COMMISSION STAFF WORKING DOCUMENT Bosnia and Herzegovina 2021 Report Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions 2021 Communication on EU Enlargement Policy
Date: 2021-10-19
Institutions: Directorate-General for Neighbourhood and Enlargement Negotiations, European Commission
Subjects: Bosnia and Herzegovina, accession criteria, accession negotiations, pre-accession strategy, regional cooperation

EN 

  EN 

   EUROPEAN COMMISSION  Strasbourg, 19.10.2021  SWD(2021) 291 final  COMMISSION STAFF WORKING DOCUMENT Bosnia and Herzegovina 2021 Report Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions    2021 Communication on EU Enlargement Policy {COM(2021) 644 final} - {SWD(2021) 288 final} - {SWD(2021) 289 final} - {SWD(2021) 290 final} - {SWD(2021) 292 final} - {SWD(2021) 293 final} - {SWD(2021) 294 final}  
 
 
TABLE OF CONTENTS 

1. 

Introduction ..................................................................................................................................... 3 

1.1. 

Context ..................................................................................................................................... 3 

1.2. 

Summary of the report ............................................................................................................ 4 

2.  Cluster 1: The Fundamentals of the Accession Process .................................................................. 7 

2.1. 

Functioning of democratic institutions and Public Administration Reform ............................ 7 

2.1.1   Democracy .......................................................................................................................... 7 

2.1.2. Public Administration Reform ............................................................................................. 11 

2.2.   Rule of law and fundamental rights ....................................................................................... 15 

2.2.1  Chapter 23: Judiciary and fundamental rights .................................................................. 15 

2.2.2  Chapter 24: Justice, freedom and security ........................................................................ 33 

2.3. Economic criteria ........................................................................................................................ 45 

2.3.1. The existence of a functioning market economy ................................................................ 46 

2.4. Public Procurement, Statistics; Financial control ....................................................................... 56 

Chapter 5 - Public procurement .................................................................................................... 56 

Chapter 18 - Statistics .................................................................................................................... 57 

Chapter 32 - Financial control ....................................................................................................... 60 

3.  Good neighbourly relations and regional cooperation ................................................................. 64 

4.   Ability to assume the obligations of membership ........................................................................ 66 

Cluster 2: Internal Market ................................................................................................................. 66 

Chapter 1 - Free movement of goods ........................................................................................... 67 

Chapter 2 - Freedom of movements for workers ......................................................................... 69 

Chapter 3 - Right of establishment and freedom to provide services .......................................... 69 

Chapter 4: Free movement of capital ........................................................................................... 70 

Chapter 6 - Company law .............................................................................................................. 72 

Chapter 7 - Intellectual property law ............................................................................................ 72 

Chapter 8 - Competition policy ..................................................................................................... 73 

Chapter 9 - Financial services ........................................................................................................ 75 

Chapter 28 - Consumer and health protection ............................................................................. 77 

Cluster 3: Competitiveness and inclusive growth ............................................................................. 79 

Chapter 10 - Information society and media ................................................................................ 80 

Chapter 16 - Taxation .................................................................................................................... 81 

Chapter 17 - Economic and monetary policy ................................................................................ 82 

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Chapter 19 - Social policy and employment .................................................................................. 84 

Chapter 20 - Enterprise and industrial policy ................................................................................ 87 

Chapter 25 - Science and research ................................................................................................ 90 

Chapter 26 - Education and culture .............................................................................................. 91 

Chapter 29 - Customs union .......................................................................................................... 94 

Cluster 4: The Green agenda and sustainable connectivity .............................................................. 95 

Chapter 14 - Transport policy ........................................................................................................ 95 

Chapter 15 - Energy ....................................................................................................................... 97 

Chapter 21 - Trans-European Networks ...................................................................................... 100 

Chapter 27 - Environment and climate change ........................................................................... 101 

Cluster 5: Resources, agriculture and cohesion .............................................................................. 105 

Chapter 11 - Agriculture and rural development ........................................................................ 105 

Chapter 12 - Food safety, veterinary and phytosanitary policy .................................................. 106 

Chapter 13: Fisheries ................................................................................................................... 108 

Chapter 22 - Regional policy & coordination of structural instruments ..................................... 109 

Chapter 33 - Financial & budgetary provisions ........................................................................... 111 

Cluster 6: External relations ............................................................................................................ 111 

Chapter 30 - External relations .................................................................................................... 112 

Chapter 31 - Foreign, security & defence policy ......................................................................... 113 

Annex I – Relations between the EU and Bosnia and Herzegovina .................................................... 116 

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1. 

INTRODUCTION  

1.1.  CONTEXT  

Following its application for EU membership in February 2016, Bosnia and Herzegovina has 
to  fulfil  the  14  key  priorities  from  the  May  2019  Commission  Opinion,1  which  covers  the 
areas  of  democracy/functionality, 
law,  fundamental  rights,  and  public 
administration reform. This is required for the Commission to recommend the opening of EU 
accession  negotiations  with  Bosnia  and  Herzegovina.  On  the  basis  of  the  December  2019 
conclusions  of  the  EU  Council,  the  Commission  focuses  its  annual  reports  on  Bosnia  and 
Herzegovina on the implementation of the Opinion’s key priorities.2  

the  rule  of 

Bosnia and Herzegovina continues to implement the Stabilisation and Association Agreement 
(SAA) and the joint bodies established under the agreement meet regularly. The SAA and its 
Interim  Agreement,  applied  since  2008,  have  allowed  progressive  trade  liberalisation  and 
mutual duty-free access for most goods. In 2020, the EU remained Bosnia and Herzegovina’s 
main trading partner, accounting for 65% of the country’s total trade in goods, although with 
a 10.2% decrease due to the pandemic. In 2020, total trade was worth EUR 9.6 billion, while 
the country’s trade deficit with the EU amounted to EUR 1.5 billion.  

The public political commitment of the authorities at all levels of government to the strategic 
goal  of  European  integration  has  not  been  turned  into  concrete  action,  as  political  leaders 
continued  to  engage  in  divisive  rhetoric  and  unconstructive  political  disputes,  which  have 
hindered progress on the 14 key priorities so far. Still, some significant steps have been taken, 
amid  the  pandemic,  to  address  the  key  priorities  from  the  Opinion.  In  particular,  municipal 
elections were held in Mostar in December 2020, for the first time since 2008, fulfilling part 
of  key  priority  1.  The  Stabilisation  and  Association  Parliamentary  Committee  was  held  in 
June  2021,  after  a  five-year  stalemate,  marking  good  progress  on  key  priority  3.  An  inter-
agency  working  group  was  established  in  May  2021,  to  discuss  constitutional  and  electoral 
reforms required to address key priorities 1 and 4.  All levels of government also adopted the 
action  plan  on  public  administration  reform  and  strategies  on  public  financial  management, 
contributing to key priority 14. Bosnia and Herzegovina needs to move forward on all other 
key priorities.  

The  COVID-19  pandemic  continued  throughout  the  reporting  period.  By  end  September 
2021, the country had recorded 227,579 cases and 10,606  deaths related to the pandemic. The 
Commission  redirected  EUR  80.5  million  in  grants  for  immediate  needs  and  the  socio-
economic response to the pandemic. The Commission also secured macro-financial assistance 
of EUR 250 million in very favourable loans, which was ratified by Bosnia and Herzegovina 
in June 2021. 

Bosnia and Herzegovina does not have a countrywide vaccine strategy, and the entities have 
proceeded  with  their  own  separate  vaccine  procurement.  Together  with  the  donation  of 
medical  equipment,  the  continued  delivery  of  EU-funded  vaccines  is  a  sign  of  concrete  EU 
solidarity.  Bosnia  and  Herzegovina  received  214,110  Pfizer/BioNTech  doses  from  the  EU 
between  May  and  August  2021,  facilitated  by  Austria  and  funded  by  the  EU4Health  grant. 
COVAX also delivered over 332,640 doses to Bosnia and Herzegovina by end August 2021. 
Overall, the EU and its Member States provided over 1.3 million vaccine doses by September 
2021. By end September 2021, around 13% of the population had been fully vaccinated.  

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/ 

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1.2. 

SUMMARY OF THE REPORT3 4 

Regarding the political criteria, legislative and executive authorities had a low output due to 
political  polarisation  and  the  disruption  caused  by  pandemic.  The  Federation  entity 
government is still acting in a caretaker role.  Bosnia and Herzegovina’s Constitution remains 
in breach of the European Convention on Human Rights (ECHR), following the Sejdić-Finci 
and  related  cases.  An  inter-agency  working  group,  tasked  with  discussing  electoral  and 
constitutional reforms, was established in May 2021. Municipal elections were held in Mostar 
in  December  2020,  for  the  first  time  since  2008.  The  Stabilisation  and  Association 
Parliamentary Committee met and adopted its rules of procedures in June 2021, following a 
five-year stalemate. No progress was made in improving the electoral framework in line with 
European  standards  and  ensuring  transparency  of  political  party  financing.  Bosnia  and 
Herzegovina  has  yet  to  address  the  recommendations  by  the  Office  for  Democratic 
Institutions  and  Human  Rights  of  the  Organisation  for  Security  and  Cooperation  in  Europe 
(OSCE/ODIHR),  the  Venice  Commission  and  the  Council  of  Europe’s  Group  of  States 
against Corruption (GRECO). The development of a national programme for the adoption of 
the  EU  acquis  is  still  pending.  Limited  progress  was  made  in  ensuring  an  enabling 
environment for civil society.  

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  with  public  administration 
reform (PAR); some progress was made by adopting the action plan on public administration 
reform as well as strategies on public financial management at all levels of government. The 
country  needs  to  ensure  a  professional  and  depoliticised  civil  service  and  a  coordinated 
countrywide approach to policy-making.  

Bosnia  and  Herzegovina  is  at  an  early  stage/has  some  level  of  preparation  as  regards  its 
judiciary. No progress was made in this area over the reporting period. The authorities have 
taken  limited  action  to  address  the  findings  of  the  Expert  Report  on  Rule  of  Law  issues 
(‘Priebe  report’).  Integrity  amendments  are  due  to  enter  in  parliamentary  procedure;  their 
adoption  is  key  to  establish  a  credible  and  rigorous  system  of  verification  of  financial 
statements of judicial office holders. Persistent and evident signs of deterioration continue to 
require  urgent  measures  to  strengthen  the  integrity  of  and  regain  citizens’  trust  in  the 
judiciary.  Lack  of  commitment  to  judicial  reform  from  political  actors,  and  the  poor 
functioning  of  the  judicial  system  continued  to  undermine  the  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 this area over 
the  reporting  period;  urgent  action  is  required  to  adopt  the  pending  legislation  on  public 
procurement and conflict of interest. During the pandemic, the negative effects of widespread 
corruption and signs of political capture continued to manifest strongly during the pandemic, 
directly affecting the wellbeing of citizens. The selective and non-transparent prosecution and 
judicial follow-up of corruption cases is a cause of concern. There are systemic shortcomings 

3  This  report  covers  the  period  from  June  2020  to  June  2021.  It  is  based  on  input  from  a  variety  of  sources, 
including contributions from the government of Serbia, the EU Member States, European Parliament reports and 
information  from  various  international  and  non-governmental  organisations.  This  also  includes  the  results  of 
comparative assessments and indices produced by other stakeholders, in particular in the area of rule of law. 
4  For  the  state  of  play  the  report  uses  the  following  assessment  scales:  early  stage,  some  level  of  preparation, 
moderately  prepared,  good  level  of  preparation  and  well  advanced.  For  progress  made  during  the  reporting 
period,  the  following  scale  has  been  used:  backsliding,  no  progress,  limited  progress,  some  progress,  good 
progress and very good progress. Where appropriate, also interim steps have been used. 

4 

 
 
                                                           
 
in the operational cooperation among law enforcement agencies and a very limited exchange 
of intelligence. The police are vulnerable to political interference. Financial investigations and 
asset seizures are largely ineffective. Although some preparatory steps were taken, the contact 
point  for  cooperation  with  Europol  is  not  yet  operational.  Bosnia  and  Herzegovina  has  not 
taken  any  steps  to  establish  cooperation  with  Eurojust.  The  country  needs  to  continue  its 
efforts in the fight against terrorism and drug trafficking and increase its capacity to do so.  

