  developing  its  policy,  institutions,  legal  and 
regulatory framework in this area. The low level of priority in this sub-sector is caused by a 
physical  infrastructural  bottleneck  at  the  Ivan  tunnel  and  Bradina  ramp  on  the  railway  in 
Corridor Vc, which prevents shipment of 40ft and high cube containers as well as the piggy-
back  shipment  of  trucks  along  this  railway  corridor.  The  EU  is  providing  assistance  in 
preparation of technical  documentation, but  removal of this infrastructural bottleneck would 
require a EUR 400 million investment in railway infrastructure. 

5.15.  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 country remains at an early stage of preparations in this area. No progress was made 
during the reporting period and some of the measures introduced (including for  the Block 7 
Tuzla thermal power plant) represent a step in the wrong direction. Bosnia and Herzegovina 
needs to make significant efforts in improving cooperation and coordination to start making 
progress.  A  fragmented,  inconsistent,  uneven  legislative  and  regulatory  framework  prevents 
the country from moving forward and meeting its international obligations.  

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

  adopt gas and electricity legal frameworks compliant with the third energy package; 

  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 the obligations stemming from the Energy Community Treaty. 

Following the adoption of the framework energy strategy, Bosnia and Herzegovina has yet to 
adopt  concrete,  comprehensive  and  binding  action  plan(s)  in  line  with  climate  change 
commitments. Identified objectives and the implementation of priorities will contribute to the 
security of supply, but the production scenarios envisaged will lead to a bigger share of fossil 
energy  in  the  total  consumption,  which  is  contrary  to  the  country’s  climate  change  and 
decarbonisation  commitments.  Preparations  for  implementing  the  Block  7  Tuzla  thermal 
power plant investment project, which will increase the country's security of supply, but at the 
same time prolong dependence on coal, reached its final stages. The Federation entity signed 
a  public  guarantee,  which  the  Council  of  Ministers  endorsed,  for  the  project  loan  from 
China’s  Exim  Bank.  This  unilateral  action  terminated  the  ongoing  mediation  procedure 
between  the  Energy  Community  and  the  State  Aid  Council  on  the  possible  violation  of  EU 
State aid rules. As a result, the Energy Community secretariat launched a formal infringement 
case against Bosnia and Herzegovina.  

Authorities  and  relevant  stakeholders  at  all  levels  acted  promptly  and  undertook  severe 
preventive measures to ensure safe and stable security of supply as the COVID-19 pandemic 
reached  Bosnia  and  Herzegovina.  Special  attention  is  granted  to  safeguarding  the  control 
centre, and regular reporting to the state level ministry and the regulatory authority is put in 

79 

 
 
place. 

The  country  needs  to  consider  future  investments  in  energy  infrastructure,  including  power 
plants,  in  the light  of its obligations under the Stabilisation and Association  Agreement  and 
the Energy Community Treaty. The level of security of electricity supply is hindered due to 
long-lasting issues with the functioning of the state-level transmission company (TRANSCO). 
This  is  caused  by  the  lack  of  political  agreement  on  the  company’s  management  and 
investments and on its overall operation. Already the weak security of supply for natural gas 
continues  to  be  jeopardised  by  uneven  and  disharmonised  legislative  frameworks  at  entity 
level  and  the  lack  of  legislation  at  state  level,  which  is  contrary  to  EU  requirements.  The 
Federation of Bosnia and Herzegovina is thoroughly preparing the project documentation for 
implementing the South gas interconnection pipeline with Croatia (Zagvozd – Posušje – Novi 
Travnik  with  a  branch  to  Mostar),  which,  once  developed  and  operational,  will  help  to 
increase security of supply. In the Republika Srpska entity, two gas supply related projects are 
at an early stage: the development of a gas pipeline from the existing entry point at the border 
with Republic of Serbia to gasify the town of Bijeljina, and the construction of the new main 
gas pipeline from Republic of Serbia to Bijeljina – Banja Luka – Prijedor – Novi Grad.    

Bosnia and Herzegovina did not take the necessary steps to adopt a legislative framework at 
state level that is relevant for oil stocks and aligned with the EU acquis, thus preventing the 
creation of a body on compulsory oil stocks and petroleum products at state level. During the 
reporting  period,  the  Ministry  of  Foreign  Trade  and  Economic  Relations  did  not  take  any 
meaningful  steps  to  follow  up  on  the  assistance  it  received  from  the  Energy  Community 
Secretariat on the oil stock model for the emergency stockholding system.   

No progress was made in aligning the legislative framework for gas and electricity with the 
third  energy  package,  thus  delaying  the  creation  and  functioning  of  an  internal  energy 
market. The absence of state-level legislation is preventing the country from unbundling the 
transmission  system  operator.  In  the  entities,  electricity  distribution  remains  bundled  with 
supply  and  generation,  which  will  trigger  additional  infringement  procedures  against  the 
country  by  the  Energy  Community  Secretariat.  The  absence  of  state-level  legislation 
compliant with  the third energy package  also continues to  prevent  the creation of organised 
markets, i.e. power exchange or market coupling. The renewed control block agreement with 
the transmission systems of Croatia and Slovenia, as well as bilateral contracts on the cross-
border delivery of energy for tertiary control, ensured the exchange of balancing services.  

The new law on electricity in Republika Srpska which would, among other things, eliminate 
the regulation of electricity generation prices, remains to be adopted. The tariff methodologies 
currently applied in the country leave most of the consumers incumbent of electricity utilities 
that traditionally operate only within their respective servicing territory. The state regulatory 
authority carried out tariff proceeding and approved increase in tariff for independent system 
operator. The full independence of regulatory authorities continues to be hindered and is often 
susceptible to strong political interferences.    

Due to a continuous lack of alignment with the EU acquis in the gas sector, the country, as a 
signatory  of  the  Energy  Community  Treaty,  remains  in  serious  and  persistent  breach  of  its 
commitments. The Energy Community Ministerial meeting of 2019 considered extending the 
measures that the Energy Community Secretariat introduced back in 2015 against the country. 
The absence of state-level legislation, and uneven and disharmonised entity-level legislation 
relevant for the natural gas sector created a supply crisis in late 2019. The supply of natural 
gas between the entities  was restored on the basis  of an annual  contract  signed between the 

80 

 
 
entity-level public companies responsible for natural gas. The market remains closed without 
adequate  regulatory  oversight  and  lacks  transparency,  particularly  when  it  comes  to  setting 
prices for end consumers.  

The  country  is  yet  to  align  its  respective  legislative  framework  with  the  EU  acquis  on 
hydrocarbons,  which  includes  transposing  the  Directive  on  the  Safety  of  Offshore  Oil  and 
Gas Installations. 

Regarding  renewable  energy,  based  on  the  2017  Progress  Report  submitted  to  the  Energy 
Community Secretariat, the country achieved a 36% share of renewable energy sources (RES) 
in  gross  final  consumption.  The  number  of  reported  environmental  concerns  rose,  mainly 
from  the  non-governmental  sector  regarding  the  development  of  small,  dispersed  renewable 
energy  projects  and  in  particular  small  hydro  power  plants  (HPPs).  In  June  2020,  the 
Parliament  (House  of  Representatives)  of  the  Federation  of  Bosnia  and  Herzegovina  has 
urged  in  a  resolution  to  ban  the  further  construction  of  small  HPPs in  the  entity.  The 
Federation  government  was  given  three  months  to  analyse  related  legislation  and  draft law 
proposals  stipulating  the  protection  of  rivers  and  environment,  and  to  review  all  previously 
issued permits for already built small HPPs or those approved for construction. Stricter, more 
coordinated  and  harmonised  legal  frameworks  introducing  market  based  support  schemes, 
efficient  investment  planning  as  well  as  registration  of  projects  are  needed  to  warrant  the 
promotion of RES while ensuring that all environmental concerns are duly addressed. 

As  for  investing  in  RES,  the  framework  continues  to  be  cumbersome  for  issuing 
authorisations  and  licensing.  The  procedures  need  to  be  simplified  to  ensure  a  more 
favourable  environment  for  such  investments.  There  needs  to  be  a  higher  level  of 
transparency  and  more  prudent  oversight  by  the  authorities  for  the  disbursement  of  funds 
promoting RES. There are serious concerns related to the work of the Operator for Renewable 
Energy Sources in the Federation of Bosnia and Herzegovina. Responsible authorities should 
undertake  meaningful  measures  to  ensure  prudent  management  and  prevent  any  misuse  of 
available funds.   

During the reporting period, no activities were initiated to adopt amendments by the Energy 
Community Secretariat to the existing entity-level laws on renewable energy and efficient co-
generation. In the Republika  Srpska entity, the Law on Renewable Energy and Efficient Co-
generation was amended, limiting the growth of incentives to  generate electricity from RES 
and  limiting  efficient  co-generation.  The  changes  to  the  law  removed  support  for  wind 
projects, which is a step in the wrong direction. A serious reform of the legal framework for 
renewable  energy  is  needed.  Further  alignment  with  EU  requirements  is  necessary  for  the 
issuance, transfer and cancellation of guarantees of origins and for the use of minimum levels 
of energy for RES in new buildings and in buildings undergoing major renovations. Similarly, 
the  legislative  framework  needs  to  be  aligned  with  sustainability  criteria  in  order  to  rectify 
identified  non-compliance  with  the  EU  acquis.  The  Brčko  District,  which  remains  without 
legislation  in  this  area,  will  receive  technical  assistance  to  enable  it  to  develop  the  required 
legislation.  

In the area of energy efficiency, Bosnia and Herzegovina submitted its third Annual Report 
for Energy Efficiency to the Energy Community Secretariat in July 2019. Limited progress is 
noted  in  the  reporting  period,  indicating  that  the  implementation  of  energy  efficiency 
legislation is not sufficient. Work on a new national energy efficiency action plan has, for the 
most part, been completed and the adoption of the plan is awaiting political endorsement. The 
country needs to take additional actions to achieve full compliance, which means transposing 

81 

 
 
the  Energy  Efficiency  Directive  and  the  new  Framework  Energy  Labelling  Regulation.  The 
Brčko District will receive technical assistance to develop the required legislative framework 
for energy efficiency. More comprehensive and coordinated action between all levels of the 
government is required in order to achieve measurable progress. It is in particular necessary to 
adopt uniform secondary legislation at the cantonal level that is fully harmonised with entity-
level legislation.  

As  for  nuclear  energy,  nuclear  safety  and  radiation  protection,  shortcomings  were 
identified  during  the  reporting  period,  such  as  a  lack  of  adequate  capacities  as  well  as 
insufficient  cooperation  and  coordination  between  relevant  stakeholders  responsible  for 
submitting  data.  Random  monitoring  is  still  carried  out  on  an  ad  hoc  basis  while  data 
collection is not systematic or centralised. In December 2019, Bosnia and Herzegovina signed 
a  financing  agreement  with  the  European  Commission  that  would  help  it  obtain  radiation 
monitoring equipment in order to upgrade the national monitoring and detection system in the 
country, including a decision support system.  

5.16.  Chapter 16: Taxation  

EU  taxation  rules  cover  value-added  tax,  excise  duties  and  certain  aspects  of  corporate 
taxation.  They  also  deal  with  cooperation  between  tax  administrations,  including  the 
exchange of information to prevent tax evasion. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  area  of  taxation.  Some 
progress was made with the signing of the OECD/Council of Europe Multilateral Convention 
on Mutual Administrative Assistance in Tax Matters (MAC). The Parliament of Bosnia and 
Herzegovina ratified the MAC in June 2020 and the decision of the Presidency should follow 
soon. The Commission’s recommendations of 2019 were not  fully implemented and remain 
valid.  

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

  bring the legislation on VAT and on excise duties in line with the EU acquis, notably on 

excise duties on beer; 

  eliminate  all  administrative  burdens  in  the  area  of  electronic  signature  (e-signature)  in 

order to ensure its interoperability and a harmonised countrywide system. 

The legislative framework for indirect taxation is partially aligned with the EU acquis. The 
country must improve cooperation between the Indirect Taxation Authority (ITA) and the tax 
administrations of the entities and Brčko District, including through joint audits. Bosnia and 
Herzegovina  also  needs  to  continue  the  process  of  aligning  VAT  legislation  with  the  EU 
acquis.  

As  regards  excise  duties  on  tobacco,  alcohol,  non-alcoholic  beverages  other  than  natural 
juices  and  water,  fuel  and  coffee,  there  are  considerable  discrepancies  with  the  EU  acquis. 
This  concerns  the  scope  and  classification  of  the  excisable  goods  as  well  as  exemptions, 
structures and minimum rates. The country needs to align its law on excise tax fully with the 
EU acquis.  

On direct taxation, amendments were adopted in July 2019 in the Republika Srpska entity to 
the Law on Corporate Income Tax, which regulates, among other things, the reduction of the 
tax basis for investment in production. Moreover, the Federation entity Law on amendments 
and  changes  to  the  Law  on  Corporate  Income  Tax,  published  in  February  2020,  inter  alia 

82 

 
 
envisages the deletion of the current provision on the obligation of legal entities to submit a 
hard copy of profit and loss financial statements to the Federation entity Tax Administration. 

On administrative cooperation and mutual assistance, Bosnia and Herzegovina joined the 
OECD  Inclusive  Framework  against  Base  Erosion  and  Profit  Shifting  in  July  2019.  Bosnia 
and  Herzegovina  signed  the  OECD/Council  of  Europe  Multilateral  Convention  on  Mutual 
Administrative Assistance in Tax Matters on 26 November 2019; the Parliamentary Assembly 
ratified  the  Convention  and  following  the  Presidency  decision  of  22  July  2020,  the  country 
deposited the instrument of ratification with its coordinating body in Paris on 21 September 
2020.  

Concerning  operational  capacity  and  computerisation,  the  electronic  submission  of  VAT 
and  excise  duties  declarations  is  in  place.  However,  coordination,  cooperation  and  data 
exchange  between  the  country’s  different  tax  administrations  need  to  be  further  improved, 
including the countrywide harmonisation and interoperability of the e-signature. 

5.17.  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.   

Bosnia and Herzegovina is at an early stage of preparation on economic and monetary policy. 
There  was  no  progress  towards  improved  cooperation  and  coordination  of  macroeconomic 
and  fiscal  policies.  The  2019  recommendations  were  not  addressed  and  remain  valid. 
Monetary  policy  underpins  economic  stability,  but  full  independence  of  the  Central  Bank 
remains to be ensured. 

 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 the different levels of the government; 

  ensure  consistent  political  support  for  and  high  visibility,  countrywide  ownership  and 
coherence of the Economic Reform Programme (ERP); enhance administrative capacity to 
design, implement and monitor reforms; 

  improve  the  ERP’s  medium-term  macro-fiscal  framework  with  a  view  to  presenting  a 

consistent and consolidated countrywide analysis and policy document.  

As  regards  monetary  policy,  Bosnia  and  Herzegovina  runs  a  currency  board  arrangement, 
with  the  convertible  mark  pegged  to  the  euro  at  an  exchange  rate  fixed  by  the  Law  on  the 
Central Bank. The Central Bank's objective of keeping the domestic currency stable remains 
in contrast with the primary objective of monetary policy in the EU, which is price stability. 
The  Law  on  the  Central  Bank  is  not  fully  aligned  with  the  EU  acquis  as  regards  the 
prohibition of monetary financing.  