As regards fundamental rights, while the legislative and institutional framework is largely in 
place,  Bosnia  and  Herzegovina  has  yet  to  adopt  a  comprehensive  strategic  framework. 
Significant  reforms  are  needed  to  ensure  that  all  citizens  are  able  to  exercise  their  political 
rights and to ensure non-discriminatory, inclusive and quality education for all, including by 
overcoming  the  practice  of  ‘two  schools  under  one  roof’.  No  progress  was  made  on 
guaranteeing freedom of expression and of the media, on protecting journalists against threats 
and  violence  by  ensuring  an  appropriate  judicial  follow-up,  nor  on  ensuring  the  financial 
sustainability of the public broadcasting system. Challenges persist as regards the freedom of 
assembly, particularly in the Republika Srpska entity, where activists have been subjected to 
intimidation and judicial prosecution. 

The failure of the authorities to establish a sustainable migration and asylum system led to a 
humanitarian  crisis  in  December  2020.  Following  extensive  EU  engagement  and  support,  a 
temporary  tent  camp  was  established  in  Lipa  to  provide  shelter  to  all  persons  in  need.  A 
permanent multi-purpose reception centre is being built  in Lipa in the course of 2021. Bosnia 
and Herzegovina has stepped up efforts to improve migration management; it needs to ensure 
effective  coordination,  at  all  levels,  of  border  management  and  migration  management 
capacity, as well as the functioning of the asylum system. This requires a fair distribution of 
responsibilities among all entities and cantons, including in the hosting of reception centres.  

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 country took measures to 
counter  the  negative  effects  of  the  COVID-19  pandemic  on  the  economy  and  the  labour 
market. The Central Bank undertook significant measures to improve its analytical capacities. 
Some  steps  were  taken  to  strengthen  the  financial  sector’s  shock  resilience.  However,  there 
have  been  no  significant  measures  to  improve  the  functioning  of  the  product  markets. 
Cooperation  and  coordination  among  the  country’s  stakeholders  has  further  deteriorated. 
Resistance from the Republika Srpska entity against EU acquis-related country-wide reforms 
has further slowed down the country’s compliance with the EU accession criteria. As a result, 
the  country’s  institutional  set-up  as  well  as  its  internal  market  remains  fragmented.  No 
improvement has been reached with respect to the rule of law and the functioning of country-
wide supervisory and regulatory institutions. This continues to impede the country’s business 
environment.  The  quality  of  public  spending  has  not  improved,  while  the  public  sector  has 
remained inefficient and oversized.  

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. 

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  alignment  with  the  EU  acquis  and  implement  and  enforce  the 

5 

 
 
relevant  legislation.  Limited  to  no  progress  was  made  on  the  different  EU  acquis  chapters 
during the reporting period.  

Bosnia  and  Herzegovina  has  been  backsliding  in  the  area  of  public  procurement,  where  it 
applied preferential treatment for domestic bidders in awarding public contracts during most 
of  the  reporting  period;  amendments  to  the  public  procurement  law  are  awaiting 
parliamentary adoption. Limited progress was made on statistics, as preparation for the next 
population  and  housing  census  has  hardly  progressed.  Some  progress  was  made  on  public 
internal financial control, with both entities adopting strategies. 

Major  steps  are  required  to  align  the  legislative  framework  with  the  EU  acquis  on  the 
internal  market  (free  movement  of  goods,  services  and  capital,  competition  policy,  and 
financial services). Bosnia and Herzegovina made some progress only on competition policy, 
further  aligning  the  law  on  State  aid  with  the  EU  acquis,  and  in  financial  services.    This 
cluster  is  key  for  Bosnia  and  Herzegovina’s  preparations  for  the  requirements  of  the  EU’s 
internal  market  and  is  highly  relevant  for  early  integration  and  the  development  of  the 
Common Regional Market. 

Bosnia and Herzegovina made limited or no progress in most areas  of competitiveness and 
inclusive  growth  (information  society  and  media,  taxation,  economic  and  monetary  policy, 
enterprise and industrial policy, education and culture, and the customs union), where it is at 
an  early  stage  or  has  some  level  of  preparation.  These  areas  have  significant  links  to  the 
country’s  Economic  Reform  Programme.  Socio-economic  reforms  must  be  pursued  to  help 
address the existing structural weaknesses, low competitiveness, high unemployment, as well 
as the impact of the pandemic, which has further increased their urgency. Some progress was 
made with the adoption of policies on inclusive education, vocational education and training, 
and entrepreneurial learning.  

Bosnia  and Herzegovina made some or limited progress  in most areas related to  the  Green 
Agenda  and  sustainable  connectivity,  (trans-European  networks,  energy,  and  environment 
and  climate  change),  where  it  is  at  an  early  stage  or  has  some  level  of  preparation.  The 
country  needs  to  significantly step up its ambitions  towards a  green transition,  and align its 
laws  on  gas  and  electricity  with  the  EU  acquis.  The  green  transition  and  sustainable 
connectivity are key to  economic integration within the region  and with the EU, facilitating 
cross-border  trade  within  the  region  and  creating  real  benefits  for  businesses  and  citizens. 
This  cluster  and  the  reforms  concerned  have  significant  links  to  the  Economic  Reform 
Programme,  the  Economic  and  Investment  Plan  and  the  Green  Agenda  for  the  Western 
Balkans.  

Bosnia and Herzegovina made no progress in the areas linked to resources, agriculture and 
cohesion (agriculture and rural development, food safety, veterinary and phytosanitary policy, 
fisheries,  and  financial  and  budgetary  provisions),  where  preparation  is  mostly  at  an  early 
stage.  

Bosnia  and  Herzegovina  has  some  level  of  preparation  but  made  no  progress  as  regards 
external  relations. The country needs to intensify the efforts to finalise its accession to the 
World  Trade  Organization.  Bosnia  and  Herzegovina  is  strongly  encouraged  to  improve  its 
alignment  with  the  EU  foreign  policy  statements  and  restrictive  measures,  which  has 
significantly  declined  to  reach  43%  by  August  2021,  which  is  worrying.  Bosnia  and 
Herzegovina  continued  to  actively  participate  in  regional  cooperation  and  maintain  good 
neighbourly relations.  

6 

 
 
 
2. 

2.1. 

CLUSTER 1: THE FUNDAMENTALS OF THE ACCESSION PROCESS  

FUNCTIONING OF DEMOCRATIC INSTITUTIONS AND PUBLIC 
ADMINISTRATION REFORM  

2.1.1   Democracy  

The political environment remained polarised in the reporting period, with repeated calls from 
the  Republika  Srpska  entity  leadership  to  roll  back  reforms  and  to  block  State-level 
institutions, the latest in July 2021 after the High Representative used its executive powers to 
criminalise denial of genocide and war crimes. The Federation entity remains with a caretaker 
government,  three  years after the October 2018 elections. Polarisation between the different 
levels  of  government  also  hampered  the  response  to  the  COVID-19  pandemic,  including  in 
terms of procurement of vaccines. Bosnia and Herzegovina has taken some significant step on 
the  14  key  priorities,  but  most  substantive  issues  remain  outstanding.  Municipal  elections 
were held in Mostar in December 2020, for the first time since 2008.  An action plan on the 
key priorities remains pending with the Council of Ministers due to political disagreements on 
the  distribution  of  competences.  The  State  budget  for  2021  is  still  awaiting  adoption;  State 
institutions are funded via three-monthly temporary financing decisions.  

Elections  

Some progress was made towards addressing part of the Opinion key priority 1 as municipal 
elections  were  held  in  Mostar  on  20  December  2020,  for  the  first  time  since  2008,  in  the 
context  of  the  local  elections  which  were  held  orderly  in  November  across  the  country. 
Previous  recommendations  by  OSCE/ODIHR,  Venice  Commission  and  GRECO  remain 
unaddressed, including  as regards transparency of political  party  financing.  An inter-agency 
working  group was  established in  May 2021 to discuss electoral  and constitutional reforms. 
Political  actors  and  institutions  need  to  engage  in  a  transparent  and  inclusive  dialogue  to 
address  long-standing electoral  shortcomings  ahead of the next  general  elections in  October 
2022.  

No  legislative  steps  were  taken  to  implement  the  comprehensive  set  of  recommendations 
issued  by  OSCE/ODIHR  and  GRECO  on  the  transparency  and  integrity  of  the  electoral 
process and the implementation of election results. Bosnia and Herzegovina does not have an 
action plan for this.  

Ethnic- and residence-based restrictions to the right to stand for election to the Presidency and 
the  House  of  Peoples  of  Bosnia  and  Herzegovina  remain  in  violation  of  the  ECHR  and  its 
Protocols.  In  December  2020,  in  the  Pudarić  case,  the  European  Court  of  Human  Rights 
(ECtHR) found that the applicant, a Serb residing in the Federation entity, was discriminated 
for his inability to stand as a candidate for the Presidency. This is the fifth decision since 2009 
in the Sejdić-Finci case law. 

In  May  2021,  an  inter-agency  working  group  (IAWG)  was  established  to  discuss 
constitutional  and  electoral  reforms  to  address  key  priorities  1  and  4  ahead  of  the  October 
2022  general  elections.  The  working  group,  composed  of  members  of  parliament  and  of 
government  of  both  ruling  and  opposition  parties,  is  expected  to  prepare  legislative 
amendments to bring the electoral framework in compliance with the case law of the ECtHR 
and with European standards. The IAWG has the mandate to consult expert from civil society, 
the Central Electoral Commission, and academic community.  

Municipal  elections  were  held  orderly  on  15  November  2020  across  the  country  amid  the 
pandemic  and  were  marked  by  organisational  difficulties  and  divisive  campaigning.  Voting 
took place in Mostar on 20 December 2020 for the first time since 2008, thanks to legislative 

7 

 
 
amendments  adopted  in  July  2020,  thus  complying  with  the  2010  decision  of  the 
Constitutional Court and the 2019 ECtHR decision in  the  Baralija  case. A new Mostar city 
council  and  mayor  took  office  by  February  2021,  thus  fulfilling  part  of  key  priority  1.  The 
electoral  campaign  was  marked  by  divisive  rhetoric,  verbal  attacks,  and  lack  of  substantial 
party  programmes  for  municipalities  and  cities.  Epidemiological  regulations  were  unevenly 
enforced  during  the  campaign,  as  pre-electoral  events  were  not  subject  to  restrictions.  
Epidemiological  measures  were  broadly  respected  during  the  voting.  Turnout  reached  50%. 
The  minor  irregularities  registered  did  not  influence  the  outcome.  Opposition  candidates 
gained  mayoral  seats  in  Sarajevo,  Banja  Luka  and  Bijeljina.  Elections  were  repeated  in 
February 2021 in  Doboj and Srebrenica, as well as in Travnik and Foča-Ustikolina in April 
2021. Partial boycotts were reported in the Srebrenica and Travnik re-run elections. Municipal 
elections did not improve local political representation of women: only 5 out of 136 directly-
elected mayors are women, as well as the indirectly-elected mayor of the City of Sarajevo. Of 
2,417 municipal lists, 450 (19%) were headed by women. Four directly-elected mayors  and 
the indirectly-elected Mayor of the City of Sarajevo come from the rank of  the ‘Others’; there 
are no members of national minorities amongst the 143 mayors.  

The  Central  Election  Commission  (CEC)  demonstrated  a  professional,  independent  and 
proactive approach, despite political attacks by; a court ruling on the legality of the March and 
May 2020 appointments to the CEC is still pending.  

Parliament  

The  polarised  political  environment  further  slowed  down  legislative  activities.  The 
Parliamentary  Assembly  convened  regularly,  however  the  legislative  output  was  minimal, 
including on key EU-related laws. 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  need  to  be  improved.  Good  progress  was 
made  in  addressing  the  Opinion  key  priority  3  on  ensuring  the  proper  functioning  of  the 
Stabilisation and Association Parliamentary Committee (SAPC). 

The  Parliamentary  Assembly  of  Bosnia  and  Herzegovina  met  regularly,  despite  the 
pandemic. The Parliament had a minimal output, despite the outstanding legislative backlog. 
The very limited legislative initiative of the Council of Ministers resulted in the parliamentary 
adoption  of  only  five  sets  of  amendment  to  the  existing  laws  by  June  2021,  all  in  regular 
procedure.  

The  Parliament’s  oversight  of  the  executive  improved;  the  Council  of  Ministers  survived  a 
no-confidence vote in January 2021. An ad-hoc investigative committee on the situation in the 
judicial  institutions  held  32  sessions  by  June  2021.  A  uniform  and  effective  system  of 
monitoring  the  implementation  of  conclusions  and  recommendations  adopted  at  oversight 
hearings  or  plenary  sessions  is  yet  to  be  developed.  The  Parliament’s  oversight  of  the 
government’s response to the coronavirus pandemic was limited.   

After  five  years  of  stalemate,  in  July  2020  the  Parliament  adopted  the  proposal  of  rules  of 
procedure of the SAPC, which foresee two-thirds majority voting without ethnic quotas. The 
second  meeting  of  the  SAPC  took  place  on  17  June  2021,  marking  good  progress  on  key 
priority  3.  Bosnia  and  Herzegovina  still  needs  to  fully  ensure  the  proper  functioning  of  the 
SAPC, notably with the adoption of recommendations by the joint body.  

Parliamentary  representation  of  women  remains  unchanged,  at  around  20%,  despite  a  40% 
gender quota for candidates; rules of procedure requiring gender balance are largely ignored. 

8 

 
 
Entity  parliaments  met  regularly  despite  the  pandemic,  with  online  and  physical  sessions, 
making  large  use  of  urgent  procedures.  In  2020,  the  Parliament  of  the  Federation  entity 
adopted 7 laws in urgent and 7 in shortened procedure out of a total of 22 (64%). The entity 
government survived a no-confidence vote in June 2020. In the Republika Srpska entity, the 
National Assembly adopted in the reporting period 13 laws in fast-track procedures out of 26 
(50%),  including  the  budget;  such  procedures  are  in  principle  reserved  only  for  exceptional 
cases. The Brčko District Assembly adopted 38 laws, 18 of which (47%) in urgent procedure. 

There  are  no  specific  standing  committees  on  oversight  and  control  of  the  government  in 
either entity, and the assemblies do not follow up on the work of administrative bodies. The 
new  rules  of  procedure  introduced  in  June  2020  in  Republika  Srpska  entity  significantly 
shortened the length of sessions but did not particularly improve the quality of parliamentary 
work.  Due  to  splintering,  the  entity  assembly  has  now  12  party  groups,  compared  to  9  in 
2018.  After  all  its  activities  were  suspended  in  2020,  the  parliamentary  forum  on  European 
integration held two sessions in 2021.  

No steps were taken to harmonise the legislation on the registration of political parties across 
the  country  and  to  ensure  appropriate  follow-up  to  the  outstanding  GRECO  and 
OSCE/ODIHR  recommendations  on  political  party  financing,  including  on  transparency  of 
campaign  costs  and  sanctions  for  breaches.  The  Central  Election  Commission  needs  to 
strengthen its audit capacity to monitor compliance on political party financing. 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  had  a  low  output  in  the  reporting  period.  The 
appointment of new governments in the Federation entity and in one canton remain pending 
since  the  2018  elections.  The  executives  have  little  capacities  for  coordination  and  policy 
planning, including on EU matters. This requires effectively implementing the legislation on 
coordination  of  EU  matters,  including  the  coordination  mechanism,  and  strengthening  the 
Directorate for European Integration. 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 Presidency failed to meet regularly over the reporting period, and its members continued 
to  express  opposite  stances  on  multiple  issues.  ‘Vital  entity  interest’  vetoes  were  raised 
against Presidency decisions in July and August 2020 and supported by the Republika Srpska 
entity  assembly.  Despite  disagreements,  the  Presidency  managed  to  respond  consistently  to 
the COVID-19 pandemic. The Presidency also  ratified Additional  Protocol  6 to the CEFTA 
Agreement, and supported Bosnia and Herzegovina’s participation in the Common Regional 
Market initiative and the Green Agenda for the Western Balkans. On the 25th anniversary of 
the  Dayton  Peace  Agreement,  the  Presidency  issued  a  statement  but  failed  to  hold  a  joint 
commemoration of all civilian victims of the war.  

The Council of Ministers had a very low legislative output, adopting three draft laws and two 
sets of amendments. Two ministers are women (22%), in charge of foreign and civil affairs. 
The governments of the Republika Srpska entity and of most cantons worked regularly in the 
reporting period. The  governments  of the  Federation entity and of the Herzegovina-Neretva 
Canton continued to act in a caretaker mandate, for the third year since the 2018 elections. In 
the Brčko District, the new ruling coalition includes ten political parties. The participation of 
women in the executives across the country remains at around 20%.  

9 

 
 
The President and Parliament of the Federation entity have not yet filled the vacancies at the 
Constitutional Court of the Federation entity, which since  2019 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  members  of  the  securities  commission  of  the  Federation  entity  were  only 
appointed in September 2021, after over a year. 

Despite  the  need  to  focus  on  fighting  the  pandemic,  there  was  very  limited  coordination 
among  executives  at  all  levels,  including  on  epidemiological  and  socio-economic  response 
measures,  whose  timeline  and  scope  were  not  harmonised.  Epidemiological  decisions  taken 
by  ‘crisis  headquarters’  in  the  Federation  entity  have  been  quashed  by  the  entity 
Constitutional  Court  in  December  2020  due  to  lack  of  legal  basis  and  proportionality,  after 
which  the  Federation  Government  started  to  formally  adopt  the  measures  recommended  by 
the ‘crisis headquarters’.  

The entity and state  governments  adopted in  October 2019 and January 2020 respectively a 
document outlining a socio-economic reform programme for 2019-2022. No steps were taken 
to develop and implement a common action plan of socio-economic reforms in line with the 
key  recommendations  of  the  European  Commission  and  with  the  joint  conclusions  of  the 
economic  and  financial  dialogue.  Formulating  and  enacting  this  package  of  socio-economic 
reforms requires good coordination among executives at all levels.  

Coordination on EU matters, including in the development of countrywide sector strategies, 
is  essential  to  ensure  harmonised  alignment  with  the  EU  acquis  and  to  benefit  from  EU 
assistance  and  participation  in  EU  programmes.  This  requires  effectively  implementing  the 
legislation  on  coordination  on  EU  matters,  including  the  coordination  mechanism,  and 
strengthening the Council of Ministers’ Directorate for European Integration (DEI) to ensure 
a harmonised alignment with the EU acquis). Executives and legislatures across the country 
have little capacities for coordination and policy planning, including on EU matters. 

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) / Programme for  EU 
Integration (PI) that reflects the role different levels of government play in aligning with and 
enforcing the EU  acquis, duly including SAA obligations and other EU requirements  in  the 
NPAA and in  the  corresponding  annual  work programmes of all levels  of  government.  The 
Council of Ministers adopted in September 2020 a methodology for the NPAA, prepared by 
the DEI; Bosnia and Herzegovina needs to proceed to develop the NPAA and agree upon it 
with the Commission. The DEI also prepared an action plan on the 14 key priorities, which is 
still pending adoption by the Council of Ministers, due to obstruction by the Republika Srpska 
entity. (See Public Administration reform)   

The Republika Srpska entity has a 2017-2021 strategy for local self-government, while there 
is  no  such  strategy  at  the  state  level  or  in  the  Federation  entity.  Following  the  municipal 
election, Republika Srpska entity authorities announced reforms to curb the power of newly-
elected opposition mayors in Banja Luka and Bijeljina; no measures have been introduced so 
far. Anti-corruption offices have been established in several cantons of the Federation entity.  

Civil society 

Limited  progress  was  made  in  addressing  the  Opinion  key  priority  11  on  ensuring  an 
enabling  environment  for  civil  society,  notably  by  adopting  a  new  law  on  freedom  of 
assembly in the Brčko District, broadly in line with EU standards. Freedom of assembly and 
of expression remain restricted in the Republika Srpska entity, where activists of the ‘Justice 
for David’ movement have been subject to intimidation and judicial prosecution, and where a 

10 

 
 
new  crime  of  offence  to  the  reputation  of  the  Republika  Srpska  entity  and  its  peoples  was 
introduced in August 2021. Meaningful and systematic consultations with civil society remain 
to  be  ensured  as  part  of  an  inclusive  policy  dialogue.  The  adoption  of  a  framework  for  the 
transparent funding of civil society organisations remains outstanding. 

The  overall  legal  and  regulatory  framework  for  civil  society  in  Bosnia  and  Herzegovina  is 
broadly in line with the EU acquis. An empowered civil society is a crucial component of any 
democratic system and should be recognised and treated as such by public institutions.  

The  legislation  on  freedom  of  association  is  broadly  in  line  with  standards  and  generally 
upheld.  Activists  dealing  with  sensitive  issues  remain  targets  of  threats,  abuse  and  physical 
attacks.  A  framework  for  the  transparent  and  impartial  distribution  of  public  funds  to 
associations is needed across the country; only  few municipalities adopted regulations on the 
issue.  

The  legislation  on  freedom  of  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. The new law adopted in July 2020 in the Brčko District, broadly 
in  line  with  EU  standards,  should  be  used  as  a  model  in  all  other  jurisdictions.  Freedom  of 
assembly remains restricted in the Republika Srpska entity, where activists of the ‘Justice for 
David’ movement continue to be subject to intimidation, fines, and judicial prosecution. The 
crime of offence to the reputation of the Republika Srpska entity and its peoples, introduced 
by law in August 2021, risks further restricting the space for civil society.  

The  legislation  on  public  consultations  is  uneven  across  the  country  and  meaningful  and 
systematic  consultations  remain  to  be  ensured.  The  Council  of  Ministers  needs  to  enact  the 
2017 charter on cooperation with civil society organisations. (see also Public Administration 
Reform) 

Civilian oversight of the security and intelligence sector 

The  Parliamentary  Assembly  and  its  committees  have  a  key  role  in  the  oversight  of  the 
country’s  security  forces.  The  joint  committee  on  defence  and  security  held  10  sessions  in 
2020 and 7 in 2021. The joint committee for the oversight of the Intelligence-Security Agency 
(OSA)  only  held  two  sessions  since  its  constitution  in  January  2020  due  to  political 
disagreements  on  the  appointment  of  the  OSA  Director  and  deputies;  an  investigation  is 
ongoing on the qualifications of the OSA Director. The legislation on the OSA has not been 
amended yet to address a number of procedural shortcomings identified by the Constitutional 
Court in June 2017. 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, opened 102 proceedings in 2020. 

2.1.2. Public Administration Reform   

Bosnia  and  Herzegovina  is  at  an  early  stage  with  public  administration  reform.  Some 
progress was made in addressing the Opinion Key priority 14 with the adoption of the action 
plan  on  public  administration  reform  (PAR)  and  of  the  strategies  on  public  financial 
management (PFM) at all levels of government. Bosnia and Herzegovina faces challenges to 
effectively implement the PAR Action Plan and to develop a comprehensive and countrywide 
PFM  strategy.  Ensuring  political  commitment  and  establishing  an  effective  coordination 
structure  on  PAR  remains  a  priority.  Despite  some  progress  in  civil  service  trainings, 
performance appraisals, improved legal basis on strategic planning and impact assessments at 
some government levels, last year’s recommendations remain largely valid.  