The  Law  on  the  Central  Bank  does  not  ensure  the  Bank’s  unconditional  functional 
independence.  The  Central  Bank  is  required  to  report  to  the  Parliamentary  Assembly  on  its 
audited  annual  financial  statements  for  parliamentary  scrutiny  and  to  the  Presidency  on  the 
preliminary  financial  reports.  This  latter  requirement  could  impinge  on  the  Central  Bank’s 
independence.  Legislative  provisions  governing  the  removal  of  the  Governing  Board 
members and the duration of appointment of replacement members remain to be fully aligned 

83 

 
 
with the EU acquis. The country should ensure the Central Bank’s full independence in line 
with the EU acquis. 

The  efficiency  of  banking  sector  supervision  is  impeded  by  fragmented  competences  and 
insufficient coordination. Supervisory powers lie with the two entities’ banking agencies.  

Regarding  the  EU  acquis  on  economic  policy,  the  quality  of  Bosnia  and  Herzegovina's 
medium-term economic reform programme remains low as it reflects insufficient cooperation 
among  key  stakeholders.  Implementation  of  the  jointly  adopted  policy  guidance  remains 
limited.  Capacities  to  design,  implement  and  monitor  structural  reforms  need  to  be 
significantly  enhanced  to  meet  the  requirements  of  the  European  Semester.  This  means 
establishing a countrywide medium-term reform programme that is coherent and developing 
closer coordination of and between various governmental bodies.  

The governments’ response to the COVID-19 pandemic was uncoordinated and fragmented, 
in terms of both the substance and timing of the introduction. In May 2020, a task force was 
established aiming to coordinate the activities of all levels of the government in Bosnia and 
Herzegovina concerning socio-economic measures in response to the COVID-19 crisis and to 
facilitate  mobilisation  of  funding  for  all  levels  of  government  through  domestic  funds  and 
foreign financial assistance. However, its operationalisation proved to be difficult, with only 
one, inaugural meeting held during the first seven weeks. 

The reporting of public sector data in line with the European System of National and Regional 
Accounts  (ESA  2010)  remains  very  limited  and  the  alignment  of  the  underlying  statistical 
framework with ESA 2010 requirements and definitions is still very low. Data provision and 
transparency  is  severely  hampered  by  a  lack  of  cooperation  between  the  main  statistical 
bodies. Fiscal rules remain at entity level and there is still no independent fiscal institution to 
monitor and enforce compliance with  countrywide fiscal  rules. The medium-term  budgetary 
framework remains insufficiently developed and underused as a policy-guiding instrument. 

5.18.  Chapter 18: Statistics 

EU  rules  require  Member  States  to  be  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. 

Bosnia and Herzegovina is at an early stage of preparations in the area of statistics. Limited 
progress  was  made  in  implementing  last  year’s  recommendations,  notably  by  updating  the 
master  sample  frame  for  household  surveys  in  view  of  implementation  of  a  labour  force 
survey on a quarterly basis. The 2019 recommendations therefore largely remain valid.  The 
country  will  have  to  enhance  cooperation,  coordination,  decision-making  processes  and  the 
legal  basis  to  develop  the  national  statistical  system  in  key  statistical  areas  increasingly 
applying  European  and  international  standards.  In  order  to  better  support  policy  analysis, 
improvement is  needed on the provision of timely, exhaustive and countrywide statistics on 
government  finance,  national  accounts  and  labour  market.  The  classification  of  regions 
according to the NUTS classification remains to be finalised. 

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

  adopt a master plan for production of national accounts;  

  implement a standard living conditions survey;  

  adopt a methodology, responsibilities and budgetary aspects of a future agricultural census 

84 

 
 
and adopt a roadmap for preparation of the next population census.  

As regards statistical infrastructure, a law on statistics of Bosnia and Herzegovina remains 
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.  

Coordination  of  the  national  statistical  system  between  the  Agency  for  Statistics  of  Bosnia 
and Herzegovina (BHAS) and other producers needs to be strengthened; the same applies to 
cooperation with providers of statistics and cooperation between the Agency for Statistics and 
the entities’ offices. The latter need to  timely carry out  the surveys according to  the overall 
statistical programme. These issues are highly relevant, as European methodology needs 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  needs  to  obtain  access  to  administrative  data  other  than  that  of  the 
Indirect Taxation Authority. 

On  classifications  and  registers,  there  was  limited  progress  in  further  developing  the 
Statistical  Business  Register  (including  the  introduction  of  an  enterprise  group  unit  in  the 
register  and  improvement  of  data  on  agriculture,  forestry  and  fisheries),  but  data  received 
from  relevant  administrative  sources  remains  insufficient.  Business  demography  data  is  not 
submitted to Eurostat. The address list of agricultural households is in place and is being used 
to prepare a quality research framework necessary for the future agricultural census. The main 
classifications  (NACE Rev.2,  ISCO-08, CPA, GENOM and  ISCED 2011) are in  place. The 
NUTS  II  regions  have  only  been  provisionally  defined  and  accepted  by  the  European 
Commission  until  Bosnia  and  Herzegovina  finalises  and  agrees  the  entire  classification  and 
includes  it  in  the  definition  of  the  NUTS  III  level  as  well.  Bosnia  and  Herzegovina  did  not 
provide any data on regional accounts. 

On macroeconomic statistics, the production of and responsibility for national accounts are 
still not in line with the EU acquis. A master plan for the development of national accounts 
will  need  to  be  agreed  among  the  three  statistical  institutes,  as  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 approaches. Supply and use tables and input-output tables are not 
compiled regularly. Annual sector accounts and quarterly sector accounts are not produced.  

Regarding the transition  to  ESA 2010 methodology, the sector classification was completed 
but without an agreement on sub-sectors of the general government sector. This prevents 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. Bosnia and Herzegovina needs to  provide the European Commission with its 
GDP  per  capita  figures  harmonised  at  NUTS  II  level.  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.  

Little progress was made in compiling government finance statistics in line with ESA 2010. 
For the period 2015-2018, data was processed and transmitted to Eurostat.  

On business statistics, some figures are produced in line with the EU acquis. Some progress 
was  made  by  publishing  results  of  structural  business  statistics  by  using  an  improved 
production  method.  Indicators  and  definitions  for  short-term  construction  statistics  comply 

85 

 
 
with EU recommendations. Short-term statistics for industry, construction and services are not 
available  and  will  need  to  be  established  in  line  with  requirements  of  the  EU  acquis.  The 
PRODCOM survey of industrial production is conducted and results are sent to Eurostat on an 
annual basis. 

Foreign affiliates statistics are produced by the Agency for Statistics for inward statistics (the 
coverage was extended to enterprises with fewer than 20 employees) and by the Central Bank 
for outward statistics. Full compliance with FATS regulations needs to be ensured. Regarding 
tourism,  Bosnia  and  Herzegovina  is  currently  only  producing  accommodation  statistics,  but 
has conducted a private and business travel survey. The data collection methodology does not 
comply  with  the  EU  methodology  for  road  transport  of  goods.  Research  and  development 
statistics  are  compiled  for  four  sectors  –  business,  government,  higher  education  and  non-
governmental organisations – and are published annually. The Community Innovation Survey 
is conducted on a regular basis.  

On  social  statistics,  preparation  for  the  next  population  and  housing  census  has  hardly 
progressed. Related legislation has not been agreed among entity statistical institutes and the 
country is not prepared to participate in the 2021 census round. A new master sample frame is 
now  available  and  will  be  used  not  only  for  the  household  budget  survey,  but  also  for 
upcoming  surveys,  such  as  the  labour  force  survey  and  a  full-scale  survey  of  income  and 
living  conditions.  The  labour  force  survey  was  implemented  annually  and  began  to  be 
conducted  on  a  quarterly  basis  in  January  2020  following  a  pilot  continuous  survey.  The 
labour cost survey remains to be harmonised with Eurostat recommendations. Calculation of 
the  labour  cost  index  and  introduction  of  the  structure  of  earnings  survey  are  not 
implemented.  Job  vacancy  statistics  are  collected  regularly.  Social  protection  statistics  are 
submitted to Eurostat. Intensified cooperation with the institutions responsible for monitoring 
migration  flows  is  needed  in  order  to  obtain  complete  data  on  migration.  In  the  area  of 
education, all levels of the government are covered and statistics are published on an annual 
basis.  Culture  statistics  include  15  cultural  domains,  although  their  coverage  is  not  yet 
adjusted  to  Eurostat  requirements.  There  have  been  some  improvements  regarding  data  on 
crime statistics, which 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. Therefore, special attention needs to be paid to adopting 
a methodology and defining the responsibilities and budgetary aspects of a future agricultural 
census. 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 EU acquis; 
the same is true for slaughter statistics.  

As for energy statistics, further work is needed to improve the quality of data in line with EU 
requirements, in particular annual data on renewable energy sources and basic monthly data 
on oil.  

Regarding environmental statistics, the Agency for Statistics regularly publishes data from 
the  annual  statistical  surveys  on  climate  change  and  greenhouse  gas  emissions  from 
agriculture  and  waste  disposal.  The  Agency  for  Statistics  is  not  reporting  to  Eurostat  on 
monetary environmental accounts.  

5.19.  Chapter 19: Social policy and employment 

86 

 
 
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. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  field  of  social  policy  and 
last  year’s 
employment.  Limited  progress  was  achieved 
recommendations,  especially  when  it  comes  to  adoption  of  legislation  on  labour  law,  but 
serious  challenges  remain  to  be  addressed  as  regards  employment,  social  inclusion  and 
protection,  and  poverty  reduction,  especially  related  to  coordination  among  the  responsible 
institutions across the country. No steps were taken to strengthen and promote social dialogue.  

implementing 

the 

in 

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;  

  enhance social dialogue at all levels and conclusion of general collective agreements. 

Labour laws are in place at the level of the entities and the Brčko District. The labour laws 
apply to all employees, except to civil servants, and guarantee a minimum level of protection 
of employee rights. They also regulate issues such as the conclusion and termination of labour 
contracts, the prohibition of discrimination, maximum working hours, minimum annual leave, 
salaries, and the conclusion of collective agreements and the peaceful settlement of collective 
labour  disputes.  In  order  to  fully  meet  EU  standards  in  this  area,  the  legal  framework  still 
requires  further improvement, especially when it comes to  the protection of workers, which 
include protection against discrimination. 

The right to strike is regulated by the entity-level labour laws and the laws on striking that are 
in  place  at  all  levels  of  the  government.  Legislation  on  an  amicable  settlement  of  labour 
disputes continues to exist in the Republika Srpska entity only. 

Implementation  of  the  labour  laws  remains  inadequate,  especially  when  it  comes  to  social 
dialogue, protection for workers and the enforcement of labour inspection.  

The  outbreak  of  COVID-19  exposed  some  deficiencies  in  the  legislation  related  to  crisis 
management, such as lack of detailed provisions regulating work from home, paid and unpaid 
leave due to force majeure, temporary reduction of working hours as well as limited options 
for  adequate  response  in  order  to  protect  jobs  and  provide  socio-economic  security  for 
employees. 

Laws on occupational health and safety are in place in the entities and the Brčko District. 
The  level  of  their  harmonisation  with  the  EU  acquis  remains  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 
training or proper risk control. 

According to available data, 157 cases of seriously injured workers and 28 fatalities at work 
were  recorded  in  2018.  The  most  affected  sectors  were  civil  construction  and  the  electro-
industry. 

87 

 
 
As  a  response  to  COVID-19  outbreak,  authorities  at  all  levels  introduced  a  number  of 
measures  aimed  at  protecting  health  and  safety  of  workers,  including stricter  application  of 
occupational  safety  and  health-at-work  legislation,  especially  on  use  of  personal  protective 
equipment, disinfection and physical distancing. Such measures also included the suspension 
or reduction of activities in a number of sectors, such as education, retail, hotels, restaurants 
and catering services, and public transportation. 

On the issue of social dialogue, the involvement of social partners in the implementation of 
policies  is  limited  and  their  internal  capacities  are  weak.  There  are  no  general  collective 
agreements in the two entities, but a number of branch agreements are in place limited mainly 
to the public sector and some state-owned enterprises. Labour dispute settlement mechanisms 
are  pending  reforms.  Economic  and  Social  Councils  (ESC)  operate  at  entity  level,  although 
the ESC in the Federation entity has been facing  many difficulties in  its work over the past 
two  years.  The  state-level  Economic  and  Social  Council  has  not  been  established.  Social 
dialogue remains weak at all levels of the government and no significant improvements have 
been made. 

Regarding  employment  policy,  there  is  still  no  countrywide  employment  strategy  in  place. 
The  Republika  Srpska  entity  has  an  employment  strategy  for  2016-2020.  The  Federation 
entity  has  no  employment  strategy.  A  countrywide  strategy  needs  to  be  developed  and 
adopted. 

According to the 2019 Labour Force Survey, the unemployment rate is 15.7% (13.6% men; 
18.8% women), particularly affecting the 15-24 cohort (31.3% for young males and 37.9 for 
young  females).  The  employment  and  activity  rates  are  particularly  low,  with  35.5%  and 
42.1%  respectively.  The  gender  gap  is  relatively  high,  and  so  are  the  disparities  between 
entities.  The  absence  of  coordination  between  entities  and  the  lack  of  active  labour  market 
measures targeting women are most probably the sources of the problem. The activity and the 
employment rates are by far the highest in the 25 to 49 age group years (73.4% and 60.7%).  
Social  contribution  rates  contribute  to  a  high  tax  on  the  labour  earnings  of  low  income 
earners,  resulting  in  a  disincentive  to  work  for  this  category  and  for  their  employers  to 
formalise employment, therefore often confining them to informal work. 

Public  employment  services  are  implementing  various  labour  market  programmes  but  the 
capacity of the public employment services to provide quality services to jobseekers is weak. 
The administration of social benefits further limits the ability of public employment services 
to assist active jobseekers.  

In November 2019, the  Republika Srpska entity  amended its law on mediation, relieving its 
Employment  Bureau  of  tasks  related  to  the  health  insurance  of  unemployed  persons  and 
enabling it to perform mediation activities. 

Entities  have  recently  taken  measures  to  facilitate  the  transition  from  informal  to  formal 
economy and improve the business environment.  

There has been no progress  in  preparations for using the  European Social Fund,  given the 
status of Bosnia and Herzegovina as potential candidate. 

On  social  protection  and  inclusion,  there  are  still  no  countrywide  strategies  on  poverty 
reduction,  social  inclusion  and  protection  or  a  system  at  state  level  for  monitoring  policy 
implementation.  For  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 for deinstitutionalisation. At entity level, there is a wide range of 

88 

 
 
strategies and laws related on social inclusion and protection, but they are not enforced due to 
lack of funding, inadequate procedures, standards and referral practices and a general lack of 
coordination.  

The  social  protection  system  remains  underdeveloped  and  the  effectiveness  of  social 
transfers  is  limited.  Social  assistance  is  neither  well  targeted,  nor  needs-based  due  to  the 
absence  of  adequate  system  for  data  collection.  A  large  number  of  people  in  Bosnia  and 
Herzegovina  are  not  covered  by  public  health  insurance  and  as  such  are  not  entitled  to  the 
basic  package  of  health  care  services.  In  addition,  because  of  the  highly  decentralised 
governance  structure,  the  eligibility  conditions  for  social  assistance  differ  between  entities, 
districts and cantons. Along with differences in eligibility criteria, there are also differences in 
coverage, targeting efficiency and generosity. Cooperation between the social service centres 
and employment bureaus is not well established. The transformation of institutions for social 
protection and, in particular, of those for children without parental care is still ongoing. Some 
progress has been made in the Republika Srpska entity and the Herzegovina-Neretva Canton 
in the Federation entity, with financial support being ensured by local authorities to continue 
funding services established as part of their deinstitutionalisation strategy. However, there is 
still a need for comprehensive reform. In October 2019, the Ombudsman Institution issued a 
Special Report on the Status and Problems of Social Work Centres highlighting the need for 
capacity building and support to social service centres across the country. 

There are still no countrywide systematic measures to improve the situation of older persons. 
A strategy for Improving the Situation of the Elderly 2019-2028 was adopted in the Republika 
Srpska  entity  but  systematic  measures  to  improve  the  situation  of  older  persons  need  to  be 
taken country level. Bosnia and Herzegovina should adopt a new action plan for children.  

The  principle  of  equal  opportunities  and  equal  treatment  of  men  and  women  in  matters  of 
laws  on  gender  equality  and 
employment  and  occupation 
antidiscrimination,  and  by  the  entity-level  labour  laws.  These  laws  contain  provisions  on 
gender  equality  covering  different  areas  (employment,  education,  training  and  professional 
qualification) but in practice the enforcement of non-discrimination legislation remains low.  

regulated  by 

the 

is 

Bosnia  and  Herzegovina  is  a  signatory  of  83  conventions  of  the  International  Labour 
Organisation. Data from the Statistics Agency show that two out of three inactive persons are 
women  and  almost  60%  of  the  working-age  women  are  inactive.  There  is  no  sex-
disaggregated  data  on  occupational  segregation  in  the  labour  market  and  gender  pay  gap. 
Estimates are that women earn around 78% to 85% of a man’s salary for the same position. 
The  provision  of  maternity  leave  and  related  compensation  remain  inconsistent  across  the 
country,  with  inequalities  in  the  provision  of  maternity  rights.  In  addition,  there  are  not 
enough kindergartens, especially in smaller municipalities, to allow parents to go to work.   

On non-discrimination in employment and social protection, although labour laws within 
the  country  address  the  issue  of  non-discrimination  at  work,  apart  from  policy  frameworks 
which target the increase of employment opportunities for persons with disabilities, there are 
no  strategies  or  action  plans  in  place  specifically  developed  for  employment-related 
discrimination. The Human Rights Ombudsman institution is the body in charge of protection 
from  discrimination.  In  2019,  the  Ombudsman  dealt  with  52  cases  of  employment-related 
discrimination,  with  the  highest  number  of  complaints  in  the  reporting  period  relating  to 
mobbing in the workplace. However, it still does not reflect the real situation on the ground as 
a  significant  number  of  citizens  do  not  initiate  proceedings  before  the  Ombudsman,  nor  do 
they seek judicial protection for fear of being fired from their jobs. Most public bodies do not 

89 

 
 
have mechanisms to deal with complaints of mobbing and discrimination, which is not in line 
with the antidiscrimination law. 

5.20.  Chapter 20: Enterprise and industrial policy 

EU enterprise and industrial policy strengthens competitiveness, facilitates structural change 
and  encourages  a  business  friendly  environment  that  stimulates  small  and  medium-sized 
enterprises (SMEs). 

Bosnia and Herzegovina remains at an early stage of preparations in the area of enterprise 
and industrial policy. Limited progress was made on the policy for small and medium-sized 
enterprises  (SMEs).  Implementation  of  recommendations  of  the  previous  report  hardly 
to  be 
progressed; 
unsatisfactory. 

investment  environment  continued 

thus  remain  valid.  The 

they 

In the coming year, Bosnia and Herzegovina 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. 

According  to  some  preliminary  business  surveys  performed  in  March  2020,  the  COVID-19 
crisis has affected 90% of micro- and small enterprises in the metal, wood, textile and agri-
processing sectors, while some services, such as tourism, transport and hospitality are facing 
most severe reduction in business operations and employment. FDI inflows into the country 
have almost stopped during the COVID-19 pandemic and, compared to the previous trends, a 
sharp decline is forecasted for the rest of 2020. Further problems are linked to disruption in 
trade and supply chains, short-term liquidity, access to finance and a loss of markets, although 
some  companies  reoriented  their  production  to  medical  devices  and  personal  protective 
equipment to respond increased domestic demand. The governments of the entities and of the 
Brčko  District  have  taken  some  immediate  measures  to  support  the  recovery  of  industrial 
output and to preserve jobs. They introduced temporary wage subsidies and suspended taxes 
and contributions over the period of the lockdown. Stabilisation and solidarity funds as well 
as  SME  guarantee  schemes  were  activated.  However,  there  is  a  need  to  ensure  a  consistent 
countrywide  approach  in  developing  and  implementing  COVID-19  mitigation  measures  for 
small and medium enterprises in coordination with the private sector. 

Regarding enterprise and industrial policy principles, Bosnia and Herzegovina still lacks a 
countrywide  industrial  development  strategy.  There  is  no  state-level  body  promoting 
consistency between industrial strategies or coherence with other policies affecting industrial 
competitiveness.  The  Federation  entity  adopted  a  decision  on  drafting  a  new  development 
strategy for 2021-2027, as its action plan on industrial policy expired in 2019. The Federation 
entity and some cantons adopted legislation on mitigation of negative economic consequences 
of  the  COVID-19.  The  Republika  Srpska  entity  introduced  a  temporary  moratorium  on 
banking  loans  during  the  emergency  period.  This  entity  is  yet  to  prepare  a  strategy  for 
industrial development beyond 2020. The renewal of the 2008-2017 development strategy of 

90 

 
 
the Brčko District is still ongoing. 

Bosnia  and  Herzegovina  introduced  a  domestic  price  advantage  in  public  procurement 
contrary to the SAA and EU rules. Such a preferential treatment is not considered effective as 
a means to raise industrial competitiveness and is incompatible with the principles of the EU 
industrial policy (see also chapter 5 – public procurement). 

The reduction of the informal economy by improving inspections was identified as one of the 
priorities of socio-economic reforms in 2019-2022. Other aspects, including on rule of law in 
areas affecting industrial cooperation, remain unaddressed.  

Common causes of informality like high barriers to starting a business and rules on taxes and 
para-fiscal  charges  continue  to  be  among  the  most  salient  business  environment  issues, 
together  with  ‘red  tape’  and  the  regulatory  differences  across  various  levels  of  the 
government. To improve access to information on the requirements for setting up and running 
a business, the Republika Srpska entity developed a web portal as an electronic single contact 
point grouping together administrative procedures and formalities for starting and performing 
business  activities.  It  also  created  the  legal  basis  for  the  electronic  registration  of  limited 
liability  companies  founded  by  domestic  natural  and  legal  persons,  whose  implementation 
should  start  once  technical  conditions  are  met.  The  Brčko  District  adopted  legislation 
regulating registration of business entities, including the procedure of electronic registration. 
The Federation entity prepared legislation on the register of fees and charges. A set of laws 
for  establishing  a  one-stop  shop  system  in  the  Federation  entity  is  still  pending  adoption, 
while the digitalisation of business registers at municipal courts is ongoing.  

The  application  of  the  regulatory  impact  assessment  was  systematically  enforced  across  the 
country. Overall, the simplification of business-related legislation is  being 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.  As  expressed  in  the  2019/20 
Global  Competitiveness 
Index,  businesses  have  a  negative  perception  of  public 
administration.  The  investment  environment  remains  unsatisfactory.  The  Federation  entity 
engaged  in  a  comprehensive  consultation  with  local  stakeholders  and  foreign  investors  in 
view of developing legislation on business and science parks.  

Public  enterprises  remain  in  need  of  governance  reform  and  restructuring.  The  Federation 
government  adopted  the  revised  2019  privatisation  plan  for  three  state-owned  companies, 
while its efforts continue to put the telecom sector on a path to sustainability. The state capital 
of 12 companies in the Republika Srpska entity was offered for privatisation in 2019 and the 
restructuring of its railways should end in 2021.  

A  countrywide  strategic  framework  to  encourage  foreign  direct  investments  is  not  yet  in 
place.  The  Republika  Srpska  entity  adopted  procedures  for  granting  direct  investments 
incentives and transferred the responsibility for foreign direct investments to the Ministry of 
Economy  and  Entrepreneurship  in  order  to  better  connect  foreign  investors  with  domestic 
firms. 

State-level  coordination  of  the  policy  on  small  and  medium-sized  enterprises  (SMEs)  has 
somewhat improved as countrywide strategic guidelines are being prepared to harmonise the 
2021-2027 SME strategies of entities and the Brčko District. In October 2019, the Republika 
Srpska entity adopted the strategy for development of women’s entrepreneurship until 2023 in 
order to promote female employment. A countrywide framework for SME policies is still not 
in place in Bosnia and Herzegovina and the level of harmonisation between its key business-

91 

 
 
related legislations remains  unclear.  The Republika Srpska entity also  adopted legislation in 
October  2019  on  SMEs  to  harmonise  the  definition  with  the  EU  acquis.  The  entity 
strengthened  SME  support  structures  with  its  amendments  to  the  legislation  on  SME 
development and by adopting a new law on incentives in June 2019.  

Some  cantons  in  the  Federation  entity  are  providing  funding  to  support  business 
infrastructure, for example the Zenica-Doboj cantonal government which in 2019 decided to 
support  incubators,  start-ups,  business  chambers  and  associations.  However,  technology 
extension  services  (advisory  and  support  services  for  the  adoption  and  diffusion  of 
technology) are still non-existent. Bosnia and Herzegovina’s level of assistance to innovation 
by  SMEs  is  still  the  lowest  in  the  region,  despite  both  entities’  financial  allocations  for 
innovation  in  2019.  SME  skills  programmes  are  still  receiving  support,  mainly  from 
international donors. Bank lending remains the dominant source of SME finance and financial 
instruments for innovative start-ups and high-growth enterprises are still absent.  

In spite of limited steps to increase the capacity of institutions to do monitoring and perform 
evaluations, there is  still a lack of funding to  conduct  evaluations of planned enterprise and 
industrial policy measures and evaluations are not systematically incorporated in action plans.  
Also, data to describe the structure and dynamics of industry remain insufficient.  

As  for  enterprise  and  industrial  policy  instruments,  no  progress  was  made  in  the  EU 
acquis  alignment  of  legislation  on  financial  transactions  to  combat  late  payment  in 
commercial transactions. The Brčko District will have to adopt such legislation as well. 

Since 2017, Bosnia and Herzegovina has been participating in the EU’s COSME programme 
on the competitiveness of enterprises and small and medium-sized enterprises. It has entity-
based  Enterprise  Europe  Network  (EEN)  consortia,  which  supported  over  2,000  SMEs  and 
uses  the  Loan  Guarantee  Facility  that  lent  EUR  14.4  million  to  161  beneficiaries  through  a 
sole intermediary. Bosnia and Herzegovina has not  yet used the Equity Facility for Growth. 
Some  15  exchanges  have  taken  place  through  the  Erasmus  for  Young  Entrepreneurs  (EYE) 
programme. The potential of COSME to assist SMEs in accessing markets has not been fully 
used. The country did not participate in the Enterprise Innovation Fund (ENIF) of the Western 
Balkans Development and Innovation Facility, as it had not paid its financial contribution and 
had not identified eligible projects.  

As  regards  sectoral  policies,  the  Federation  entity  adopted  action  plans  for  implementing 
sectoral strategies in metal, wood and construction industries, which are valid until 2025.  

5.21.  Chapter 21: Trans-European Networks 

transport, 
The  EU  promotes 
telecommunications  and  energy  to  strengthen  the  internal  market  and  contribute  to  growth 
and employment. 

trans-European  networks 

the  areas  of 

(TEN) 

in 

Bosnia  and  Herzegovina  has  achieved  some  level  of  preparation  in  the  area  of  trans-
European networks.  There was  no progress in  completing key sector reforms  and the 2019 
recommendations  remain  valid.  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:  

  continue with the development of the indicative extension of the TEN-T and TEN-E core 

92 

 
 
networks  in  line  with  the  infrastructure  investment  priorities  agreed  under  the  regional 
connectivity agenda;  

  accelerate  the  implementation  of  connectivity  reform  measures  and  continue  with  the 
adoption of the multiannual maintenance plans for the entire road and rail core network;  

  align  with  Regulation  (EU)  347/2013  on  guidelines  for 

trans-European  energy 

infrastructure. 

As  regards  transport  networks,  active  involvement  is  necessary  in  the  Regional  Steering 
Committee (RSC) meetings and other technical committees on railway, roads and road safety 
transport facilitation under the Transport Community Treaty (TCT) secretariat . In the course 
of  2020,  Bosnia  and  Herzegovina  will  take  over  the  yearly  chairmanship  of  the  Regional 
Steering Committee from Albania.  Implementation of the Transport Community Treaty will 
require  sufficient  resources  and  adequate  administrative  capacities.  Therefore,  Bosnia  and 
Herzegovina  is  encouraged  to  continue  cooperation  under  the  TCT  and  intensify  such 
cooperation. 

Bosnia  and  Herzegovina  continues  to  participate  in  the  Western  Balkans  Six  (WB6) 
processes,  focusing  on  improving  connectivity  within  the  region  and  with  the  EU.  As  a 
reaction  to  the  COVID-19  pandemic,  green  corridors  were  established  and  are  functioning 
effectively  throughout  the  major  corridors.  Bosnia  and  Herzegovina  has  intensified  the 
preparation  of  priority  connectivity  projects  on  the  indicative  extension  of  the  TEN-T  core 
network to  the Western  Balkans in  order to  benefit from  EU connectivity funds. Additional 
efforts  are  required  to  speed  up  their  implementation,  improve  preparedness  and  ensure  an 
effective use of available resources. A revision of the framework transport strategy and action 
plan is envisaged with EU support. Future infrastructure investments need to be implemented 
in  compliance  with  the  EU  acquis,  standards  on  public  procurement,  State  aid  and 
environmental  impact  assessments.  Additionally,  investments  need  to  be  implemented  in 
accordance  with  cost-benefit  analyses  carried  out  in  accordance  with  EU  best  practice. 
Projects  should  be  channelled  through  a  single  project  pipeline,  confirming  the  strategic 
orientation  towards  trans-European  networks.  The  implementation  of  connectivity  reform 
measures  remains  uneven  and  should  be  improved.  Road  and  rail  multiannual  maintenance 
plans have not been adopted yet, and border crossing agreements with neighbouring countries 
remain a challenge. 