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

11 

 
 
  adopt a countrywide strategic framework for public financial management 2021-2025 and 

continue the implementation of the action plan of public administration 2018-2022; 

  establish  a  functioning  coordination  structure  with  a  political  decision-making  body  and 
  public 

improve  the  capacities  of  PAR  Coordinators  to  steer  coordination  of 
administration reforms across all government levels;    

  develop  and  adopt  amendments  of  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  adopted  the  countrywide 
strategic  framework  on  public  administration  reform  (PAR  SF)  2018-2022,  and,  by  the 
end of 2020, all levels of government adopted the related PAR Action Plan 2020-2022. The 
systematic implementation of the PAR Action Plan has faced delays and the timeframe of the 
strategy  and  action  plan  needs  to  be  extended.  A  common  performance-based  monitoring 
system remains to be established. Insufficient political support still hinders the coordinated 
implementation  of  reforms  by  all  levels  of  government.  The  country  has  yet  to  establish  a 
political  decision-making  body  to  steer  and  coordinate  reforms  across  all  levels  of 
government.  The  existing  coordination  structures  at  technical  level  also  need  to  be 
strengthened.  Financial sustainability is not ensured, and reforms are mostly donor-driven; 
this has even worsened with the pandemic.  

Policy development and coordination  

The policy-making system  in  Bosnia  and Herzegovina remains fragmented. The legislative 
framework  on  medium-term  policy  planning  is  unevenly  developed.  In  January  2021,  the 
Federation  entity  further  extended  the  entry  into  force  of  a  set  of  by-laws  regulating  the 
annual  and  medium-term  work  planning,  monitoring  and  reporting  until  January  2022.  The 
Council  of  Ministers  still  has  to  choose  the  best  alternative  solution  for  regulating  sector 
strategic  planning.  The  Republika  Srpska  entity  adopted  in  June  2021  a  law  on  strategic 
planning  and  development.  There  has  been  no  progress  in  developing  methodological 
guidance  for  countrywide  sectoral  strategic  planning  by  harmonising  central  planning 
levels  of 
documents,  framework  budgets  and  countrywide  sector  strategies  across 
government.  While the legal  framework for monitoring and reporting is  in  place, the public 
availability of government reports is very limited. Bosnia and Herzegovina is still expected to 
develop its first National Programme for the Adoption of Acquis (NPAA), i.e. Programme 
of EU Integration (PI).  In September 2020 the Council of Ministers adopted a methodology 
for the development of the programme, but such methodology lacks requirements on costing 
the planned measures. 

The  legal  framework  for  inclusive  and  evidence-based  policy  development  needs  to  be 
consistently implemented across all levels of government. In September 2020, the Federation 
entity regulated the manner and procedure of regulatory impact assessment for legislation and 
clarified institutional responsibilities. The impact and quality of the analysis supporting policy 
proposals  remains  weak  across  all  levels  of  government.  Quality  control  function  for 
consistent oversight on regulatory impact should be upgraded across all levels of government. 
Financial  implications  remain  not  systemically  calculated,  and  the  collection  and  use  of 
administrative  data  for  policymaking  are  not  ensured.  The  legal  framework  on  public 
consultations needs to be improved and consistently applied. The legislative framework does 
not  fully  establish  standards  for  monitoring  and  reporting  on  key  government  planning 

12 

 
 
documents at each level of government, hampering public scrutiny over government work. 
Beyond legislative measures, more efforts are needed to raise awareness on various forms of 
consultation  with  the  public,  and  to  strengthen  the  technical  capacities  at  all  levels  of 
government to regularly use them.  

Public financial management  

Bosnia  and  Herzegovina  still  needs  to  develop  and  adopt  a  countrywide  strategy  for  the 
reform  of  public  financial  management  (PFM)  with  a  performance-based  monitoring  to 
establish    common  reform  priorities.  This  is  one  of  the  eligibility  criteria  for  sector  budget 
support.  All  levels  of  government  adopted  their  own  PFM  strategies  for  2021-2025  in  the 
reporting period.  

Public  institutions  at  all  levels  lack  sufficient  internal  audit  capacity  and  adequate  internal 
control,  especially  for  public  procurement.  Reform  efforts  need  to  target  the  substantial 
payment  arrears  of  the  public  sector,  in  particular  in  the  health  sector,  and  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,  although 
during 2020, state institutions and entities published their respective citizens’ budgets online. 
Annual budgets and reports on budget implementation are published by state institutions and 
two  entities.  The  lack  of  harmonisation  of  the  charts  of  accounts  at  state  and  entity  level 
hampers access to  consolidated data. In-year reporting still needs to improve at all levels of 
government.  Available budgetary information  remains incomplete,  and assessing the overall 
budgetary  and  fiscal  policy  is  difficult.  In  addition,  budget  calendars  remain  to  be  adopted. 
For  most  of  the  reporting  period,  Bosnia  and  Herzegovina  had  to  rely  on  three-monthly 
temporary  financing  decisions.  The  2020  budget  was  adopted  only  in  late  July  2020.  The 
2021  budget  was  adopted  by  the  Presidency  only  on  24  June  2021  and  is  still  pending 
adoption by the Parliament. 

Public service and human resources management 

Merit-based  recruitment,  promotion  and  dismissal  of  civil  servants  based  on  objective 
criteria  is  not  fully  ensured.  The  various  civil  service  laws  do  not  provide  a  clear  and 
comparable  vertical  and  horizontal  scope  of  the  civil  service,  nor  do  they  clarify  which 
institutions are included in the civil service, which positions belong to civil servants, as well 
as what are senior and middle management categories. Political influence in recruitment and 
promotion procedures persists systematically at all levels of government. Candidates are often 
selected without applying merit principles, and in certain recruitment procedures, particularly 
at  cantonal  level,  final  selection  depends  on  ethnic  background  rather  than  merit. 
Constitutional  provisions  on  the  general  representation  of  the  population  in  the  public 
administration  should  not  be  interpreted  as  to  imply  strict  ethnic  proportionality  in  civil 
service and the legislation should ensure that ethnic criteria do not  prevail  over merit-based 
recruitment. The criteria for dismissals and disciplinary procedures set by the legislation are 
still insufficiently applied, including  as regards the possibility to  appeal.  Gender equality in 
public service is at an early stage and only a few top managers are women.  

Human  resources  management  (HRM)  remains  highly  fragmented.  Different  working 
conditions stemming from the various civil service legislation as well as diverging practices 
across  levels  of  government  hamper  the  mobility  of  civil  servants  and  the  creation  of  an 
administrative  space  with  equal  standards.  The  Brčko  District  adopted  the  common  policy 
framework  on  HRM  development  in  August  2020  and  Republika  Srpska  entity  did  so  in 

13 

 
 
March 2021. There is no coordinated approach to HRM and civil service legislation across all 
levels  of  government.  In  particular,  the  Federation  entity  and  cantons  need  to  develop  a 
coordinated  legislative  framework  on  civil  service.  Monitoring  of  human  resource 
management is not done consistently across levels of government and civil service agencies 
do not make those data fully transparent to the public. The State level needs to adopt a legal 
basis  to  make  the  Human  Resource  Management  Information  systems  (HRMIS)  functional 
for civil service. In July 2020, the Federation entity regulated the manner of maintaining the 
civil  service  registers,  and  Brčko  District  adopted  the  legal  basis  to  establish  the  public 
service registers, which was made public in August 2020. 

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.  The  remuneration  system  is  based  on  the  job 
classification at each administrative levels and all basic salary elements are regulated by the 
law.  The  salary  system  at  all  levels  of  government  still  lacks  appropriate  level  of 
transparency.  No  level  of  government  publishes  information  on  average  salary  levels  for 
different  job  categories.  Fairness  in  determining  the  basic  salary  is  not  fully  ensured  at  any 
level  of  government.  Although  a  new  system  of  classification  and  job  categorisation  was 
established,  the  new  job  classification  systems  have  not  yet  been  fully  applied  in  the 
legislative framework and practice. 

Civil service agencies need more resources for training and professional development. Some 
progress  was  made  in  establishing  the  legislative  and  policy  framework  for  trainings  and 
performance appraisal, particularly at the Federation entity. A performance appraisal system 
is  in  place  but  not  used  properly  and  systematically  to  justify  promotions.  There  was  no 
progress  in  establishing  a  coherent  system  for  fair  performance  appraisal,  promotion  and 
training as a right of a civil servant.  

There is no systemic, consolidated data on the integrity of civil servants. The Federation of 
Bosnia and Herzegovina revised the 2014 code of ethics and partially amended the regulation 
on disciplinary proceedings and liability of civil service. While all levels of government have 
a code of ethics, the Brčko District still has to align its own with the civil service law. Public 
perception  of  corruption  among  public  officials  remains  high.  The  Federation  entity  still 
needs to adopt legislation on whistle-blowers’ protection, and the Republika Srpska entity on 
declaration  of  assets;  such  legislation  should  be  aligned  with  international  standards  at  all 
levels  of  government.  Measures  to  promote  integrity  in  public  service  are  only  partially  in 
place and are not systematically applied. 

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  at  all  levels  of 
government.  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.  The  Federation  entity  issued  guidelines  for  the  development  of 
managerial  accountability  in  the  public  sector  with  the  purpose  of  ensuring  practical 
implementation of the concept of managerial accountability. (see also Chapter 32) 

The recommendations of oversight mechanisms such as parliamentary scrutiny as well as of 
independent  institutions  such  as  the  State  Audit  Institution  and  the  Human  Rights 
Ombudsman  remain  rarely  implemented.  Several  institutions  do  not  even  respond  to  the 

14 

 
 
recommendations  addressed  to  them,  although  they  are  legally  obliged  to  do  so.  This 
compromises the citizens’ right to good administration.  

The enjoyment of the right to access public information remains uneven. 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  to 
supervise the implementation of laws or sanction violations. The legislative framework has to 
be aligned with international and European standards.  

The  varying  efficiency  of  courts  across  the  country  render  the  citizens’  right  to 
administrative justice uneven. There are no effective remedies against the excessive length 
of judicial proceedings. (see also 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. A new law on electronic identification and trust services for electronic transactions in 
compliance  with  the  EU  acquis  is  still  pending  adoption.  To  foster  a  user-oriented 
administration, Bosnia and Herzegovina should simplify and harmonise business registration 
procedures and ensure full mutual recognition between entities, including on concessions and 
licensing.  The  Brčko  District  introduced  in  April  2021  an  electronic  system  of  business 
registers. One-stop-shops  for citizens or businesses exist in  the  Republika Srpska  entity  and 
since April 2021 in the Brčko District. The overall perception of citizens about public services 
is very low.  

2.2.   RULE OF LAW AND FUNDAMENTAL RIGHTS  

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.  The  authorities  and  the  judiciary  have  taken  limited  action  to 
address the findings of the Expert Report on Rule of Law issues,5 and political commitment 
towards  justice  reform  remains  insufficient.  The  poor  functioning  of  the  judicial  system 
continued  to  undermine  the  citizens’  enjoyment  of  rights  and  the  fight  against  corruption. 
Corruption indicators further deteriorated and all levels of government show signs of political 
capture directly affecting the daily life of citizens. Selective and non-transparent prosecution 
and  judicial  follow  up  of  corruption  cases  continued,  affecting  public  interest,  but  also 
business  operators  and  investors.  As  regards  fundamental  rights,  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. 

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. Three out of four 
2019  recommendations  remain  outstanding  and  one  has  been  addressed  to  a  limited  extent. 
The  authorities  and  the  judiciary  have  taken  limited  action  to  address  the  findings  of  the 
Expert  Report  on  Rule  of  Law  Issues  (‘Priebe  report’).  Action  was  taken  towards  the 

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

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establishment  of  a  system  of  verification  of  asset  declarations  of  judicial  office  holders.  To 
this aim, targeted amendments to the law on the High Judicial and Prosecutorial Council, have 
been adopted by the Council of Ministers, and are due to enter the  parliamentary procedure. 
Persistent and evident signs of deterioration continue to require urgent measures to strengthen 
integrity  and  regain  citizens’  trust  in  the  judiciary.  Lack  of  commitment  to  judicial  reform 
from political actors, 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: 

  urgently  adopt  the  integrity-related  targeted  amendments  to  the  HJPC  Law  establishing 
among other a credible and rigorous system of verification of asset declarations of judges 
and prosecutors, and members of the High Judicial and Prosecutorial Council;  

  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; 

  apply  consistently  merit-based  appointment  practices,  without  prevalence  of  ethnic 

criteria, and ensure that quality criteria are applied in performance appraisal;  

  effectively implement the revised National War Crimes Strategy, notably by appointing 

the supervisory body, and adopt a new Justice Sector Reform Strategy. 

Strategic documents  

Bosnia and Herzegovina needs to develop and adopt a new 2021-2027 Justice Sector Reform 
Strategy  and  action  plan  to  replace  the  ones  expired  in  2018,  notably  by  establishing  a 
credible implementation timeline and ensuring adequate monitoring and funding. 

Legal and institutional framework 

The legal and institutional framework has significant shortcomings. No progress was made on 
the Opinion key priority 6, requiring the country to adopt the new Law on Courts of Bosnia 
and  Herzegovina  and  the  new  Law  on  the  High  Judicial  and  Prosecutorial  Council  (HJPC) 
which  indicates  continued  insufficient  political  commitment  to  pursue  key  rule  of  law 
reforms.  The  Law  on  Courts  should  achieve  greater  legal  certainty,  and  clarify  the  courts’ 
subject  matter  jurisdiction.  It  should  also  provide  for  a  separate  second  instance  appellate 
court.  The  new  Law  on  the  HJPC  should  strengthen  the  independence,  professionalism  and 
accountability  of  the  judiciary.  The  Ministry  of  Justice  should  swiftly  finalise  the  drafts  of 
both  laws,  in  line  with  European  Commission  recommendations,  and  submit  them  to  the 
Venice  Commission  for  an  opinion,  before  adoption  by  the  Council  of  Ministers  and 
submission for parliamentary procedure.  

Judicial self-governance body 

In  the  reporting  period,  continued  shortcomings  in  the  independence,  accountability  and 
efficiency of the HJPC have further deteriorated trust in the judiciary. Additional corruption 
allegations against the HJPC President culminated with his resignation and appointment of a 
new HJPC president in February 2021. None of the corruption allegations have been properly 
investigated by the HJPC, which remains a matter of serious concern. In May 2021, the HJPC 
adopted  a  2021-2023  HJPC  Reform  Program,  including  measures  to  strengthen  the  quality, 
integrity,  efficiency  of  the  judiciary  and  fight  against  organised  crime  and  corruption.  The 
HJPC must ensure its swift implementation and urgently enable reforms in the areas under its 
direct competence, notably those that do not require legislative changes.  

Independence and impartiality 

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Limited  action  was  taken  in  2020  to  improve  the  independence  and  impartiality  of  the 
judiciary,  which  need  to  be  significantly  strengthened  in  line  with  European  standards, 
including through additional constitutional and legal safeguards.  

The  rules  on  the  appointment,  promotion,  career  advancement,  conflict  of  interests  and 
disciplinary  responsibility  of  judges  and  prosecutors  remain  insufficient  to  safeguard  their 
independence. The HJPC amended its internal rules on appointment procedures, disciplinary 
measures  and 
inconsistent  and  non-transparent 
implementation continued to hamper judicial independence and public trust. The HJPC needs 
to  ensure  that  judicial  appointment  procedures  are  merit-based  and  transparent,  and  that 
appointment decisions are thoroughly reasoned. 

integrity  standards;  however, 

their 

Multiple ad-hoc appointment procedures make the system vulnerable.  Access to the judicial 
and  prosecutorial  profession  should  be  managed  through  a  single  annual  examination.  In 
addition,  first  access  to  the  judicial  or  prosecutorial  profession  should  be  conditional  on 
completing  a  specialised  preparatory  programme.  Access  to  the  profession  and  judicial 
promotions should be subject to thorough integrity and asset verificaitons. The new Law on 
the HJPC should address these shortcomings. 

The  regulatory  safeguards  on  impartiality  remain  weak  and  are  applied  inconsistently, 
notably for conflict of interests and case allocation. There are no sufficient security features to 
prevent  abuse  of  the  random  case  allocation  and  the  reassignment  of  cases  without  due 
justification.  Manual  case  assignment  is  still  observed,  including  at  State  level  prosecutor’s 
office. This  is  a cause of major concern and needs to  be urgently remedied by the  HJPC in 
cooperation  with  court  presidents  and  chief  prosecutors.  Judges  and  prosecutors  remain 
subject  to  internal  and  external  pressure,  including  politically  motivated  intimidation.  Such 
practices  need  to  be  forcefully  addressed.  There  are  no  dedicated  sanctions  for  undue 
influence  of  the  judicial  office  holders  or  public  comments  that  would  undermine  their 
independence. The HJPC needs to review its reporting mechanism, to ensure effective follow 
up  and  safeguard  judicial  independence.  The  citizens’  and  business  perception  of  judicial 
independence remained low. 

Accountability 

Preliminary  action  was  taken  towards  the  establishment  of  a  system  of  verification  of  asset 
declarations  of  judges  and  prosecutors  and  members  of  the  HJPC,  in  line  with  the 
Commission’s recommendations. The lack of the system seriously affects the integrity of the 
judiciary. Obstruction to integrity reforms from political actors and from within the judiciary 
needs to be addressed by legislative amendments. As a positive step, in June 2021 the Council 
of  ministers  adopted  the  targeted  amendments  to  the  HJPC  law,  which  are  now  to  be 
submitted  for  parliamentary  procedure.  Pending  their  adoption  in  Parliament,  the  HJPC  and 
its  secretariat  must  swiftly  take  all  necessary  preparatory  action  for  the  verification  of  asset 
declarations,  in  line  with  the  Commission’s  recommendations  and  Venice  Commission’s 
Opinion, before staff and management of the unit are recruited. Moreover, in the meantime, 
voluntary publication of asset declarations by all HJPC members and by judicial management 
must be further encouraged.  

All courts and prosecutors’ offices have integrity plans, but their implementation is uneven. 
The  HJPC  has  put  in  place  an  integrity  unit  in  September  2020,  as  part  of  its  secretariat, 
whose  activity  has  had  only  limited  impact.  Implementation  of  integrity  plans  and  code  of 
ethics  and  their  monitoring  must  be  stepped  up.  The  recruitment  of  judges  and  prosecutors 
does  not  include  any  thorough  integrity  and  assets  verification  or  any  assessment  of  the 
candidates’ ethical and moral standards.  

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Disciplinary procedures continue to be limited and have little dissuasive effect. In 2020 the 
office of the disciplinary prosecutor registered 31 complaints against 31 judicial office holders 
(50% less than in 2019) and filed 29 disciplinary charges, including in two high-level cases 
regarding  the  President  of  the  Court  of  Bosnia  and  Herzegovina  and  the  State-level  Chief 
Prosecutor. These cases require a thorough, independent and transparent follow up. Pressure 
and intimidation against the office of the disciplinary prosecutor has continued and is a cause 
of concern; it needs to be forcefully addressed. Plans to  provide the disciplinary prosecutor 
with  greater  autonomy  and  independence  from  the  HJPC,  in  particular  through  sufficient 
separation of premises and infrastructure, must be urgently pursued by the HJPC.  The HJPC 
disciplinary  commissions  completed  30  disciplinary  proceedings.  26  cases  resulted  in 
disciplinary  measures,  including  12  cases  of  salary  reduction.  Two  court  presidents  were 
removed from their management position on the account of disciplinary offence of nepotism 
and  criminal  offence.  The  disciplinary  panels  are  almost  exclusively  composed  of  HJPC 
members without clear selection criteria, which constitutes a potential conflict of interest, in 
particular  when  members  of  the  HJPC  are  concerned.  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.  The  targeted  amendments  to  the  law  on  the  HJPC 
should provide for disciplinary liability of all members of the HJPC, including the President. 
Promotions  continued  to  be  systematically  granted  in  disregard  of  disciplinary  record.  This 
practice  is  worrysome.  Disciplinary  background  should  be  duly  taken  into  account  in  the 
performance,  appraisal  and  promotion  of  judicial  office  holders  to  enhance  a  rule  of  law 
culture  in  the  judiciary.  Targeted  amendments  to  the  Law  on  the  HJPC  should  provide  for 
suspension  of  appointments  and  promotions  subject  to  verfication  of  asset  declarations. 
Irregularities detected during verifications should be automatically referred to the office of the 
disciplinary prosecutor, and properly reflected in the appointment and promotion process.  

Professionalism and competence 

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

Following  the  2020  decision  of  the  Court  of  Bosnia  and  Herzegovina,  the  criteria  on 
performance appraisal for all judges and prosecutors have been annulled. In May 2021, the 
Court  of  Bosnia  and  Herzegovina  rejected  theappeal  of  the  HJPC  against  its  decision  as 
inadmissible. This is a major setback for judicial reform which should be urgently remedied 
via  the  targeted  amendments  to  the  HJPC  Law.  A  system  of  thorough  and  balanced 
performance appraisal based on quality criteria must continue to be in place and consistently 
applied to all judges and prosecutors, in line with the European standards. 

Quality of justice 

There  was  no  meaningful  progress  in  prosecution  and  judicial  follow-up  of  cases  of  public 
resonance  including  cases  of  alleged  electoral  fraud,  notably  following  elections  in  Mostar. 
The State-level Prosecutor’s Office asserted jurisdiction over two entity-level organised crime 
cases, involving unresolved killings, on the basis of the extended jurisdiction clause relating 
to  detrimental  consequences  for  the  country.  These  two  investigations  are  ongoing.  It  is 
essential to ensure effective judicial protection and the right to fair trial in these cases. 

The justice system continues to lack transparency. In January 2021, the online database of 
court decisions was opened to  the public free of charge;  however the database does not  yet 
include  all  key  court  decisions  and  indictments,  in  particular  in  corruption  cases.  The 

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database,  needs  to  be  systematically  populated  to  foster  consistent  case  law  across  the 
country. The HJPC received 78 requests for access to information in 2020, all of which were 
processed.  The  HJPC  has  no  communication  strategy  in  place.  The  judiciary  needs  to 
significantly improve transparency in its interaction with legal professionals, justice users, the 
media and public at large. Dedicated case law departments should also be in operation in all 
the  highest  judicial  instances.  Comprehensive  training  on  public  communication  and  media 
relations for courts and prosecutors’ offices is required to ensure transparency and public trust 
in the judiciary.  

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.  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 country.  

There  are  1,024  judges  and  358  prosecutors,  including  77  court  presidents  and  18  chief 
prosecutors, for an average of 29 judges and 10 prosecutors per 100,000 inhabitants, against a 
European average of 21 and 12 respectively, according to the Council of Europe’s European 
Commission  for  the  Efficiency  of  Justice  (CEPEJ).  61%  of  the  total  number  of  judges  and 
prosecutors and 49% of managers are women. The 2020  budget for the judiciary, including 
the  HJPC  is  EUR  135.2  million  (0.79%  of  GDP),  which  is  less  than  in  2019  (EUR  137.3 
million, 0.76% of GDP). In 2020, EUR 102.9 million was allocated to courts and EUR 29.7 
million  to  prosecutors’  offices  (compared  to  EUR  104.8  million  and  EUR  29.6  million  in 
2019). The funds allocated remain insufficient to cover investment needs and to improve the 
judicial infrastructure, since over 85% of the budget is spent on salaries and compensations.  

Training  for  judges  and  prosecutors  remains  insufficient.  Significant  improvements  in  the 
duration, quality and diversity of substance of mandatory training remain 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 and promote their participation in training. The HJPC needs to strengthen 
the  supervision  of  all  judicial  training  activities  based  on  the  annual  reports  received  from 
entity-level  training  centres.  The  quality  of  training  of  state-level  judiciary  needs  to  be 
ensured. Comprehensive training on public communication and media relations for courts and 
prosecutors’  offices  is  not  in  place.  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 be more proactive in order to benefit 
more extensively from the expertise within the network.  

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  

The  length  of  court  proceedings  in  non-utility  cases  increased  to  421  days  in  2020, 
compared  to  418  days  in  2019.  The  clearance  rate  decreased  to  96%  (103%  in  2019).  The 
length  of  proceedings  remains  a  major  concern.  Weak  trial  management  and  lenient 
enforcement  of  procedural  discipline  by  judges  further  aggravate  the  situation.  Managerial 
oversight of court presidents/chief prosecutors by the HJPC needs to be increased. The civil 
and criminal procedure codes at all levels must be urgently amended to address the excessive 
length of proceedings.  