Bosnia  and  Herzegovina  has  made  some  progress  on  road  networks,  focusing  on  the 
completion  of  the  Corridor  Vc  motorway.  However,  the  same  degree  of  importance  should 
also  be  given  to  other/greener  means  of  transport.  The  construction  of  the  interstate  bridge 
over  the  Sava  River  at  Svilaj  was  finalised  in  mid-April  2020.  It  will  be  opened  in  2020  if 
temporary border crossing procedures are established. This is the first connectivity project in 
the region that has been completed. Construction of the permanent border crossing at Svilaj 
started  in  May  2020  and  its  prompt  finalisation  will  ensure  full  functionality  of  the  already 
completed motorway section from Svilaj to Odžak and the international bridge in Svilaj. The 
construction  projects  for  the  motorway  from  the  Johovac  interchange  to  the  Rudanka 
interchange  as  well  as  for  the  Zenica  Tunnel  started  in  2019  and  the  digging  of  the  Ivan 
Tunnel  on  sub-section  Tarčin  –  Ivan  in  2020.  Most  of  the  remaining  sections  are  under 
preparation. The construction of a second international bridge on the core network route 2A, 
connecting  Banja  Luka  with  Gradiška, started in August  2019 and is  progressing.  In March 
2020, in response to the COVID-19 crisis, protective measures  for workers were introduced 
widely  in  all  major  construction  sites  in  Bosnia  and  Herzegovina.  Investments  in  the  rail 

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network  continue  to  be  limited  due  to  limited  borrowing  capacity  and  lack  of  adequate 
financial  support.  Inland  waterways  need  improvement  and  regular  maintenance.  The 
navigability  of  the  Sava  River  requires  further  demining  and  rehabilitation.  The  Project 
Agreement  with  the  European  Bank  for  Reconstruction  and  Development  (EBRD)  for  the 
Brčko  District  rehabilitation  project  was  signed  in  October  2019  and  preparation  for 
procurement has started.  

On energy networks, Bosnia and Herzegovina continues to fail to transpose Regulation (EU) 
347/2013  on  the  guidelines  for  trans-European  energy  infrastructure  and,  as  a  result,  the 
Ministerial  Council  of  the  Energy  Community  considered  further  measures  against  the 
country at the end of 2019.  

More needs to be done to speed up the development and implementation of electricity and gas 
projects included in the list of the Projects of Energy Community Interest (PECI) and Projects 
of Mutual Interest (PMI). Thanks to EU support, progress was made in the reporting period to 
prepare  project  documentation  for  the  implementation  of  the  South  gas  interconnection 
pipeline with  Croatia (Zagvozd  – Posušje  –  Novi Travnik  with  a branch  to  Mostar). Bosnia 
and Herzegovina needs to ensure proper maintenance of infrastructure and a greater security 
of supply.  

5.22.  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. 

Bosnia  and  Herzegovina  remains  at  an  early  stage  of  preparation  in  the  area  of  regional 
policy.  There  was  a  gradual  and  steady,  though  still  limited  progress  in  the  country’s 
capacity  to  program  and  implement  IPA  assistance.  In  the  coming  year,  Bosnia  and 
Herzegovina should implement the pending recommendations from 2019, 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  [to  update  if  energy  SPP  is  adopted  at  beginning  of  2020],  and  ensure  its 
endorsement by the National Investment Committee and its regular update. 

  reach an agreement on coordination modalities for the effective use of pre-accession funds 
while respecting the NIPAC functions as provided for in the IPA Framework Agreement. 

Bosnia and Herzegovina continues to lack a legislative framework to establish a system for 
managing  EU  structural  funds.  A  proper  allocation  and  implementation  of  future  EU 
structural funds is only possible after key parts of the EU acquis have been transposed in all 
chapters  relevant  to  EU  cohesion  policy.  Bosnia  and  Herzegovina  has  yet  to  submit  to  the 
European  Commission  its  GDP  per  capita  figures,  harmonised  at  NUTS  II  level.  Relevant 
budget  laws  allow  for  both  flexibility  and  multi-annual  budgeting,  but  the  multi-annual 
programmes need to be included in a more comprehensive manner in the entities’ budgets and 
more  consistently  so  across  administrative  levels.  In  the  reporting  period,  no  progress  was 
made in  adopting the necessary legislation and making budget  provisions that would enable 
multiannual  cohesion  programmes  to  be  co-financed.  Legislative  frameworks  establishing 

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financial control and independent internal audit structures are in place at both state and entity 
levels. 

The institutional framework for coordinating the planning, implementation and monitoring 
of EU financial assistance under direct management is in place. However, the current level of 
coordination among the numerous actors involved in the programming and implementation of 
EU  funds  needs  strengthening.  Bosnia  and  Herzegovina  has  still  not  reached  political 
consensus  on  coordination  methods  to  ensure  an  effective  use  of  pre-accession  funds.  In 
particular, there were no relevant developments in the reporting period as to an agreement on 
how  the  coordination  mechanism  on  EU  matters  could  be  utilised  in  certain  IPA-related 
matters, while preserving the existing functions of the NIPAC. In all thematic areas relevant 
to  regional  policy,  the  institutions  involved  in  the  planning  and  programming  of  EU  funds 
need  to  assume  greater  ownership.  There  was  no  progress  in  offsetting  up  countrywide 
institutional  and  administrative  structures  or  in  adopting  legislative  acts  for  managing  and 
implementing future EU structural funds.   

Administrative capacity to deal with the requirements of EU regional policy remains weak. 
Specialised  competences  and  specific  sector  knowledge  still  need  to  be  developed  in  most 
institutions.  To  prepare  cohesion  policy,  a  provisional  plan  still  needs  to  be  established  for 
assessing the need to build capacity or for adopting training measures. In addition, there were 
no relevant developments concerning the establishment of any other systematic plan to help 
prepare  administrative  capacities  to  implement  EU  regional  policy  in  the  future.  In  the 
reporting  period,  the  authorities  continued  to  benefit  from  numerous  training  opportunities, 
including to build their capacity through various EU-funded projects. 

On  programming,  the  authorities  of  Bosnia  and  Herzegovina  finalised  the  2019  and  2020 
annual  national  IPA  programmes  and  agreed  in  March  2020  to  adjust  the  planned  financial 
assistance  to  the  purpose  of  quickly  responding  to  COVID-19  outbreak  and  mitigating  its 
effects. Numerous countrywide sectoral planning and strategic documents remain pending, in 
particular on social inclusion, human rights, anti-discrimination, public administration reform, 
public finance management,  employment,  education and SME competitiveness.  An efficient 
coordination of cross-border, transnational and interregional cooperation programmes remains 
to  be  established.  There  was  no  progress  on  the  preparation  of  regional  development 
strategies.  Further  efforts  are  needed  to  improve  coordination  between  all  levels  of 
government  when  it  comes  to  selecting,  prioritising  and  implementing  the  planned  strategic 
interventions.  Medium-term  financial  planning  for  investments  remains  to  be  systematically 
introduced in line with the objectives of the strategic documents. There was some progress in 
establishing  of  investment  pipelines.  The  revised  transport  and  environment  pipeline  was 
adopted  in  February  2019,  comprising  25  transport  and  64  environment  projects.  An 
additional revision is underway. Preparations for establishing a single project pipeline in the 
energy sector are well advanced. A pipeline of investments in the social sector needs to be set 
up.  Bosnia  and  Herzegovina  should  regularly  update  its  existing  single  sector  pipeline  and 
ensure its endorsement by the National  Investment Committee. The  Republika Srpska entity 
still does not send its representatives to the meetings. 

There  was  no  progress  in  setting  up  institutions  or  bodies  in  charge  of  monitoring  and 
evaluating public investment programmes. The capacities of the Monitoring and Evaluation 
Department  of the NIPAC Office remain weak.  There were no  concrete  plans to  build such 
capacity at state level in order to ensure proper monitoring and evaluation of future cohesion 
programmes. 

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Bosnia and Herzegovina still lacks a financial management, control and audit system  for 
EU  funds,  except  for  cross-border  cooperation  programmes.  There  were  no  relevant 
developments in the establishment of most of the structures and bodies defined in Annex A of 
the Framework Agreement.  

5.25.  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 EU 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. 

Bosnia and Herzegovina has some level of preparation in the area of science and research. 
No progress was made in the reporting period.  

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;  

  develop and adopt a smart specialisation strategy;  

  prepare and adopt the roadmap for research infrastructure. 

On  research  and  innovation  policy,  the  legislative  framework  regulating  science  and 
research  development  remains  fragmented  and  still  needs  to  be  improved  throughout  the 
country. There was no progress in developing the action plan for implementation of the 2017-
2022 revised strategy for scientific development.    

The  country’s  estimated  total  allocations  for  research  remain  low  at  0.3%  of  GDP.  No 
progress was made to ensure reliable and comprehensive statistics on research and innovation. 
The  country’s  research  capacities  remain  very  limited,  while  the  trend  of  a  brain  drain 
continues,  most  notably  in  the  health,  medical,  and  IT  sector,  with  no  systematic  measures 
having been introduced so far to address the issue.  

Initial  activities  on  the  development  of  a  smart  specialisation  strategy  for  Bosnia  and 
Herzegovina have been undertaken, but the strategy remains to be developed and adopted. 

The government’s efforts in upgrading research and innovation policies and related activities 
(e.g.  the  Strategy  for  the  Development  of  Science  and  the  current  adoption  and 
implementation  of  the  related  Action  Plan)  as  well  as  grants  provided  to  organisations  for 
submitting proposals under Horizon2020 have been intensified. Bosnia and Herzegovina has 
completed  the  preparatory  work  allowing  for  Framework  Agreements  on  scientific  and 
technical cooperation. This will greatly facilitate cooperation on research and innovation with 
international partners. 

Systemic  collaboration  and  interaction  needs  to  be  enhanced  between  ‘triple  helix’  actors  – 
academia,  industry  and  governments.  Following  the  COVID-19  outbreak,  certain  efforts  in 
this regard were observed, as some activities of academia and industry aimed at alleviating the 
pandemic impact were undertaken, such as the production of medical and personal protective 
equipment, as well as sharing expert knowledge and information. 

As  regards  international  cooperation,  Bosnia  and  Herzegovina  continues  to  be  active  and 

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successful in Horizon 2020, having competitively already received EUR 8 million (more than 
double  the  amount  of  the  previous  7th  framework  programme  FP7),  as  well  as  in  the 
European Cooperation in Science and Technology The entities have participated 104 times to 
59  signed  grants  of  collaborative  Instrument  actions  of  Horizon  2020,  receiving  EUR  8 
million of direct EU contribution. 

A very good increase in the publications, 925 publications per 1000 researchers, above the EU 
average of 717 was observed, as well as a significant increase in the innovation activity, with 
67 patents per 1000 researchers. It is important to note the success rate of applications from 
Bosnian entities is at 13,2%, above the overall Horizon 2020 success rate of 12%.  

The  country  also  cooperates  at  regional  level,  as  co-signatory  of  the  regional  strategy  on 
research for innovation, with the Central European Initiative and is also active in COST with 
an increasing number of participations in its actions. Bosnia and Herzegovina is taking part in 
the creation of the South East European International Institute for Sustainable Technologies. 
The  country  continues  to  participate  in  the  European  Research  Area  Committee  and  related 
advisory  bodies  and  initiatives.  It  also  participates  in  the  European  Strategic  Forum  on 
Research  Infrastructure,  but  still  has  to  develop  the  roadmap  for  research  infrastructure. 
Bosnia and Herzegovina is still not included in the European innovation scoreboard as not all 
the indicators necessary to participate are available. 

5.26.  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.  

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  in  the  area  of  education  and 
culture.  Some  progress  was  achieved  with  the  entry  of  two  public  universities  from  the 
Republika  Srpska  entity  in  the  relevant  State  Registry  and  with  the  adoption  of  the  policy 
recommendations on inclusive education. Efforts have to be undertaken to make progress on 
the accreditation of the study programmes. Bosnia and Herzegovina participated for the first 
time  in  the  Programme  for  International  Student  Assessment  (PISA)  in  2018.  Additional 
efforts  are  needed  to  ensure  implementation  of  results  as  well  as  continued  participation  in 
international assessments. The education system still lacks common standards for the different 
levels  of  education,  as  well  as  in  teacher  training  and  performance  evaluation.  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 of government 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 and 

study programmes across the country; 

  develop a vocational education and training strategy addressing labour market needs; 

  establish an inter-sectorial commission for the national qualification framework. 

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In the area of education and training, policy recommendations on inclusive education were 
adopted by the Council of Ministers in November 2019. The adoption of relevant legislation 
on adult education was  completed in  the cantons. Some cantons still need to  adopt  relevant 
legislation in early childhood education and care, vocational education and training, as well as 
youth strategies.         

Due  to  demographic  changes,  the  number  of  students  enrolled  at  all  levels  of  education  is 
gradually  decreasing.  In  early  childhood  education  and  care  (ECEC),  the  enrolment 
remains very low but the trend is positive and it is now around 12%. As for 3-6 year olds pre-
school  enrolment  Bosnia  and  Herzegovina  has  the  lowest  enrolment  figure  in  Europe  with 
25%, which includes only 3% for Roma children. 

Access  to  primary  and secondary  education in  Bosnia and Herzegovina is satisfactory,  with 
97.6 per cent of children attending primary and 84.6 per cent attending secondary education. 
Among Roma children, 69 per cent attend primary and 23 per cent secondary education. 

Comprehensive  teacher  training  focused  on  developing  students'  key  competences  and  a 
systematic  approach  for  implementing  the  common  core  curriculum  should  be  provided  to 
complement the ongoing outcome-based curricular changes.   

The  education  of  children  with  special  needs  remains  a  challenge,  particularly  in  terms  of 
ensuring  the  necessary  infrastructure,  provisions,  transportation  and  school  assistants  to 
support both children and teachers. 

The legislative framework vocational education and training (VET) has yet to be completed at 
the cantonal level. Small-scale activities to help introduce dual education in the VET system 
need  to  be  scaled-up  in  order  to  make  vocational  education  and  training  more  relevant  for 
employment.  As  per  figures  from  European  Training  Foundation,  46.4%  of  VET  graduates 
are employed, as compared to 56.2% of those whom have passed general education. This rate 
improved  over  the  course  of  the  decade  from  27.3%  in  2010.  Further  development  of 
qualification  framework  (QF)  for  Bosnia  and  Herzegovina  is  still  on  hold  and  cannot  go 
forward  until  the  nomination  of  the  inter-sectorial  group  responsible  for  the  action  plan 
implementing  the  qualification  framework.  The  process  of  developing  qualifications  and 
occupations in different parts of the country remains slow and needs better coordination and 
harmonisation. Bosnia and Herzegovina’s qualification framework is not yet referenced to the 
European Qualification Framework. There is no mechanism for validation of prior learning in 
place yet.               

The longstanding disputes between the two accreditation agencies, one at state level and one 
in  the  Republika  Srpska  entity,  which  hampers  the  accreditation  of  higher  education 
institutions and study programmes, has progressed with the adoption  of a decision on norms 
on the  accreditation of higher  education institutions and study programmes by the Steering 
Board  of  the  state  level  agency.  The  issue  of  the  entry  of  two  public  universities  from  the 
Republika  Srpska  entity  (Banja  Luka  and  East  Sarajevo)  in  the  State  Registry  of  accredited 
higher  education  institutions  has  been  successfully  resolved.  Additional  efforts  should  be 
made  for  closer  cooperation  between  the  institutions  to  progress  in  accrediting  the  study 
programmes.    

In 2018, for the first time Bosnia and Herzegovina participated in the OECD Programme for 
International Student Assessment (PISA) and ranked 62nd out of 79 countries, with the lowest 
results being recorded in natural sciences. The PISA results showed that 15-year olds are on 
average  about  3 school  years behind  their peers  in  OECD countries. The minimum  level  of 

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functional literacy (i.e. above Level 2) is not attained by 58% of students in mathematics, 54 
%  in  reading  and  57%  in  science.  (OECD  averages  are  24%,  23  %  and  22%  respectively). 
Very  few  students  are  among  top  performers  (scores  at  level  5  or  6).  The  country  also 
participated  in  the  TIMMS  2019  assessment  (Trends  in  International  Mathematics  and 
Science Study), with a report expected to be published at the end of 2020 as well as PIRLS 
2021  (Progress  in  International  Reading  Literacy  Study).  Additional  efforts  to  ensure 
continuous participation in international assessment studies, in particular PISA 2021, should 
be  taken  to  track  country's  progress  and  enhance  visibility  and  comparability  in  a  larger 
context. 