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The  overall  backlog  for  pending  court  cases  amounts  to  2.1  million  cases,  out  of  which 
approximately  1.8  million  are  cases  of  unpaid  utility  bills.  This  seriously  harms  judicial 
efficiency.  The  backlog  for  non-utility  cases  slightly  decreased  by  5%  compared  to  2019, 
however the pandemic reduced the efficiency especially in first instance courts. The backlog 
of  unpaid  utility  bill  cases  and  small  financial  claims  needs  to  be  reduced  significantly. 
Annual  quotas  to  reduce  the  backlog  in  connection  with  qualitative  performance  appraisal 
criteria  should  continue  to  be  used  to  reduce  the  backlog  of  cases,  without  hampering  the 
quality of justice. The worsening of efficiency parameters due to the Covid-19 pandemic, and 
adoption of urgent  remedial action should  be pursued with  priority.  Initiatives  to  reduce the 
annual quotas should be resisted by the HJPC as they risk to negatively affect efficiency.  

An effective remedy for excessive length of proceedings needs to set up with no delay at all 
levels  of  government.  Though  applicants  may  file a  case  with  the Constitutional  Court, this 
measure does not ensure acceleration of the pending proceedings, and remains a continuous 
violation of the individuals’ rights, under the ECHR.  

The  use  of  court  settlement  and  alternative  dispute  resolution  methods  is  underdeveloped 
and  the  issue  of  increased  backlog  of  cases  is  being  addressed  by  the  HJPC  solely  by 
appointment of additional judges, which remains inefficient. Efficiency reform measures need 
to  better  explore  and  promote  the  potential  of  alternative  dispute  resolution  methods, 
notably conciliation and mediation, 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 lower number of indictments 
for war crimes were filed in 2020. 

The  implementation  of  the  revised  National  War  Crime  Strategy  has  started.  However,  the 
supervisory  body  has  not  yet  been  established  and  sufficient  funding  must  be  provided  to 
ensure  attainment  of  its  main  target  of  completion  of  all  war  crimes  cases  by  2023.  The 
Council of Ministers must establish the supervisory body and ensure  sufficient funding with 
no further delay. 

Regional judicial cooperation in processing war crime cases remains 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  helped  to  reduce  judicial  impunity  but  have  not  been  used 
systematically. Cooperation with Serbia has led to indictments being issued pursuant to cases 
transferred from Bosnia and Herzegovina, which are yet to lead to verdicts. Cooperation with 
Croatia continued to face a number of impediments and has not led to tangible results in terms 
of indictments. A protocol with the Montenegro prosecutor’s office is in place but is not used.   

Out of the 238 unresolved cases pending before the courts in Bosnia and Herzegovina by end 
2020, 97 proceedings are pending 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  extradite their own nationals  for the criminal  offences of  genocide, crimes against 

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humanity  and  war  crimes.  They  are  also  benefiting  from  the  lack  of  progress  of  other 
jurisdictions in addressing the crimes in question. The final sentence handed down in Bosnia 
and  Herzegovina  in  2014  against  Novak  Djukić  was  not  enforced  by  Serbia,  despite  the 
applicable international judicial cooperation tools. In August 2021, war crime indictee Duško 
Kornjača, who faces charges for crimes against humanity, was revealed to be living freely in 
Novi  Sad,  Serbia.  Tomislav  Kovač,  indicted  in  2018  for  genocide  in  Srebrenica,  is  also 
residing in Serbia. 

War  crime  cases  continued  to  be  gradually  reduced,  however  the  processing  of  cases,  in 
particular the most  complex ones, is  subject  to  serious delays, and was  further impacted by 
the  public  health  situation.  The  revised  national  war  crimes  strategy  includes  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 571 (-53%) 
by  31  December  2020;  around  243  of  these  were  complex  cases.  An  estimated  178  cases 
(31.2%) are pending due to the unavailability of the suspects; they require reinforced regional 
cooperation. In 2020 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, the 2020 
recommendations and the findings of the Expert Report on Rule of Law issues, which remain 
outstanding.  Continued  negative  effects  of  widespread  corruption  and  signs  of  political 
capture manifested strongly during the COVID-19 pandemic, directly affecting the wellbeing 
of  citizens.  Within  their  respective  remits,  both  judicial  office  holders  and  political  leaders 
have  failed  to  tackle  the  generalised  phenomenon  of  corruption  and  actively  obstructed 
progress,  leading  to  long-term  stagnation,  and  a  serious  risk  of  backsliding  in  this  field. 
Selective and non-transparent judicial follow-up in corruption cases of public resonance was 
observed,  alongside  pressures  and  intimidations,  and  is  a  cause  of  significant  concern.  No 
action  was  taken  towards  the  adoption  of  new  strategic  documents  at  state  and  Federation 
entity  levels.  Lack  of  harmonisation  of  legislation  across  the  country  and  weak  institutional 
cooperation and coordination continued to hamper results. The track record on prevention and 
repression of high-level corruption remains insignificant, due to operational inefficiency and 
political  interference.  The  Sarajevo  canton  authorities  continued  corruption  prevention 
activities, however efficient follow-up from prosecution and  judiciary remains to be ensured. 
The continued lack of progress at all levels shows the country’s lack of advancement in the 
area  and  increases  the  risk  of  backsliding.  The  political  leaders  and  criminal  justice  system 
institutions need to urgently remedy the situation.  

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

  adopt the law on the prevention of conflict of interest at state level, and further harmonise 
the  legislation  at  entity  and  Brčko  District  levels  with  international  standards  and  best 
European  practices;  complete  the  legal  framework  and  step  up  implementation  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;  

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  amend  criminal  legislation  to  address  lack  of  harmonisation  and  competence  conflicts, 
excessive  length  of  proceedings  and  weak  institutional  cooperation  in  corruption  cases 
across  the  country;  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 

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  high-level  corruption  cases,  in  2020,  there  were  14  ordered  investigations,  7  filed 
indictments  and  1  conviction  with  suspended  sentence  in  the  case  of  the  former  mayor  of 
Bihać.  This  trend  shows  that  there  is  alarmingly  low  number  of  final  convictions  in  high-
profile cases.  

In 2020, 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 at state level 
shows that only few investigations have been finalised.  

There were 91 indictments countrywide, with a decrease of 50% compared with 2019 (181), 
124  indictments  were  confirmed,  including  indictments  from  the  previous  period,  while  the 
number  of  convictions  was  110,  a  majority  of  which  were  suspended  sentences.  The  HJPC 
has adopted criteria for the identification of high-level corruption cases. Nevertheless, data on 
final convictions may not be automatically 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  with  little  dissuassive  effect.  Most  of  the  convictions  were 
pronounced for abuse of office or authority.  

In  the  area  of  conflict  of  interests,  a  state-level  commission  has  been  established  in  July 
2020.  It  took  no  decisions  in  2020.  In  the  period  of  Junuary-June  2021,  this  commission 
initiated 11 proceedings and adopted sanctions in 3 cases, including in the case of the head of 
a ruling political   party.  The lenient  sanctions imposed are not  proportionate and have little 
dissuassive  effect.  As  regards  asset  declarations,  about  600  public  officials  of  state-level 
institutions  are  required  to  submit  their  financial  reports  for  verification,  out  of  whom  only 
231  submited  their  financial  reports  in  2020  and  193  in  2021.  Despite  the  state-level 
commission  being  established,  no  reports  were  checked  and  no  sanctions  were  imposed.  In 
the  Republika  Srpska  entity  around  4,500  office  holders  are  obliged  to  submit  financial 
reports,  out  of  whom  only  5  financial  reports  were  submitted  in  2020.  A  positive  trend 
continued  in  the  Sarajevo  Canton,  where  1,163  asset  declarations  were  submitted  for  about 
900 public positions  by  office holders. 227 office holders who failed to  submit declarations 
were  sanctioned  with  misdemeanour  fines  during  the  reporting  period,  of  which  46  orders 
were appealed before minor offences courts. In all cases, the final sentences pronounced on 
merits  imposed  lower  sanctions  than  the  minimum  provided  by  law.  Such  judicial  practice 
must  be  further  scrutinised  in  the  light  of  the  principle  of  dissuasiveness  and  efficiency  of 
sanctions. The data reported in the asset declarations were verified in 2015 cases, and 5 cases 
of  discrepancy  were  referred  to  prosecution  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 

22 

 
 
Election  Commission,  which  has  no  obligation  to  check  their  accuracy.  In  the  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  zero  cases  out  of  four 
requests in 2020, compared with one case in 2019. In the Republika Srpska entity, one request 
for protection to whistle-blowers was filed and partially upheld in 2020, compared with one 
request  field  but  dismissed  by  courts  in  2019.  There  is  no  legislation  on  whistle-blower 
protection in the Federation entity and the 2018 legislation adopted by Brčko District is not 
implemented. Legislation at all levels of government needs to be aligned with the EU acquis. 

Institutional framework 

Corruption Prevention  

The functioning and coordination of corruption prevention bodies among themselves and with 
the  APIK  continued  to  be  ineffective.  APIK  should  play  a  much  more  proactive  role  in 
implementing GRECO recommendations and aligning with international standards.  

The  independence  of  corruption  prevention  bodies  set  up  at  the  cantonal  level  needs  to  be 
significantly strengthened, as do human and material resources. The anticorruption office of 
the Sarajevo Canton continued to make good progress and remains an isolated good example. 
In  2020,  the  office  processed  518  reports  of  corruption,  of  which  106  were  sent  on  to  the 
competent  authorities  for  further  investigation  and  action.  53  reports  were  referrred  to  the 
Prosecutor’s  Office  of  Sarajevo  Canton,  with  no  meaningful  judicial  follow-up.  The 
corruption prevention body of the Sarajevo Canton continued the  good practice of mapping 
corruption risks and implementation of the methodology on public procurement monitoring in 
COVID-19 pandemic-related measures. In May 2021 the Tuzla Canton adopted legislation to 
establish an anticorruption office, on the model of the Sarajevo Canton.   

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  and  inspection  control  system  remains  necessary  to  tackle  corruption 
and irregularities in public procurement procedures.  

The  audit  department  of  the  Central  Election  Commission  needs  stronger  capacities  to 
monitor compliance with political party financing regulations. 

Law enforcement 

The  criminal  justice  policy  throughout  the  country  is  largely  ineffective  in  the  fight  against 
corruption. This is in part due to inadequate law enforcement and 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  are  not 
proactive  in  launching  investigations.  Systemic  shortcomings  in  the  operational  cooperation 
of law enforcement agencies and a very limited exchange of intelligence remains a persistent 
challenge.  In  the  few  high-level  corruption  cases  reported,  selective  judicial  follow-up  and 
legal  mistakes,  negligence,  abuse  of  procedures,  political  pressure,  questionable  court 
decisions and  verbal  attacks  on the prosecution  continued to  be  observed, including  at  state 
level.   

In the reporting period, limited cooperation of law enforcement agencies with the prosecutor’s 
offices and lack of effective control by the prosecutors  over the work of police continued to 
seriously  hamper  the  effectiveness  of  investigations.  The  selective  unwillingness  of  the 
police,  including  at  the  state  level,  to  cooperate  with  prosecutor’s  offices,  notably  in  high 

23 

 
 
level  corruption  cases  of  public  relevance,  is  a  cause  of  serious  concern  over  their 
independence and professionalism.  

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

The  state  level  prosecutor’s  office  started  two  additional  investigations  related  to  the  2020 
case of alleged public procurement fraud of COVID-19 medical equipment. These cases were 
largely  reported  in  the  media  and  have  a  high  public  resonance.  The  two  investigations  are 
still  ongoing.  One  indictment  has  been  confirmed  by  Court  of  Bosnia  and  Herzegovina 
against the Prime Minister and the Minister of Finance of the Federation entity, the suspended 
head  of  Civil  Protection  of  Federation  entity  and  a  private  entity  (case  Novalic  et  al.).  It  is 
essential to ensure an independent, effective and impartial judicial follow-up in these cases by 
state  level  prosecutor’s  office  and  the  Court  of  Bosnia  and  Herzegovina,  which  have  high 
public resonance and elicited concern over the state of corruption in the country.  