Bosnia  and  Herzegovina’s  participation  in  the  Erasmus+  programme  resulted  in  3559 
mobilities this  year in the field of higher education. The overall quality of the proposals for 
capacity  building  in  higher  education  has  slightly  decreased  in  relation  to  previous  years. 
Issues  related  to  the  accreditation  of  study  programmes  have  hampered  the  overall  2019 
selection  and  reduced  the  percentage  of  projects  devoted  to  curriculum  development:  20% 
against  60%  in  the  2018  selection.  In  the  area  of  culture,  Bosnia  and  Herzegovina  is 
implementing measures under the UNESCO Convention on the protection and promotion of 
the  diversity  of  cultural  expression.  Bosnia  and  Herzegovina  needs  to  recognise  cultural 
industries as a sector with potentials for economic development and connectivity, and create a 
conducive legal and business environment for their rapid development.     

Bosnia  and  Herzegovina's  Commission  to  Preserve  National  Monuments  has  continued  its 
valuable work. Implementation of this Commission’s decisions rests on the entities and there 
is room for improvement. The budget allocation for culture on all levels of government should 
be increased with longer term, multi-annual funding decisions to provide stability for cultural 
creation and operation. Bosnia and Hercegovina has to establish formal partnership structures 
enabling transparent and organised participation in the cultural policymaking. 

Due  to  the  spread  of  the  COVID-19  pandemic,  schools  have  been  closed  throughout  the 
country as of mid-March and over 400,000 children of ECEC, primary, and secondary school 
age are affected by this measure. Continuation of education was ensured primarily though ad 
hoc solutions  for  distance  learning  as  well  as  the  delivery  of  learning  content  through  TV. 
There are discrepancies in the scope and quality of these services within the country, mainly 
because of lack of necessary equipment and overall strategy for teachers and students on how 
to  ensure  quality  in  distance  learning  including  the  assessment  of  students'  progress.  As  for 
enrolment into ECEC and first grade, the majority of institutions have issued instructions for 
online applications. Enrolment to secondary schools and universities will be conducted online 
in a limited number of institutions. 

Although there  are  youth  strategies at  some levels  of  government,  Bosnia and Herzegovina 
should work on a youth strategy that would ensure equal treatment of young people and stop 
them from leaving the country. Participation in Erasmus+  fosters young people’s non-formal 
learning  at  international  and  national  levels  to  enhance  their  competences,  skills  and 
employability.  

Bosnia and Herzegovina actively joined the European Week of Sport (23-30 September 2019) 
for the second time, under the framework of the Commission’s initiative  European Week of 
Sport Beyond Borders. Sport activities were organised across the country. 

5.27.  Chapter 27: Environment and climate change 

The  EU  promotes  strong  climate  action,  sustainable  development  and  protection  of  the 

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environment. EU law contains provisions addressing climate change, water and air quality, 
waste  management,  nature  protection,  industrial  pollution,  chemicals,  noise  and  civil 
protection. 

Bosnia and Herzegovina is at an early stage of preparation/has some level of preparation 
in  the  area  of  environment  and  climate  change.  Limited  progress  was  achieved  during  the 
reporting  period.  A  countrywide  harmonised  approach  in  strategic  planning  needs  to  be 
ensured to address alignment with the EU environmental acquis at all levels of government in 
a  consistent  and  comprehensive  manner,  including  on  air  quality.  Significant  efforts  are 
needed on implementation and enforcement.  

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

  implement  the  countrywide  environmental  approximation  strategy,  and  accordingly 
enhance the legal framework, strengthen administrative capacity and monitoring systems, 
and improve inter-institutional coordination among all relevant authorities; 

  formalise  the  procedures  for  the  appointment  and  functions  of  the  national  focal  points 
(NFP)  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  nationally  determined  contribution  (NDC),  update  and  implement  the 
climate  change  adaptation  and  low  emissions  development  strategy,  and  develop  an 
integrated national energy and climate plan (NECP) in line with the Energy Community 
recommendation. 

Environment  

Horizontal  legislation  is,  to  a  limited  extent,  aligned  with  the  EU  acquis.  Bosnia  and 
Herzegovina needs to align with the EU environmental acquis at all levels of government in a 
harmonised  and  coordinated  manner  and  strengthen  administrative  capacities  for  efficient 
implementation. The countrywide environment approximation strategy adopted in 2017, and 
supplemented by more specific environmental approximation programmes for the entities and 
the  Brčko  District,  needs  to  be  updated  and  fully  implemented.  The  plan  for  implementing 
and  monitoring  this  strategy  remains  to  be  adopted.  The  sub-sector  strategies  at  state  and 
entity  level,  which  are  few  in  number,  broadly  remain  non-harmonised  between  the  entities 
for the respective areas covered, leaving the environment sector unevenly covered across the 
country.  The  countrywide  environmental  protection  strategy  for  Bosnia  and  Herzegovina  is 
now  being  developed.  This  will  encompass  sub-sector  strategies  for  waste  and  water 
management,  air  quality  and  nature  protection.  The  provisions  of  the  environmental  impact 
assessment  (EIA)  and  strategic  environmental  assessment  (SEA)  have  not  been  fully 
transposed  in  the  legislation  at  entity  level.  Considerably  stronger  enforcement  of  SEA  and 
EIA is needed to ensure that environmental concerns are adequately addressed when planning 
investments.  The  country  remains  without  a  standardised  system  or  methods  for  gathering, 
transferring and reporting environmental data. A draft strategy also remains to be adopted to 
monitor the management and reporting of environmental data. There has been no progress in 
improving  the  public’s  access  to  information  and  its  participation  in  the  decision-making 
process. The legal framework regulating environmental inspections needs to be improved in 
line with the relevant EU acquis, and implementation needs to be enforced. Capacities need to 
be  considerably  strengthened.  There  has  been  no  progress  in  aligning  with  a  number  of 
horizontal  environmental  directives  such  as  the  Directive  on  Environmental  Liability,  the 

100 

 
 
Directive on  Infrastructure for Spatial  Information in  the European Community (INSPIRE)9 
and the Directive on Environmental Crime. The procedure for appointing national focal points 
for  Bosnia  and  Herzegovina  and  for  determining 
the 
implementation  of  environmental  conventions  to  which  the  country  is  a  signatory  party, 
remains to be formalised and systematised. 

their  functions  concerning 

Alignment  with  the  EU  acquis  on  air  quality  remains  limited.  A  well-functioning 
countrywide  air  quality  monitoring  network  still  needs  to  be  established  together  with  the 
programme for air quality improvement. Air quality plans for areas where levels of pollutants 
exceed limit values still need to be adopted. Air quality management needs to be addressed in 
a  harmonised  and  consistent  countrywide  manner  to  efficiently  combat  air  pollution  and 
reduce  as  quickly  as  possible  the  levels  of  pollution  in  exceedance  of  the  limit  values  in  a 
number of cities. Progress is needed also in addressing national emissions of main pollutants 
and establishing national emission inventories and reporting. Bosnia and Herzegovina should 
develop  a  national  strategy  towards  decarbonisation  and  cleaner  energy  production.  No 
progress has been made in aligning with the EU acquis when it comes to reducing the sulphur 
content  of  certain  liquid  fuels  (the  limiting  value  for  the  sulphur  content  of  heavy  fuel  oil 
being  1%).  The  country  remains  in  serious  and  persistent  breach  of  the  Energy  Community 
Treaty as stipulated in the Decision of the Energy Community Ministerial Council from 2018. 
There has been no progress on alignment with EU legislation on volatile organic compounds 
(VOC).  There  are  no  accredited  bodies  in  Bosnia  and  Herzegovina  for  monitoring  VOC 
emissions.  Main  emission  sources  in  Bosnia  and  Herzegovina  are  the  coal-power  plants, 
industry, household heating and transport. 

A consistent countrywide strategy for waste management has yet to be developed. Due to its 
administrative order, Bosnia and Herzegovina 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.  The  environmental  protection  strategy 
that is under development could provide for this. Bosnia and Herzegovina needs to align with 
the Landfill Directive, including by adopting a directive specific implementation plan and by 
closing  down  or  rehabilitating  non-compliant  landfills.  Substantial  efforts  and  awareness-
raising  measures  are  required  to  reduce  waste  generation  and  promote  reuse  and  recycling. 
Alignment  is  required  with  the  EU  acquis  on  sewage  sludge,  batteries,  packaging, 
polychlorinated biphenyls/ polychlorinated terphenyls and end-of-life vehicles. 

On  water  quality,  the  country  still  lacks  a  consistent  and  harmonised  countrywide  strategy 
and investment plans on water management that would include implementing legislation and 
monitoring.  There  is  no  water  policy  for  Bosnia  and  Herzegovina.  The  sustainability  of 
investments in the supply of water and in the management of urban waste water continues to 
be an issue. A consistent  legal  framework needs to  be in  place addressing water services to 
provide  for  sustainable  investments.  Regarding  the  growing  development  of  hydropower 
investments, Bosnia and Herzegovina as a matter of urgency has to better enforce SEA, EIA, 
nature protection and water-related provisions of the EU acquis in order to adequately address 
growing environmental concerns. Specific plans for implementing EU legislation on drinking 
water, urban waste water and flood risk management are still to be adopted. A ‘Roof report on 
river  basin  management  plans’  needs  to  be  adopted  for  Bosnia  and  Herzegovina.  An  action 

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

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plan for flood protection and river management in Bosnia and Herzegovina for 2014-2021 is 
being implemented. Flood hazards and risks are being mapped for the entire country. 

Alignment with the EU acquis on nature protection, in particular with the Habitats and Birds 
Directives,  is  very  limited.  There  is  no  progress  on  the  pending  adoption  of  the  list  of 
potential  Natura  2000  sites  and  secondary  legislation.  The  planning  for  and  investments  in 
renewable energy, including hydro, wind and solar power plants, requires compliance with the 
EU’s  environmental  legislation,  including  SEA,  EIA  and  the  Birds  and  Habitats  Directives. 
There has been no progress in establishing a system in Bosnia and Herzegovina for collecting 
information on and systematically monitoring biodiversity. Bosnia and Herzegovina needs to 
designate  institutions,  ensure  the  necessary  human  and  financial  resources  and  establish 
structures for implementing the Convention on International Trade in Endangered Species of 
Wild Fauna and Flora (CITES). 

Alignment with the EU acquis on industrial pollution control and risk management is very 
limited.  The  Pollutants  Release  and  Transfer  Register  (PRTR)  still  needs  to  be  fully 
operational  for  Bosnia  and  Herzegovina.  This  includes  enforcing  the  obligation  to  report  to 
PRTR countrywide, enabling public access to and the integration of the collected data and its 
transmission to the EU institutions. The PRTR Protocol to the Aarhus Convention remains to 
be  ratified.  Bosnia  and  Herzegovina  needs  to  further  align  with  the  Industrial  Emissions 
Directive (IED) and the Directives on Eco-labelling and Eco-Management and Audit Schemes 
(EMAS).  Bosnia  and  Herzegovina  is  not  aligned  with  the  EU  Directive  on  the  control  of 
major-accident hazards involving dangerous substances (Seveso III). 

On  chemicals,  Bosnia  and  Herzegovina’s  alignment  with  the  EU  REACH  Regulation 
concerning the registration, evaluation, authorisation and restriction of chemicals is uneven. It 
requires  harmonisation  at  all  levels  of  government  and  strengthening  the  administrative 
capacities  necessary  for  its  effective  implementation.  The  EU  Regulation  on  Classification, 
Labelling  and  Packaging  of  substances  and  mixtures  (CLP)  needs  to  be  implemented. 
Relevant bodies responsible for receiving information to formulate preventative and curative 
measures should be appointed. Bosnia and Herzegovina needs to align with EU legislation on 
asbestos  and  on  the  protection  of  animals  used  for  scientific  purposes.  Bosnia  and 
Herzegovina,  as  a  party  to  the  Rotterdam  Convention  on  the  Prior  Informed  Consent 
Procedure  for  Certain  Hazardous  Chemicals  and  Pesticides  in  International  Trade,  needs  to 
progress  with  its  implementation.  Progress  is  required  in  acceding  to  the  Minamata 
Convention. 

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

Regarding  civil  protection,  thanks  to  IPA  support,  the  country  is  preparing,  to  become  a 
participating  state  of  the  Union  Civil  Protection  Mechanism  (UCPM).  Establishing  secure 
trans-European services for telematics between administrations (sTESTA) is a pre-condition 
for connecting to the Common Emergency Communication and Information System (CECIS) 
of the European Commission in view of the Union Civil Protection Mechanism membership. 

Bosnia and Herzegovina is encouraged to implement the recommendations of the TAIEX peer 
review  carried  out  in  2018.  There  is  a  need  for  more  systematic  horizontal  cooperation  and 
enhanced  vertical  coordination,  including  on  standardisation,  statistics,  rescue  resources, 
professional  training  and  risk  assessment  methodologies.  Operational  resources  should  be 
allocated at the municipal level, with specialised rescue units complementing these resources 
at  cantonal  and/or  entity  levels  for  disasters  of  larger  scale  or  complexity.  The  Covid-19 
pandemic highlighted the need to strengthen the legal framework and institutional capacities 

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as  well  as  human  and  financial  resources  of  civil  protection  authorities  also  with  regard  to 
health  emergencies.  One  risk  assessment  for  the  country,  systematic  inspections,  the 
establishment  of  civil  protection  stakeholder  associations  and  civil  protection  education, 
including  first  aid  training,  will  help  to  foster  Bosnia  and  Herzegovina’s  resilience  when 
facing disasters. The introduction of the 112 European unified emergency number (for police, 
ambulance and firefighters) is recommended.  

Climate change 

The level of alignment with the EU climate acquis remains limited. Bosnia and Herzegovina 
is  currently  revising  its  2013  national  climate  change  adaptation  and  low  emission 
development strategy covering 2013-2025, which is consistent with the EU 2030 framework 
on  climate  and  energy  policies.  Its  implementation  and  integration  into  all  relevant  sectors 
should be a priority. 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 EU climate acquis and on building institutional capacities in the medium term. The 
development  of  an  integrated  national  energy  and  climate  plan  (NECP)  for  Bosnia  and 
Herzegovina,  in  line  with  the  2018  Energy  Community  recommendation  and  related  policy 
guidelines, is underway.  

As  for  the  UN  Framework  Convention  on  Climate  Change  (UNFCCC),  the  fourth  national 
communication  and  the  third  biennial  update  report  on  greenhouse  gas  emissions  are  in 
preparation.  Bosnia  and  Herzegovina  ratified  the  Paris  Agreement  in  2017  and  should  now 
give  priority  to  implementing  its  national  determined  contribution  (NDC).  NDCs  are  being 
revised together with their implementation plan. There is no progress on alignment with the 
EU  climate  acquis,  which  includes  the  EU  Monitoring  and  Reporting  Regulation,  the 
directives on fuel quality, ozone depleting substances, fluorinated gases, carbon capture and 
storage and other relevant  legislation. Ratification of the Kigali amendment  to  the Montreal 
Protocol on substances that deplete the ozone layer is pending. To progress in aligning with 
the EU climate acquis and its implementation, Bosnia and Herzegovina needs to move away 
from a project-based approach. The country’s administrative capacities should be significantly 
reinforced  at  all  levels  of  government,  covering  all  relevant  sectors  to  ensure  meaningful 
implementation of the required measures. 