Legal framework 

The  lack  of  harmonisation  of  legislation  across  the  country  continued  to  hamper  the  fight 
against corruption. The country made no progress in adopting a state-level law on prevention 
of  conflict  of  interest,  in  line  with  international  standards  and  best  European  practices.  The 
Federation entity needs to adopt legislation on conflict of interest as well as on the effective 
protection  of  whistle-blowers.  In  March  2021  the  Brčko  District  adopted  a  new  law  on 
prevention  of  conflict  of  interest,  which  needs  to  be  effectively  implemented  and  further 
aligned with best European practices. The 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 urgently aligned with international standards, particularly 
with pending GRECO recommendations. Legislation on freedom of access to information at 
state  and  entity  level  needs  to  be  aligned  with  international  and  European  standards.  Data 
protection  laws  continued  to  be  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.  

Strategic framework 

The  anti-corruption  strategies  and  action  plans  continued  to  be  outdated,  except  in  the 
Republika  Srpska  entity,  and  effective  implementation  continued  to  be  lacking  at  all  levels, 
further  humpering  a  harmonised  strategic  approach  across  the  country.  New  strategic 
documents  need  be  adopted  with  no  delay  and  their  implementation  should  start  with  no 
delay. Anti-corruption strategies need to be harmonised across the country; adequate funding 
should  be  provided  and  strong  monitoring  mechanisms  established  to  ensure  their 
implementation.  

24 

 
 
 
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.  Freedom  of  assembly  remains  restricted  in  the  Republika  Srpska 
entity, where activists of the ‘Justice for David’ movement have been subject to intimidation 
and  judicial  prosecution,  and  where  a  crime  of  offence  to  the  reputation  of  the  Republika 
Srpska entity and its peoples was introduced in August 2021. 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  needs  to  end  in  order  to  ensure  non-discriminatory, 
inclusive and quality education for all, including by overcoming the practice of ‘two schools 
under  one  roof’.  Gender-based  violence,  ill-treatment  of  detainees  and  the  protection  of 
minorities, including the Roma,6 are also issues of concern. The country needs to develop  a 
comprehensive  strategic  framework  on  human  rights  and  on  the  protection  of  minorities, 
including on transitional justice. Previous years’ recommendations remain outstanding.                                                                                                                                               

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

  implement court rulings to put an end to divided education; 

  designate by law the Human Rights Ombudsman as preventive mechanism against torture 

and ill-treatment; 

  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. 

Bosnia  and  Herzegovina  has  ratified  all  major  European  and  international  human  rights 
instruments, most of which are included in its Constitution. There was no systematic follow-
up  to  the  204  accepted  recommendations  from  the  November  2019  Universal  Periodic 
Review. Despite not having observer status to the EU Agency for Fundamental Rights (FRA), 
Bosnia  and  Herzegovina  is  encouraged  to  replicate  the  agency’s  methodology  for  data 
collection. 

The  European  Court  of  Human  Rights  (ECtHR)  delivered  8  judgments  concerning  19 
applications  in  2020  (down  from  21  in  2019  and  6  in  2018)  finding  that  Bosnia  and 
Herzegovina  had  violated  rights  guaranteed  by  the  European  Convention  on  Human  Rights 
(ECHR)  in  one  case.  The  Court  dealt  with  2,059  applications  concerning  Bosnia  and 
Herzegovina during 2020, bringing the total number of applications pending before the court 
to 530. 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,  Pilav  and  Pudarić  rulings  require  constitutional 
amendments  to  ensure  the  equality  of  political  rights  among  all  citizens;  they  have  still  not 
been implemented. 

Bosnia and Herzegovina has not taken any steps towards adoption of a comprehensive policy 
framework  on  the  promotion  and  enforcement  of  human  rights,  including  countrywide 
strategies  on  human  rights,  on  non-discrimination,  and  on  the  protection  of  minorities. 
Consequently, the protection of human rights continues to be uneven across the country.  

Bosnia and Herzegovina still needs to amend the Law on the Human Rights Ombudsman in 
order to improve the independence and effectiveness of this body and designate it as national 

6  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 

 
 
                                                           
preventive  mechanism  against  torture  and  ill-treatment  –  an  international  obligation  of  the 
country.  The  tripartite  composition  and  consensual  decision-making  of  the  Ombudsman 
institution also still needs to be revised in the mid-term to ensure its effective functioning. In 
2020, 2,716 complaints were registered by the Ombudsman (down from 3,218 in 2019). 270 
recommendations were issued in 312 cases, down from 304 in 174 cases in 2019, partly due 
to the pandemic. The Ombudsman has not made use of its prerogative to open minor offence 
proceedings  for  non-compliance  with  its  recommendations  in  the  past  5  years  nor  has  it 
initiated or intervened in administrative or judicial proceedings.  

As regards torture and ill-treatment, the Ombudsman received 92 complaints in 2020, down 
from 129 in 2019, and 144 in 2018, partly due to the pandemic, despite the option of online 
submission. Reports of ill-treatment of suspects and prisoners in police stations and detention 
facilities continued to be processed at a slow rate and only a few officers are punished. 

There is no countrywide strategy on the prison system, and no steps were taken to improve 
detention conditions, starting by harmonising the legislation across the country and bringing it 
in  line  with  with  European  and  international  standards.  The  Federation  entity  still  needs  to 
adopt  legislation  on  the  execution  of  criminal  sanctions  to  allow  the  inter-entity  transfer  of 
prisoners, staff professionalisation and a parole system. The State prison in East Sarajevo was 
opened in July 2020, three years after completion, and it is fully operational since December. 
Visits  to  inmates  were  suspended  during  the  pandemic,  save  for  defence  lawyers. 
Digitalisation, reintegration programmes, and coordination with healthcare and social services 
require improvements. The country should further expand the use of alternatives to detention, 
in particular in the Republika Srpska entity.  

No  steps  were  taken  to  adopt  a  state-level  framework  law  clearly  defining  countrywide 
criteria  on  the  rights  of  civilian  victims  of  war-time  torture  in  order  to  fulfil  its  pending 
obligations  under  the  Convention  against  Torture.  The  country  took  preparatory  steps  to 
address the August 2019 decision of the UN Committee against Torture (UNCAT) related to 
provision  of  all  forms  of  redress  to  victims  of  wartime  torture  via  an  effective  reparation 
scheme.  However,  significant  additional  efforts  are  needed  to  ensure  its  implementation.  In 
the meantime, entity governments should consider waiving court fees for victims of wartime 
torture to which statutes of limitations were applied in the past. Bosnia and Herzegovina still 
lacks a countrywide a policy framework for dealing with the legacies of the past, including a 
countrywide strategy on transitional justice, and no concrete steps were taken  to promote an 
environment  conducive  to  reconciliation  in  order  to  overcome  the  legacies  of  the  war. 
Political leaders continued to engage in historical revisionism, including genocide denial and 
glorification  of  war  criminals,  also  contesting  established  facts  and  the  independence  or 
impartiality  of  international  and  domestic  tribunals.  In  April  and  June  2021,  historical 
commissions  financed by  the  Republika Srpska  entity  government  issued their final  reports, 
which  open  the  door  to  revisionism  and  minimisation  of  the  siege  of  Sarajevo  and  of  the 
Srebrenica  genocide.  A  plaque  honoring  Radovan  Karadžić  was  removed  from  a  student 
dormitory  in  Pale  in  December  2020.  The  Presidency  also  adopted  a  constructive  joint 
declaration to mark the 25th anniversary of the Dayton Peace Agreement in December 2020, 
although they did not hold a joint commemoration of civilian victims of the war. In July 2021, 
outgoing High Representative Inzko used its executive powers to introduce a crime of denial 
of  genocide  and  war  crimes.  Bosnia  and  Herzegovina  leaders  are  expected  to  act  in  a 
sovereign  manner  to  promote  an  environment  conducive  to  reconciliation  in  order  to 
overcome the legacies of the war. 

The continued unresolved issue of  missing persons is  a matter of concern. 6,377 people are 
still missing as a result of the conflict,  of which 55 were identified in  2020, and 8 more by 

26 

 
 
May  2021.  Further  efforts  are  needed  on  a  regional  scale  to  solve  the  issue.  There  was  no 
progress in establishing a support fund for the families of missing persons, as provided for by 
the law, and improving the work of the Missing Persons Institute.  

No  progress  was  made  in  aligning  the  legislation  with  the  EU  acquis  on  data  protection. 
Bosnia  and  Herzegovina  has  signed  Protocol  223  amending  the  Council  of  Europe 
Convention  for  the  protection  of  individuals  with  regard  to  the  automatic  processing  of 
personal data; ratification is pending. The Personal Data Protection Agency needs to be fully 
independent  and  have  adequate  human  and  financial  resources;  it  should  better  balance  the 
protection  of  privacy  with  objectives  of  general  public  interest,  notably  media  freedom, 
electoral integrity, and the fight against corruption. The Agency conducted 101 procedures ex 
officio in  2020 (up from 66 in  2019).  It received 168 complaints,  conducted 36 inspections 
and issued 10 minor offence orders (compared to 131, 36 and 25 in 2019). 17 administrative 
proceedings  against  decisions  of  the  Agency  were  pending  before  the  Court  of  Bosnia  and 
Herzegovina, compared to 21 in 2019. While the State Parliament has to consult the Agency 
on legislative proposals, other legislative assemblies are not required to do so.  

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

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  concerns  continue  to  persist  over  political  pressure,  intimidation  and  threats  against 
journalists.  High-level  politicians  have  resorted  to  public  attacks  and  disparaging  remarks 
against journalists, analysts and media workers, particularly women. The authorities continue 
to  downplay  the  issue  and  there  is  no  data  collection  by  public  institutions  on  threats  and 
attacks against journalists and media workers. The BH Novinari association recorded 69 cases 
of violation of journalists’ rights in 2020, up from 56 in 2019. The Ombudsman received 11 
complaints, compared to 18 in 2019 and 9 in 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 
perpetrators.  

27 

 
 
Legislative environment  

Despite the decriminalisation of defamation since 2002, 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. The legislation on freedom of access 
to  information  and on on hate speech remains fragmented and not  in  line with  international 
and European standards. The legal provisions on data protection and on access to information 
are still interpreted in a way that protects private rather than public interests.  

Implementation of legislation/institutions  

The  Communications  Regulatory  Agency  (CRA)  still  lacks  full  political  and  financial 
independence. The procedure to appoint the CRA management needs to be revised to improve 
its  public  perception  as  a  neutral  and  independent  body.  The  former  head  of  the  Republika 
Srpska’s public television, RTRS, was appointed as new CRA director in July 2020; the CRA 
had  sanctioned  RTRS  multiple  times  during  his  mandate  for  non-respect  of  editorial 
standards, including for historical revisionist statements as regards the May 1995 massacre in 
Tuzla.  

Public service broadcaster  

The 2003 law on the public broadcasting system continues to be only partially enforced, and 
entity  laws  on  broadcasting  are  still  not  aligned  with  it.  Therefore,  the  three  public 
broadcasting  services  continue  to  be  exposed  to  political  influence,  in  particular  through 
politically  controlled  steering  boards,  with  a  worrying  trend  of  self-censorship.  The  country 
continues not to have an appropriate model for collecting fees, as provided for by the law. The 
substantial unpaid debts of entity broadcasters towards the state-level broadcaster 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.  With  analogue  transmission 
licenses  expiring  by  end  2021,  several  local  private  and  public  stations  risks  seeing  their 
broadcasts restricted, affecting access to information for the poorest residents in rural  areas. 
(Also see Chapter 10 – Information society and media) 

Economic factors 

No  steps  were  taken  to  adopt  legislation  on  media  ownership  transparency,  to  ensure 
transparency and prevent hidden media concentration, nor legislation on advertising or criteria 
for the distribution of subsidies. The advertising practices of publicly owned enterprises, such 
as  telecom  companies,  and  advertising  agencies  linked  to  political  parties  continue  to  harm 
media integrity. Local broadcasters which receive funds from local authorities remain subject 
to political pressure and influence. 