5.28.  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. 

Bosnia and Herzegovina is at an early stage of preparation in the field of consumer protection 
and  public  health.  No  progress  was  made  in  the  area  of  consumer  protection  and  public 
health  during  the  reporting  period.  The  legislation  on  serious  cross-border  health  threats 
including  communicable  diseases  is  not  yet  aligned  with  the  EU  acquis  at  all  levels  of 
government. 

 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 

103 

 
 
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;  

  further  align  its  legislation  with  the  EU  acquis  on  substances  of  human  origin  and  on 
medicines  for  human  use  and  establish  an  oversight  system  in  this  field  with  a  view  to 
ensuring efficient coordination in the whole country; 

  align the state-level Law on consumer protection with the EU acquis. 

Consumer protection 

On horizontal aspects, 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  that  have  taken  place  since 
then. 

The Consumer Protection Council (CPC) acts as an expert advisory body for the Council of 
Ministers.  The  CPC  proposes  an  annual  state  consumer  protection  programme,  monitors  its 
implementation, and defines the fundamentals of consumer protection policy and the direction 
of the scope of consumer protection activities funded by the state budget. 

The  legal  framework  in  the  area  of  consumer  credit  and  distance  marketing  of  financial 
services remains to be aligned with the EU acquis. 

The  legal  framework  for  product  safety  is  not  yet  aligned  with  the  EU  acquis,  Over  the 
reporting period, the Market Surveillance Agency and the inspection bodies of the entities and 
the  Brčko  District  implemented  21  projects  as  part  of  proactive  surveillance,  and  26  cases 
were  initiated  on  reactive  surveillance.  As  a  result  of  210  product  safety  inspections,  6,222 
unsafe  products  were  withdrawn  from  the  market  (of  which  4,473  were  destroyed),  and 
businesses brought 9,337 products into compliance with safety requirements. 

Public health 

On horizontal aspects, there was no progress in drafting a health strategy at the state level 
or in the Brčko District. The relevant legislation is not aligned with the EU acquis across the 
country. There is no state-level health information strategy or integrated health information 
system in place.  

Legislation on  tobacco  control  policies at  the level  of the entities and the Brčko District  is 
not  aligned  with  the  relevant  EU  acquis.  Bosnia  and  Herzegovina  is  a  party  to  the  WHO 
Framework  Convention  on  tobacco  control,  but  this  convention  has  not  been  fully 
implemented due to a lack of systematic monitoring. Bosnia and Herzegovina has not ratified 
the protocol to eliminate illicit trade in tobacco products.  

The legal framework regulating the areas of blood, tissues, cells and organs, at the level of 
the  entities  and  the  Brčko  District  is  not  yet  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  lacks  the  necessary 
administrative  capacities,  to  fulfil  the  requirements  laid  down  in  the  EU  acquis  on  human 
organ, tissue and cell transplantation. There was no progress in setting up an oversight system 
at state level in this field in order to ensure efficient coordination in the whole country. 

For serious cross-border health threats, including communicable diseases, the legislation 

104 

 
 
has not yet been aligned with the EU acquis at all levels 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  the 
Brčko District. 

locally  and 

internationally 

In relation to COVID-19, authorities at all levels reacted promptly and introduced mitigation 
measures to slow down the transmission of the virus similar to EU countries but these were 
not well coordinated throughout the country. The official COVID-19 information is gathered, 
through  existing  mechanism  of 
presented  and  reported 
International Health Regulations. Protocols for healthcare institutions for combating COVID-
19 are in place, but hospital preparedness and response plans are not synchronised across the 
country.  Lack  of  testing  kits,  bed-unit  capacities,  respirators,  personal  protective  equipment 
and  alternate  locations  for  patient  processing  and  treatment  marked  the  beginning  of  the 
COVID-19  crisis.  Despite  initial  success  of  the  health  authorities  throughout  the  country  to 
quickly incorporate emerging international and local evidence and international best practice 
to prevent and to control the spread of the virus, early relaxation of the restrictive measures 
caused  an  epidemiological  peak  during  the  summer  months.  Overall,  the  response  of  health 
systems  in  Bosnia  and  Herzegovina  was  effective  in  addressing  the  initial  COVID-19 
outbreak, however, coping with the peak in the summer proved to be challenging. Bosnia and 
Herzegovina joined the EU Joint Procurement Agreement and received material from JRC to 
control  COVID-19  tests,  as  well  as  EUR  7  million  in  EU  funding  to  enabling  it  to  buy 
urgently  needed  medical  equipment  and  supplies.  As  for  cancer  screening,  Bosnia  and 
Herzegovina  has  no  countrywide  cancer  control  plan,  or  a  countrywide  early  detection 
programme. The Federation entity 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.  The  Brčko  District  has  no  register  or  early  detection 
programmes. 

Bosnia and Herzegovina has a network of 74 community-based  mental  health  centres  with 
multi-disciplinary  teams  and  some  of  them  have  additional  specialists.  A  special  forensic 
psychiatric hospital provides treatment to forensic patients from across the country. 

On preventive measures, some activities to reduce alcoholism and prevention of alcohol-
induced  disorders  were  carried  out  with  the  participation  of  NGOs.  For  drug  abuse 
prevention  and  harm  reduction,  preventative  measures  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 a more systematic approach needs to be introduced.      

On  health  inequalities,  a  key  challenge  facing  the  health  care  system  is  to  improve 
accessibility  for  all  citizens,  although  the  legislation  stipulating  equal  access  to  health  is  in 
place.  Ensuring  good  quality  accessible  public  health  care  for  all  citizens  including  the 
marginalised groups of society is one of the key reform priorities. 

5.29.  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. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  area  of  customs  union. 

105 

 
 
Customs legislation is  not  fully aligned with  the EU  acquis.   No progress was made in  the 
area of customs union during the reporting period. The Commission’s recommendations from 
2019 were not implemented and remain valid. 

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

  implement the 2015 Law on Customs Policy, and eliminate all administrative burdens in 
order to ensure the interoperability of the e-signature system on a countrywide basis;  

  reinforce the administrative and operational capacity of the Indirect Taxation Authority;  

  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.  

The body in charge of implementing customs legislation and policies is the Indirect Taxation 
Authority  (ITA).  Further  alignment  with  the  Union  Customs  Code  is  needed,  notably  on 
custom  procedures  and  simplified  procedures.  The  2015  Law  on  Customs  Policy,  which  is 
partially aligned with the EU acquis, has still not been implemented; its implementation is set 
for 1 July 2021.This law also provides for the introduction of authorised economic operators 
and for additional simplified customs procedures requiring the use of the e-signature, which 
has  not  yet  been  implemented  by  the  ITA.  This  leads  to  difficulties  in  the  practical 
implementation  of  taxation  and  customs  legislation.  The  ITA  is  committed  to  start  the 
implementation of e-signature, which should be countrywide, as of January 2021. 

The customs tariff and custom valuation of Bosnia and Herzegovina is harmonised with the 
Combined  Nomenclature  (CN).  Regarding  the  rules  of  origin,  the  country  applies  the  Pan-
Euro  Mediterranean  Convention,  which  went  through  substantial  revisions  in  2019.  Bosnia 
and Herzegovina is among the countries that support the revisions of the Convention with the 
new revised rules. 

The country is an observer in the Common Transit Convention (CTC) and intends to join it 
once  it  has  met  all  legal  and  technical  requirements,  especially  the  implementation  of  New 
Computerised Transit System (NCTS);  phase 5 of the  NCTS implementation  in  Bosnia and 
Herzegovina is foreseen for July 2021.  

Bosnia  and  Herzegovina  should  also  continue  aligning  its  provisions  on  the  protection  of 
intellectual  property  rights  (IPR)  when  it  comes  to  customs  enforcement.  Also,  further 
alignment  with  the  EU  acquis  for  authorised  economic  operators  (AOP),  which  has  to  be 
achieved through implementation of CEFTA Additional Protocol (AP) 5.  

On  administrative  and  operational  capacity,  the  ITA  requires  that  its  administrative 
capacity be substantially strengthened 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). It capacity 
to conduct a risk analysis is hampered by an inadequate IT system. The customs authorities 
perform a high percentage of physical controls.  

Bosnia  and  Herzegovina’s  customs  laboratory  of  has  been  equipped  with  additional  new 
instruments but further modernisation is needed. 

Bosnia  and  Herzegovina,  together  with  other  CEFTA  Parties,  adopted  some  measures  to 
mitigate the effects of the new situation. The opening of the so-called Priority Green Lanes to 
allow a priority treatment  of vital  products  at  the predetermined border  crossings  where the 

106 

 
 
border  control  is  required  for  24  hours.  The  common  lists  of  vital  products  of  the  CEFTA 
Parties were adopted and updated as needed. 

5.30.  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 for 
humanitarian aid and development policy. 

Bosnia  and  Herzegovina  has  reached  some  level  of  preparation  in  the  area  of  external 
relations. Limited progress was made during the reporting period. The capacity to tackle key 
challenges  in  trade  policy  is  yet  to  be  strengthened.  The  Commission’s  recommendations 
from 2019 were not fully implemented and remain valid. 

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

  finalise the accession to the World Trade Organization (WTO);  

  implement  actions  under  the  multiannual  action  plan  to  develop  a  Regional  Economic 
Area (REA), in particular implement the Additional Protocol (AP) 5 on trade  facilitation 
to the Central European Free Trade Agreement (CEFTA), ratify CEFTA AP 6 on trade in 
services, negotiate and ensure a swift adoption of CEFTA AP 7 on dispute settlement; 

  start  the  process  leading  to  the  establishment  of  a  development  and  humanitarian  aid 

policy. 

On  the  common  commercial  policy,  no  progress  was  made  on  Bosnia  and  Herzegovina's 
accession to the 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, and has raised an issue 
in the multilateral discussions on the pending amendments to the legislation on the quality of 
liquid  petroleum  fuels.  The  decision  on  the  amendments  to  the  legislation  has  yet  to  be 
approved by the Council of Ministers.  

Concerning the implementation of the REA multiannual action plan, in May 2019 Bosnia and 
Herzegovina nominated its negotiating team and adopted the negotiating mandate for CEFTA 
AP 7 on dispute settlement. In December 2019, the Presidency adopted the negotiation report 
for  the  conclusion  of  CEFTA  AP  6  on  trade  in  services,  which  is  now  in  the  process  of 
ratification. As response to COVID-19, upon joint initiative by the Permanent Secretariat of 
the  Transport  Community  and  the  CEFTA  Secretariat,  the  six  governments  in  the  Western 
Balkans  have  successfully  implemented  measures  to  facilitate  the  transport  and  trade  of 
essential goods within the region. 

Bosnia  and  Herzegovina  applies  export  controls  on  dual-use  goods  in  accordance  with  its 
legislation.  The  country  should  consider  applying  for  accession  to  the  multilateral  export 
control schemes, such as the Wassenaar Arrangement, which can facilitate the preparations to 
implement the EU acquis for dual-use goods export control.  

As  regards  bilateral  agreements  with  third  countries,  in  the  reporting  period  Bosnia  and 
Herzegovina signed no new agreements.  

On  administrative  capacity,  Bosnia  and  Herzegovina  needs  to  further  strengthen  the 
administrative  capacity  and  improve  cooperation  and  coordination  between  ministries  and 
different levels of competent authorities in order to ensure consistency of implementation and 
enforcement. 

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There were no developments in the areas of development policy and humanitarian aid. The 
country is a recipient of aid programmes, and has so far provided humanitarian aid only on an 
ad-hoc basis. Bosnia and Herzegovina is encouraged to start the process of establishing 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, 
and to build dedicated administrative structures.  

5.31.  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. 

Bosnia and Herzegovina has some level of preparation in this area. There was no progress 
in  2019.  Taking  into  account  the  improving  trend  in  2020,  the  country  should  continue 
stepping  up  its  alignment  with  the  EU  foreign  policy  statements  and  restrictive  measures 
towards third countries and entities.  The  country needs to  appoint the persons in  charge of 
performing  the  functions  of  ‘political  director’  and  ‘European  correspondent’.  Bosnia  and 
Herzegovina  is  yet  to  join  a  number  of  international  arms  control  regimes  as  well  as 
strengthen  the  monitoring  regime  regarding  weapons  and  military  equipment.  Bosnia  and 
Herzegovina continued to participate in EU crisis management missions. 

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 Law on 

Marking to cover these types of firearms. 

The political dialogue between the EU and Bosnia and Herzegovina on foreign and security 
policy issues continued. 

Bosnia  and  Herzegovina’s  2018-2023  foreign  policy  strategy  includes  as  main  goals  and 
priorities  the  following:  full  membership  in  the  EU,  activation  of  the  NATO  Membership 
Action  Plan,  fight  against  terrorism,  cooperation  at  regional  level,  and  bilateral  and 
multilateral cooperation. Its implementation in the reporting period was affected by frequent 
divergent positions of the three members of the Presidency.  

It is important that Bosnia and Herzegovina appoints within the Ministry for Foreign Affairs 
the  persons  in  charge  of  performing  the  functions  of  ‘political  director’  and  of  ‘European 
correspondent’, and to ensure the adequate training of diplomatic staff.  

Regulations  and  practices  based  on  ethnic  quotas,  applied  in  the  process  of  appointment  of 
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.  

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. In 
2019,  Bosnia  and  Herzegovina  aligned  with  55  relevant  EU  declarations  and  Council 
decisions  out  of  a  total  of  90,  representing  an  average  alignment  rate  of  61%.  Bosnia  and 

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Herzegovina  improved  its  alignment  rate  in  the  first  half  of  2020,  with  an  average  of  75%. 
The  country  did  not  align  with  EU Council  Decisions  on  restrictive  measures  related  to  the 
Russian Federation, Venezuela, and Syria in particular.  

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  was 
required.  The  ratification  of  the  Kampala  Amendments  is  pending  approval  with  the 
Parliamentary  Assembly.  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. Alignment with the EU position is therefore needed. 

Concerning  restrictive  measures,  Bosnia  and  Herzegovina  respects  arms  embargoes  as 
provided for under the lists of the UN Security Council, the OSCE and the EU.   

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.  Bosnia  and 
Herzegovina is yet to join 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’s overall legal and institutional framework is broadly in line with the EU acquis. 
Further improvements are required 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.  

Bosnia  and  Herzegovina  remained  actively  engaged  in  the  implementation  of  the  2018 
Regional Roadmap for a sustainable solution to the illegal possession, misuse and trafficking 
of  small  arms  and  light  weapons  and  their  ammunition  in  the  Western  Balkans.  A 
countrywide  2016-2020  strategy  for  control  of  small  arms  and  light  weapons  (SALW)  is  in 
place,  together  with  an  action  plan.  An  assessment  of  the  strategy  implementation  is  to  be 
done,  followed  by  the  adoption  of  a  new  strategic  document  and  action  plan  for  its 
implementation. All weapons of the country’s security forces are to be marked and registered 
into a single registry to  ensure adequate traceability of small arms and light  weapons in  the 
country.  In  addition,  Bosnia  and  Herzegovina  is  to  develop  post-manufacture  marking  and 
record-keeping requirements for seized and confiscated weapons, and weapons earmarked for 
deactivation.  

Regarding  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 

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Bank  (1993),  the  International  Monetary  Fund  (1992)  and  other  major  international 
organisations.  Due to  failure to  appoint its parliamentary delegation  after the 2018 election, 
Bosnia  and  Herzegovina  could  not  participate  to  the  works  of  the  Council  of  Europe 
Parliamentary  Assembly  (PACE);  a  parliamentary  delegation  from  Bosnia  and  Herzegovina 
was  appointed  to  join  PACE  only  in  January  2020.  Bosnia  and  Herzegovina  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,  in  that  context,  submitted  a  ‘reform  programme’  to  NATO  in  December  2019.  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  entered  into  force  on  1 May  2006.  The 
agreement  was  amended  in  October  2018.  The  agreement  applies  to  classified  information 
and  materials  in  any  form,  either  delivered  or  exchanged  between  the  EU  and  Bosnia  and 
Herzegovina. Regular exchanges of classified information, up to the level of EU Restricted, 
are taking place.  

Regarding the common security and defence policy (CSDP), the 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  entered  in  force  in 
2016.  Three  members  of  Bosnia  and  Herzegovina  armed  forces  are  deployed  in  the  EU 
Training  Mission  (EUTM)  in  the  Central  African  Republic.  The  financing  threshold  for  the 
2019 defence budget, as prescribed in the Budget Framework Document 2019-21, represents 
less than 1% of GDP. Currently, 83% of the budget is used for salaries, and less than 1% goes 
to  investments.  Equipment,  weapon  systems  and  infrastructure  are  not  being  maintained  or 
replaced due to lack of funding and a centralised and dysfunctional procurement system. This 
also  affects  the  Demining  Battalion  that  is  a  key  player  in  humanitarian  demining  and  an 
essential  partner  for  the  successful  implementation  of  the  country’s  Mine  Action  Strategy 
2018-2025.  

5.32.  Chapter 32: Financial control 

The  EU  promotes  the  reform  of  national  governance  systems  to  improve  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. 

Bosnia  and  Herzegovina  is  at  an  early  stage  in  this  area.  Limited  progress  was  made  in 
fulfilling  last  year  recommendations,  notably  in  defining  a  strategic  framework  on 
managerial  accountability  in  public  internal  financial  control.  Detailed  strategic  documents 
need be prepared for each level  of  government  once the framework is  adopted. All  central 
harmonization  units  need  to  strengthen  their  administrative  capacities  and  monitor  the 
effectiveness of internal control functions in the public sector. The financial and operational 
independence  of  supreme  audit  institutions  must  be  ensured  in  practice,  particularly  in  the 
Federation  entity.  The  supreme  audit  institutions  should  also  improve  the  quality  of  their 
audit reports, and step up their communication efforts  to  reinforce the public awareness  of 
their work.  

In the coming year, Bosnia and Herzegovina should: 

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  adopt a comprehensive common framework on public internal  financial  control (PIFC) 

and  managerial accountability; 

  improve  the  quality  of  PIFC  monitoring  framework  and  implementation  of  the  PIFC 

report recommendations across budget entities; 

   ensure  the  functional,  financial  and  operational  independence  of  supreme  audit 
institutions  (SAIs)  at  all  levels  of  government  and    the  impact  of  SAIs  work  through 
Communication Strategies 2020-2025. 

Public internal financial control 

A  new  comprehensive  medium-term  strategic  framework  for  PIFC  for  some  levels  of 
government  still  needs  to  be  developed  by  means  of  the  adoption  of  2020-2025  PIFC 
strategies.  The  PIFC  strategy  and  its  action  plan  for  the  State-level  institutions  have  been 
adopted by the Council  of Ministers beginning of June 2020. A coordinated monitoring and 
reporting framework for all these strategies needs to be put in place. The enabling conditions 
for implementing managerial accountability are not yet in place, as the countrywide strategic 
framework on public administration is still lacking. 

Managerial  accountability  is  not  yet  embedded  in  the  administrative  culture  of  the  public 
sector. Across levels of government, basic accountability mechanisms between ministries and 
subordinated agencies are not in place, and effective management of subordinate bodies is not 
ensured.  While  there  are  rules  of  procedure  at  each  government  level  ensuring  legal  and 
financial  scrutiny  of  policies,  coordination  of  policy  content  with  government  priorities  is 
lacking throughout the public administration. Currently, public entities have no strategic plans 
with  clear  objective  setting  and  performance  indicators  against  which  managers  and  staff 
members  performance  is  assessed.  However,  the  highly  centralised  systems  of  decision-
making hinder efficient implementation of the principle of managerial accountability, with no 
clear role for managers at the lower level (see Public Administration Reform). 

The  legal  framework  for  the  functioning  of  internal  control  is  in  place  at  state  and  entity 
level, except in Brčko District.  Risk management is performed only in 60% of the institutions 
and  low  level  of  coordination  between  different  levels  of  government  hampers  further  this 
area.  The  current  laws  on  internal  control  lack  further  implementation  in  the  internal 
regulations,  business  processes  and  management  information  systems  at  all  levels  of 
government and in the public enterprises.  

Internal audit practice is regulated at state and entity levels, except in Brčko District, and is 
in line with international audit standards. Some progress was noticed in regulating better the 
internal audit function at state level. The internal audit function remains to be extended to all 
public entities. Internal audit units remain weakly staffed and many of them operate with only 
50%  of  vacancies  filled.  The  majority  of  the  internal  auditors  are  certified,  but  their  value 
added in contributing to effective practices remains low across levels of government. Various 
decisions  regulating  improved  certification  and  training  programmes  on  internal  audit  were 
adopted at the state level and in the Republika Srpska entity. However, more needs to be done 
to  increase  professional  development  of  audit staff,  especially  on  risk  assessment,  using  IT 
and work with analytical tools. 

Central harmonization units (CHUs) have been established at state and entity levels.  The 
three  CHUs,  except  Brčko  District,  prepare  yearly-consolidated  reports  to  their  respective 
governments  on  PIFC  implementation.  PIFC  reports  do  not  assess  risk  mitigation.  Their 

111 

 
 
impact  on 

internal  control  remains  weak,  as  and 

the  PIFC  reports’ 
quality  and 
recommendations  remain  not  well  implemented  across  public  entities  at  all  levels.  CHU 
capacity  and  its  institutional  mandate  remain  not  sufficient  to  effectively  provide 
methodological  guidance,  promote  and  monitor  PIFC  reforms  across  levels  of  government. 
The  CHUs  should  start  to  implement  quality  reviews  on  internal  control  and  internal  audit. 
Their capacities should be strengthened in order to fulfil better their tasks. 

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).  Instances  of  executive  interference  in  the  budget 
setting of SAIs have been observed in practice and particularly so in the Federation entity. 

The  institutional  capacity  of  SAIs  needs  to  be  strengthened  across  levels  of  government. 
The  Federation  entity  faces  a  particular  challenge  in  ensuring  external  audit  coverage  of  its 
cantonal  level.  All  SAIs,  except  the  SAI  of  the  Brčko  District,  implement  their  respective 
strategic  development  plans.  SAIs  should  continue  to  work  closely  with  the  prosecution 
authorities to see how to best handle instances of possible fraud and corruption, that the SAI 
uncovers during an audit. 

With regard to the quality of audit work, all the SAIs have a broad mandate, which covers 
financial, compliance and performance audit. The SAIs should consider improvement of the 
quality  of  their  audit  to  bring  up  the  causes  of  the  identified  weaknesses  and  increase  the 
number of performance audits. 

The  impact  of  the  audit  work  of  all  SAIs  is  limited.  The  rate  of  implementation  of  audit 
recommendations  still  remains  low  across  levels  of  government  (tbc  with  data).  While 
parliaments have procedures in place for examining audit reports, the level of parliamentary 
scrutiny  to  these  reports  varies  across  levels  of  government.  The  audit  results  need  to  be 
presented and communicated in a more efficient manner in the audit reports and in the media. 
Additionally,  the  SAIs  should  develop  communication  strategies  in  order  to  improve  the 
impact of their work.  

Protection of the EU’s financial interests 

The legislation at all levels of government ensure some degree of EU acquis alignment as it 
covers  many  elements  of  the  Directive  on  the  fight  against  fraud  to  the  EU’s  financial 
interests  by  means  of  criminal  law.  These  include  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.  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, 
the  freezing  and  confiscation  of  criminal  assets.  Effective 
implementation and enforcement of the legislation also needs to be ensured. 

including  on 

An  anti-fraud  coordination  service  (AFCOS)  to  facilitate  effective  cooperation  and 
exchange  of  information  with  the  Commission  is  not  yet  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 

112 

 
 
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  the  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 EU 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. 

5.33.  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.  

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  in  the  area  of  financial  and 
budgetary  provisions.  There  was  no  progress  in  strengthening  administrative  capacities  for 
coordination  and  management  of  own  resources.  Significant  further  efforts  are  needed  to 
ensure sound  capacities, institutional set-up and cooperation of institutions  and bodies to  be 
involved in application of the own resources system.  

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

  strengthen the capacity and inter-agency cooperation to combat tax and customs fraud; 

  reinforce  the  capacity  of  the  Indirect  Tax  Authority  (ITA)  to  effectively  implement 

customs legislation; 

  adopt a master plan for production of national accounts for Bosnia and Herzegovina. 

The capacity of ITA needs to be improved and it needs to implement  an accounting system 
for indirect taxes to distinguish recovered debts and outstanding debts in line with the EU’s 
traditional own resources accounting.  

Certain  aspects  of  the  country’s  law  on  VAT,  concerning  special  schemes  and  exceptions, 
remain to be aligned with the EU acquis. 

In terms of Gross National Income (GNI) resource, definitions and accounting rules of ESA 
2010 are used  for  compilation  of the GNI. Mainly  through technical  support projects,  some 
good  progress  on  methodological  issues  and  on  the  coverage  of  the  non-observed  economy 
has been achieved over the last years. However, a common and coordinated work to develop 
an appropriate national accounts system at the level of the whole country is not yet in place. 
This should be given high priority.  A master plan for the development of national accounts 
needs to be adopted to facilitate development of this system, in line with ESA 2010.   

In  terms  of  administrative  infrastructure,  both  human  and  administrative  resources  remain 
insufficient  to  ensure  full  and  correct  application  of  EU  rules  concerning  payments  into  the 

113 

 
 
EU budget.  Better coordination  among administrative structures  and implementing rules are 
needed to ensure correct forecasting, calculation, accounting, collection, payment and control 
of own resources.  

114 

 
 
 
 
ANNEX I – RELATIONS BETWEEN THE EU AND BOSNIA AND HERZEGOVINA 

The  Stabilisation  and  Association  Agreement  (SAA)  entered  into  force  in  June  2015. 
Bosnia  and Herzegovina continued to  implement the SAA. Political  and  economic dialogue 
took  place  regularly  via  the  joint  bodies  under  the  agreement,  except  for  the  parliamentary 
committee  (SAPC),  which  has  yet  to  adopt  its  rules  of  procedures.  The  country  also 
participates in the ministerial dialogue between the economic and finance ministers of the EU 
and the candidate countries, where joint recommendations are adopted. 

report.  The  Opinion 

In  February  2016  Bosnia  and  Herzegovina  applied  for  EU  membership  and  in  September 
2016,  the  European  Council  invited  the  Commission  to  submit  its  opinion  on  the  country’s 
application.  In  May  2019  the  Commission  adopted  its  Opinion  (Avis)  and  accompanying 
the  areas  of 
analytical 
democracy/functionality,  rule  of  law,  fundamental  rights,  and  public  administration  reform 
that  Bosnia  and  Herzegovina  needs  to  fulfil  in  order  to  be  recommended  for  opening  EU 
accession negotiations. In December 2019, the EU Council welcomed the Opinion and invited 
the Commission to focus its annual reports on Bosnia and Herzegovina, starting with the one 
in 2020, on the implementation of the key priorities. 

identified  14  key  priorities 

in 

Visa  liberalisation  for  citizens  of  Bosnia  and  Herzegovina  travelling  to  the  Schengen  area 
has  been  in  force  since  December  2010.  A  readmission  agreement  has  been  in  force  since 
2008.  The  Commission’s  July  2020  third  report  under  the  visa  suspension  mechanism 
concluded that Bosnia and Herzegovina continues to meet the visa liberalisation benchmarks. 

The  EU  continued  to  deploy  considerable  resources  in  Bosnia  and  Herzegovina  under  the 
common  foreign  and  security  policy  and  the  common  security  and  defence  policy.  The 
enhanced  presence  of  the  combined  Office  of  the  EU  Special  Representative  and  the  EU 
Delegation  in  Bosnia  and  Herzegovina  has  continued  to  be  instrumental  in  communicating 
EU priorities to  citizens and in  implementing the objectives of the EU agenda in  key areas. 
The  EUFOR  Althea  military  operation  remained  deployed  in  the  country,  assisting  on 
capacity building and training of the armed forces of Bosnia and Herzegovina in line with the 
strategic intent expressed by the defence leadership to develop operational capabilities of dual 
use in support of civil authorities for removing physical remnants of war or disaster relief and 
deployment  in  peace  support  operations  overseas.  At  the  same  time,  EUFOR  retained 
deterrence  capacity  to  support  a  safe  and  secure  environment.  The  UN  Security  Council 
extended EUFOR’s mandate until November 2020. 

In  2019,  Bosnia  and  Herzegovina  aligned  itself  with  55  out  of  90  relevant  EU  declarations 
and  Council  decisions  (61%).  The  country  improved  its  alignment  rate  in  the  first  half  of 
2020, with an average of 75%. Bosnia and Herzegovina did not align itself with EU Council 
decisions  on restrictive measures  related to  the Russian Federation, Venezuela, and  Syria  in 
particular.  A  framework  agreement  on  the  participation  of  Bosnia  and  Herzegovina  in  EU 
crisis management operations is in place since September 2015. 

The EU provided financial assistance to Bosnia and Herzegovina under the Instrument for 
Pre-accession  Assistance  (IPA)  with  a  total  allocation  of  EUR  530  million  in  2014-2020. 
The assistance is  implemented under direct  management by the EU Delegation in  Sarajevo.  
The 2019 and 2020 action programmes include an EU contribution totalling up to EUR 170 
million. As part of the response to the COVID-19 crisis, Bosnia and Herzegovina is benefiting 
of  EUR  7  million  for  urgent  medical  equipment  and  EUR  73.5  million  for  socio-economic 
recovery measures under IPA II; negotiations for macro financial assistance (up to EUR 250 
million  in  loans)  are  ongoing.  The  EU  has  supported  Bosnia  and  Herzegovina  in  migration 

115 

 
 
management with EUR 60.5 million since 2018 in both IPA and humanitarian (ECHO) funds. 
The  adoption  of  countrywide  sector  strategies  such  as  on  public  financial  management, 
energy,  and  employment  remains  a  key  requirement  for  Bosnia  and  Herzegovina  to  benefit 
fully from  IPA  funding in the future. Bosnia and Herzegovina  benefits  from  the  IPA multi-
country  and  regional  programmes  and  participates  in  three  cross-border  cooperation 
programmes, as well as in transnational cooperation programmes.  

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

116 

 
 
 
 
STATISTICAL DATA (as of 03.04.2020) 

Bosnia and Herzegovina 

Basic data 

Population (thousand) 

Total area of the country (km²) 

Note 

2007 

3 844 

2014 

3 831 

2015 

3 825 

2016 

3 516 

2017 

3 510 

2018 

3 503 

1) 

51 209 

51 209 

51 209 

51 209 

51 209 

51 209 

National accounts 

Note 

2007 

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-27 = 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-27 = 100) 

Gross value added by main sectors 

Agriculture, forestry and fisheries (%) 

Industry (%) 

Construction (%) 

Services (%) 

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

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

117 

2014 

27 359 

13 988 

3 650 

7 450 

28.1 

1.1 

: 

: 

: 

: 

: 

7.0 

21.3 

4.7 

67.0 

2015 

28 589 

14 617 

3 980 

8 070 

29.4 

3.1 

: 

: 

: 

: 

: 

7.3 

21.9 

4.6 

66.2 

2016 

29 905 

15 290 

4 350 

8 750 

31.1 

3.1 

: 

: 

: 

: 

: 

7.5 

22.6 

4.6 

65.3 

107.1 

103.8 

100.9 

2017 

31 376 

16 042 

4 580 

9 100 

31.1 

3.2 

: 

: 

: 

: 

: 

6.6 

23.3 

4.7 

65.4 

98.9 

2018 

32 778 

16 759 

4 780p 

9 470p 

31.3p 

3.1 

: 

: 

: 

: 

: 

7.0 

23.0 

4.7 

65.3 

97.4 

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

Changes in inventories, as a share of GDP (%) 

Exports of goods and services, relative to GDP (%) 

Imports of goods and services, relative to GDP (%) 

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

Business 

Industrial production volume index (2015 = 100) 

Number of active enterprises (number) 

Birth rate: number of enterprise births in the reference period (t) divided by the number of 
enterprises active in t (%) 

Death rate: number of enterprise deaths in the reference period (t) divided by the number of 
enterprises active in t (%) 

People employed in SMEs as a share of all persons employed (within the non-financial 
business economy) (%) 

Value added by SMEs (in the non-financial business economy) (EUR million) 

Total value added (in the non-financial business economy) (EUR million) 

: 

: 

: 

: 

: 

Note 

2007 

85.8 

: 

: 

: 

: 

: 

: 

Inflation rate and house prices 

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

**Annual change in the deflated house price index (2015 = 100) 

Note 

2007 

1.5 

: 

19.5 

-0.4 

34.0 

56.6 

: 

2014 

97.2 

17.8 

0.8 

34.9 

53.3 

: 

17.4 

2.3 

35.6 

52.3 

: 

18.0 

3.0 

40.1 

56.4 

: 

18.5 

3.3 

41.4 

56.9 

: 

2015 

100.0 

2016 

104.4 

2017 

107.6 

2018 

109.4 

64 963 

65 800 

67 205 

68 761b 

68 085p 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

71.4 

71.5 

72.0 

69.5b 

69.1p 

4 406 

6 738 

2014 

-0.9 

: 

4 701 

7 168 

2015 

-1.0 

: 

5 043 

7 594 

2016 

-1.6 

: 

4 845b 

7 681b 

5 289p 

8 434p 

2017 

2018 

0.8 

: 

1.4 

: 

Balance of payments 

Note 

2007 

2014 

2015 

Balance of payments: current account total (million euro) 

-1 046.5 

-1 014.0 

-741.5 

2016 

-720.3 

2017 

-696.8 

2018 

-633.4 

Balance of payments current account: trade balance (million euro) 

-4 335.7 

-4 025.7 

-3 668.9 

-3 624.6 

-3 792.2 

-3 831.4 

Balance of payments current account: net services (million euro) 

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

952.2 

342.4 

868.0 

114.4 

1 001.8 

1 090.6 

1 191.3 

1 269.7 

99.0 

20.4 

-58.1 

-49.4 

118 

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

1 994.6 

2 029.3 

1 826.6 

1 793.3 

1 962.3 

1 977.7 

Net balance for primary and secondary income: of which government transfers (million euro) 

179.9 

120.9 

**3 year backward moving average of the current account balance relative to GDP (%) 

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

: 

: 

-7.1 

: 

Net balance (inward - outward) of foreign direct investment (FDI) (million euro) 

1 308.8 

400.8 

Foreign direct investment (FDI) abroad (million euro) 

of which FDI of the reporting economy in the EU-27 countries (million euro) 

47.2 

: 

7.4 

: 

85.7 

-5.9 

0.2 

260.1 

85.2 

: 

44.4 

-5.7 

10.8 

281.3 

2.6 

: 

61.7 

-4.7 

31.7 

329.7 

85.1 

: 

46.4 

-4.3 

29.9 

428.3 

-16.7 

: 

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

1 356.0 

408.3 

345.3 

283.9 

414.9 

411.6 

of which FDI of the EU-27 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 (%) 

: 

-30.7 

: 

Public finance 

Note 

2007 

***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) 

1.1 

18.1 

43.6 

42.5 

Note 

2007 

: 

2.2 

: 

-56.7 

6.4 

2014 

-2.0 

41.6 

43.8 

45.8 

2014 

76.2 

2.2 

: 

-54.8 

2.9 

2015 

0.7 

41.9 

43.2 

42.6 

2015 

72.2 

2.0 

: 

-51.0 

2.5 

2016 

1.2 

40.5 

42.7 

41.5 

2016 

71.2 

2.0 

: 

-47.1 

8.5 

2017 

2.6 

36.1 

43.0 

40.4 

2017 

67.5 

1.7 

: 

-43.3 

2.1 

2018 

1.6 

40.8 

43.1 

: 

2018 

68.0 

1.6 

2) 3) 

2) 4) 

2 930.7 

3 737.8 

4 182.8 

4 755.5 

5 405.6 

6 209.0 

6 111.6 

8 829.5 

9 534.2 

10 326.8 

11 307.9 

12 368.0 

Money supply: M3 (M2 plus marketable instruments, million euro) 

: 

: 

: 

: 

: 

: 

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

2) 

5 877.6 

8 422.8 

8 623.9 

8 794.8 

9 419.3 

9 964.7 

**Annual change in financial sector liabilities (%) 

5) 6) 

34.1 

5.2b 

4.6 

5.5 

8.3 

8.8 

119 

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

**Private debt, consolidated, relative to GDP (%) 

Interest rates: day-to-day money rate, per annum (%) 

Lending interest rate (one year), per annum (%) 

Deposit interest rate (one year), per annum (%) 

Euro exchange rates: average of period (1 euro = … national currency) 

Trade-weighted effective exchange rate index, 42 countries (2005 = 100) 

**3 year change (T/T-3) in the trade-weighted effective exchange rate index, 42 countries 
(2005 = 100) 

5) 7) 

5) 7) 
8) 

9) 

10) 

11) 

11) 

11.4 

49.5 

: 

7.17 

0.39 

2.0 

93.3 

: 

6.32 

0.09 

-2.2 

87.1 

: 

5.74 

0.09 

1.2 

84.5 

: 

4.97 

0.09 

3.2 

83.3 

: 

3.88 

0.06 

3.4 

87.3 

: 

3.52 

0.05 

1.956 

1.956 

1.956 

1.956 

1.956 

1.956 

94 

: 

101 

2.8s 

100 

1.5s 

101 

1.4s 

102 

0.8s 

104 

3.6s 

Value of reserve assets (including gold) (million euro) 

3 424.9 

4 001.2 

4 400.3 

4 873.2 

5 427.0 

5 944.1 

External trade in goods 

Note 

2007 

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) 

12) 

Share of exports to EU-27 countries in value of total exports (%) 

Share of imports from EU-27 countries in value of total imports (%) 

: 

: 

: 

: 

: 

: 

Demography 

Note 

2007 

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) 

-0.3 

6.8 

: 

: 

2014 

8 283 

4 440 

-3 843 

100.3 

71.5 

58.0 

2014 

-1.5 

: 

: 

: 

2015 

8 105 

4 595 

-3 510 

102.5 

70.9 

59.9 

2015 

: 

: 

: 

: 

2016 

8 263 

4 815 

-3 448 

104.1 

71.0 

61.1 

2016 

-1.8 

: 

: 

: 

2017 

9 298 

5 653 

-3 646 

103.8 

70.4 

60.0 

2017 

-2.0 

: 

: 

: 

2018 

9 855 

6 085 

-3 770 

105.4 

72.2 

59.7 

2018 

: 

: 

: 

: 

120 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Labour market 

Note 

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

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

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

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

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

Employment by main sectors 

Agriculture, forestry and fisheries (%) 

Industry (%) 

Construction (%) 

Services (%) 

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

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

13) 

13) 

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) (%) 

2007 

57.1 

40.9 

54.2 

27.8 

25.0 

: 

: 

: 

: 

2014 

59.2 

43.2 

54.6 

31.9 

28.5 

17.1 

22.1 

7.9 

52.9 

17.3 

19.9b 

2015 

59.2 

43.2 

53.9 

32.4 

28.2 

17.9 

22 

7.5 

52.6 

20.0 

82.7 

80.1b 

80.0 

29.1 

26.8 

33.1 

58.4 

25.1 

31.3 

10.0 

27.6 

25.3 

31.2 

62.7 

23.4 

31.6 

17.2 

27.9 

25.9 

30.9 

62.3 

22.8 

27.7 

16.4 

2016 

58.8 

44.2 

56.4 

32.0 

29.7 

18.0 

22.7 

8.6 

50.8 

17.8 

82.2 

25.5 

22.6 

30.2 

54.3 

21.7 

26.2 

18.9 

2017 

58.4 

46.6 

58.1 

35.1 

32.5 

18.9 

22.2 

7.3 

51.6 

18.4 

81.6 

20.7 

19.0 

23.3 

45.8 

17.0 

19.5 

14.6 

2018 

58.4 

47.7 

59.5 

35.8 

32.6 

15.7 

23.5 

8.7 

52.1 

18.4 

81.6 

18.5 

17.3 

20.5 

38.8 

15.2 

19.1 

13.9 

Social cohesion 

Note 

2007 

2014 

2015 

2016 

2017 

2018 

121 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
645 

830 

830 

838 

109.7e 

102.4e 

102.1e 

103.1e 

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 

14) 

14) 

15) 

15) 

*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 (%) 

34 

18.4 

11.3 

Standard of living 

Note 

2007 

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

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

Mobile broadband penetration (per 100 inhabitants) 

Fixed broadband penetration (per 100 inhabitants) 

Infrastructure 

Note 

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

Length of motorways (kilometres) 

171.7 

637.6e 

: 

: 

2007 

20.0 

28 

Innovation and research 

Note 

2007 

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 
(%) 

: 

: 

: 

: 

: 

5.8 

2014 

209.1 

920.7 

30.1 

15.4 

2014 

20.1 

128 

2014 

: 

0.24 

0.05 

31 

: 

5.2 

2015 

216.7 

887 

36.2 

18.0 

2015 

20.1 

128 

2015 

: 

0.22 

0.05 

: 

: 

4.9 

2016 

245.0 

981.1 

40.4 

18.8 

2016 

20.0 

163 

2016 

4.3 

0.24 

0.04 

851 

101.4 

: 

: 

5.1 

2017 

252.0 

981.7 

43.4 

18.9 

2017 

20.0 

172 

2017 

: 

0.20 

0.04 

879 

103.8 

: 

: 

5.4 

2018 

262.9 

989.9 

52.7 

19.8 

2018 

20.0 

198 

2018 

: 

0.20 

0.06 

Percentage of households who have internet access at home (%) 

10.9 

: 

: 

61.5b 

66.0 

69.2 

Environment 

*Index of greenhouse gas emissions,  CO2 equivalent (1990 = 100) 

Note 

2007 

54.9 

2014 

76.1 

2015 

: 

2016 

: 

2017 

: 

2018 

: 

122 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) (%) 

16) 

: 

: 

: 

Energy 

Note 

2007 

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) 

: 

: 

: 

: 

: 

: 

: 

446.2 

445.7 

472.7 

457.3 

44.5 

: 

2014 

4 306 

0 

41.1 

: 

2015 

4 367 

0 

40.4 

76.6 

2016 

4 742 

0 

27.5 

78.9 

2017 

4 624 

0 

3 073 

3 165 

3 520 

3 612 

0 

1 693 

6 003 

0 

2 083 

6 183 

0 

2 133 

6 767 

0 

2 299 

6 754 

17 023 

16 438 

17 767 

16 438 

: 

: 

: 

2018 

: 

: 

: 

: 

: 

: 

: 

Agriculture 

Note 

2007 

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

: 

2014 

: 

2015 

: 

2016 

: 

2017 

: 

2018 

: 

Utilised agricultural area (thousand hectares) 

17) 

1 751e 

1 711e 

1 733e 

1 781e 

1 762e 

1 780e 

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) 

468e 

535e 

1 103 

: 

444e 

533e 

1 099 

719e 

455e 

564e 

1 093 

720e 

455e 

545e 

1 091 

724e 

445e 

548e 

1 090 

704e 

438e 

542e 

1 086 

700e 

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

18) 

1 038e 

1 082e 

1 138e 

1 658e 

1 163e 

1 744e 

Harvested crop production: sugar beet (thousand tonnes) 

Harvested crop production: vegetables (thousand tonnes) 

0 

255e 

0 

229e 

0 

280e 

0 

361e 

0 

292e 

0 

299e 

Source: Eurostat and the statistical authorities in Bosnia and Herzegovina 

123 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
: = not available 

b = break in series 

e = estimate 

p = provisional  

s = Eurostat estimate 

* = Europe 2020 indicator 

** = Macroeconomic Imbalance Procedure (MIP) indicator 

*** = The government deficit and debt data of enlargement countries are published on an "as is" basis and without any 
assurance as regards their quality and adherence to ESA rules. 

Footnotes 

1) 

Inland waters estimated at 210 km². 

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

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

sectors (except central government deposits). 

4)  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). 

5)  Data for monetary financial institutions. 

6)  2018: includes data for the central bank and other banks for the end of December 2018, while data for other financial 

institutions are given for the end of June 2018. 

7)  2018: 2017 data have been used for GDP 

8)  2007: debt excludes external private sector debt. 

9)  Short-term lending rates in national currency to non-financial corporations (weighted average). 2018: data for 

November 2018. 

10)  Demand deposit rates in national currency of households (weighted average). 2018: data for November 2018. 

11)  Calculation of effective exchange rate indices is against a group of 21 most important trading partners. 2015 = 100. 

12)  Based on Paasche export and import unit values. 

13)  2007: the public sector includes NACE Rev. 1.1 Sections L, M and N while the private sector includes other NACE 

Sections. 2014-2018: the public sector includes NACE Rev. 2 Sections O, P and Q while the private sector includes 

124 

 
 
 
 
other NACE Sections. 

14)  Net earnings. 

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

16)  Data not collected on inland waterways. Road share of inland freight transport based on road and rail transport only. 

17)  The utilised agricultural area consists of arable land, kitchen gardens, permanent crops and permanent grassland as 

cadastral data (not as UAA). 

18)  2007: excluding triticale and buckwheat. 2017 and 2018: excluding rice. 

125