Internet  

Self-regulation of online media is of limited effect, and online platforms continue to be used 
to  spread  hate  speech  and  disinformation.  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,  further  deteriorating  even  more  during  the  pandemic.  Labour  rights  are 
hardly respected, unionisation is low, and there are no branch collective agreements for media 
workers. The Press Council’s media code remains the basis of self-regulation, but compliance 

28 

 
 
is uneven. 

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

Freedom  of  thought,  conscience  and  religion  continue  to  be  generally  upheld.  Cases  of 
discrimination,  hate  speech  and  hate  crimes  on  religious  grounds  continue  to  occur,  as  do 
incidents targeting religious sites, particularly in minority areas.  

Freedom of assembly laws still need to be harmonised across the country and brought in line 
with  European  standards,  in  particular  on  grounds  for  restriction  and  responsibility  of 
organisers,  as  highlighted  by  the  organisation  of  Pride  Marches  in  Sarajevo.  The  Brčko 
District  adopted  in  July  2020  a  law  on  freedom  of  assembly,  largely  in  line  with  European 
standards, which should be used as a model in other jurisdictions. Epidemiological measures 
restricting public gatherings have been unevenly enforced, as pre-electoral events ahead of the 
October 2020 municipal elections were not subject to limitations.  The exercise of freedom of 
assembly remains restricted in the Republika Srpska entity, where human rights defenders and 
members  of  ‘Justice  for  David’  movement  have  been  subject  to  intimidation  and  judicial 
prosecution, including for some of the most serious criminal  offences (incitement to  violent 
change of the constitutional order), before being acquitted in court. Environmental protests in 
Mostar saw the police use force to remove demonstrators, who were subsequently fined and 
prosecuted. The third Sarajevo Pride march took place peacefully in August 2021; for the first 
time, the cantonal authorities agreed to cover all additional security costs.  

Freedom of association continues to be generally upheld. However, human rights defenders 
dealing with sensitive issues (women’s rights,  LGBTIQ, migrants, environment) continue to 
be  subject  to  threats,  harassment,  verbal  abuse  and  physical  attacks.  The  authorities  have 
failed so far to promptly and systematically condemn and adequately investigate such attacks. 
As a key priority, the authorities need to promote a conducive and enabling environment for 
civil  society,  and  ensure  effective  consultation  on  legislative  developments  on  freedom  of 
association. 

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

Regarding  property  rights,  no  steps  were  taken  to  update  and  interconnect  the  entity-level 
cadastre and land registry databases and no solution was found to pending repossession cases. 
The  Commission  for  real  property  claims  of  displaced  persons  and  refugees  has  still  not 
resumed operations. The October 2019 ECtHR Orlović ruling was enforced in June 2021. 

Concerning  non-discrimination  policies,  there  was  no  progress  towards  adoption  of 
countrywide human rights and anti-discrimination strategies. The 2009 law on the prohibition 
of  discrimination,  which  aims  at  full  alignment  with  the  EU  acquis,  is  still  not  applied 
effectively,  and  there  is  no  reliable  data  collection.  Discrimination  continues  to  be  under-
reported,  particularly  at  the  workplace,  and  judicial  practice  has  shown  a  lack  of  uniform 
application of burden of proof, excessive length and non-enforcement of final decisions. The 
Ombudsman registered 288 cases in 2020, in a continued upward trend from 206 in 2019, 196 
in 2018 and 174 in 2017. 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 practice of 
‘two  schools  under  one  roof’,  which  is  in  breach  of  a  2014  ruling  by  the  Federation  entity 
Supreme  Court.  In  July  2021  the  Constitutional  Court  established  discrimination  also 
concerning  the  ‘two  schools  under  one  roof’  practice  in  the  Central  Bosnia  canton.  Online 

29 

 
 
education also was implemented via separate platforms, furthering divisions. The name of the 
Bosnian  language  is  not  recognised  in  schools  in  the  Republika  Srpska  entity,  leading  to 
recurrent  school  boycotts;  the  related  Constitutional  Court  decisions  are  yet  to  be 
implemented.  

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.  In  July  2021  the  High 
Representative  enacted  amendments  to  the  criminal  code  expanding  the  scope  of  such 
criminal  offence.  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. 119 ethnic-
related hate incidents were recorded and 3 convictions were handed down in 2020, compared 
to 131 and 1 in 2019 and 121 and 2 in 2018. 8 trials are ongoing.  The case law on hate crimes 
is  not  consistent.  The  authorities  need  to  take  concrete  measures  to  counter  hate  speech, 
particularly  in  official  discourse.  The  prohibition  of  hate  speech  in  online  media  is  not 
monitored  nor  enforced.  The  implementation  of  the  Council  of  Europe  Convention  on 
cybercrime and its additional protocol remains only partial. 

Legislation on gender equality remains to be harmonised across the country and effectively 
enforced.  The  country  has  a  2018-2022  gender  action  plan,  as  well  as  an  action  plan  on 
women,  peace  and  security.  The  Republika  Srpska  entity  adopted  a  2020-2024  strategy  for 
combating  domestic  violence.  Women  are  under-represented  in  politics  and  public  life. 
Gender impact  assessments  are not  carried out  as required by law. 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 
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  pandemic  had  the  most  negative  effects  on  the  economic 
wellbeing  of  women  and  girls.  The  electoral  campaign  brought  stereotypical  portrayal  of 
women in the public and media sphere. (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 still needs to develop and adopt a 
new  action  plan  on  child  protection.  In  2020,  the  Ombudsman  received  185  complaints  on 
children’s rights (198 in 2019, 216 in 2018). There are around 1,623 children without parental 
care  in  the  country  (2019  data).  Transition  towards  community-based  care  is  progressing 
slowly.  Measures  are  required  to  prevent  family  separation  and  provide  foster  care  and 
alternative solutions, as well as support to children leaving care institutions at the age of 18. 
Child  exploitation  and  child  begging  remain  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  challenges,  such  as 
accessing safe accommodation and asylum procedures. 351 unaccompanied migrant children 
were identified in 2020 (533 in 2019, 324 in 2018). 987  were appointed a legal guardian, as 
provided for by law (304 in 2019, 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.  Public  institutions  have  been  weakened  by  the 
pandemic, while lower income affected families and children in terms of nutrition, domestic 

30 

 
 
violence and mental health. The closure of schools and the transfer to online education further 
contributed to inequality and placed a greater burden on both working parents and teachers. 

Entity-level  laws  on  juvenile  justice  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. Alternative measures needs to be used more, as 
detention should only be the last resort. Only limited reintegration measures are available to 
juveniles upon release from detention. By September 2021, there were 22 minors in prisons.  

Persons  with  disabilities  remain  among  the  most  vulnerable  groups  and  there  was  no 
progress in addressing the concerns previously identified, including as regards deprivation of 
legal  capacities,  status-based  discrimination,  accessibility.  Both  entities  adopted  strategic 
frameworks for persons with disabilities. The law continue to allow persons with disabilities 
to  be  deprived  of  legal  capacity  through  a  judicial  process,  which  is  in  violation  of 
international conventions. No steps were taken to move for a status-based approach (with war 
veterans and civilian victims of war enjoying priority) to one based on needs, with a uniform 
definition  of  disability,  and  harmonized  eligibility  criteria,  rights  and  standards  of  social 
protection  across  the  country.  Persons  with  disabilities  continue  to  face  hurdles  to  access 
education,  healthcare  and  social  assistance.  Very  few  public  buildings  are  made  accessible. 
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. 

in 

residential 

Children  with  disabilities  are  one  of  the  most  marginalised  and  excluded  groups,  facing 
stigma and discrimination, and inadequate services, especially in health and education. Many 
are  placed 
international  conventions. 
Institutionalisation  of  children  negatively  impacts  their  development  and  participation  in 
society  and  exposes  them  to  mistreatment  and  abuse.  There  is  still  no  strategy  on 
deinstitutionalisation that would enable multisectoral support to children and adults including 
the  capacity  building  and  strenghtening  of  human  resources  of  public  services.  (see  also 
Chapter 28 – Consumer and Health Protection) 

in  violation  of 

institutions, 

TAn  action  plan  on  the  rights  of lesbian,  gay, bisexual,  transgender,  intersex  and  queer 
(LGBTIQ) persons was developed and is pending adoption by the Council of Ministers. 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 LGBTIQ persons 
remains  insufficient.  The  legal  system  fails  to  recognise  the  social  and  economic  rights  of 
same-sex  couples,  including  the  right  to  family  life;  a  report  identifying  the  necessary 
legislative amendments is pending adoption by the Federation entity government since April 
2021.  The  social  inclusion  of  intersex  and  transgender  persons,  who  are  particularly 
marginalised,  has  yet  to  improve.  The  third  Sarajevo  Pride  march  took  place  peacefully  in 
August 2021; for the first time, all additional security costs for the assembly were covered by 
the  authorities.  The  Sarajevo  Open  Centre  documented  13  hate  incidents  against  LGBTIQ 
persons, including cases of domestic violence. 

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  are  yet  to  be  further  harmonised,  and  their  enforcement  is  uneven.  Bosnia  and 
Herzegovina  needs  to  ensure  the  right  to  immediate  access  to  a  lawyer  while  in  police 
detention. In order 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, in October 
2020  the  Republika  Srpska  entity  and  in  February  2021  the  Brčko  District  adopted  laws  to 
protect  the  right  to  trial  within  a  reasonable  time;  similar  laws  are  pending  adoption  at  the 

31 

 
 
State level and in the Federation entity. 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.  The  legal  framework  needs  to  be  completed    by  adopting  laws  in  the 
Federation entity and the Central Bosnia Canton. A needs assessment is required to identify 
and address the main gaps and ensure effective equal access to justice for all, irrespective of 
the place of residence. 

Respect for and protection of minorities and cultural rights 

The participation in political and public life of members of national minorities remains low. 
No  progress  was  made  towards  adopting  a  countrywide  strategy  on  national  minorities;  the 
Republika  Srpska  entity  adopted  a  2020-2024  strategy  in  October  2020.  The  Brčko  District 
adopted  a  law  on  the  rights  of  national  minorities  in  October  2020;  a  national  minorities’ 
council in the district is yet to be established. In February 2021, the Parliamentary Assembly 
improved    the  manner  and  procedure  of  electing  the  members  of  the  State-level  national 
minority council and prescribing the duration of their mandate. State- and entity-level national 
minorities’  councils  should  become  more  active  in  developing  practical,  political  and 
legislative  initiatives.  In  2020,  the  Ombudsman  received  three  complaints  concerning 
minority  rights  (compared  to  seven  in  2019  and  four  in  2018)  and  issued  one 
recommendation.  

The  Roma  (estimated  at  58,000)  are  the  most  vulnerable  and  disadvantaged  minority. 
Prejudices  and  anti-gypsyism  still  hinder  their  social  inclusion.  Roma  women  in  particular 
face multiple forms of discrimination. The action plans implementing the 2005 Roma strategy 
require appropriate funding from all levels of government and constant monitoring, including 
by  the  Roma  Advisory  Board  (Roma  Committee).  The  government  should  adopt  a 
comprehensive Roma action plan (encompassing housing, employment, education, healthcare, 
and  cross-cutting  issues).  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. While classes or schools are not segregated, 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; children outside education and elderly 
Roma face the biggest hurdles. The process of civil registration is well advanced. No step was 
taken  to  remove  outstanding  administrative  obstacles,  including  residence  requirements  for 
birth registration and for access to healthcare and education, and to recognise documents for 
children  born  abroad.  The  authorities  acted  during  the  pandemic  to  support  the  most 
vulnerable, however the grants allocated to support the social inclusion of the Roma were cut 
by half. 

Bosnia  and  Herzegovina  hosts  around  100,000  refugees  and  internally  displaced 
persons, following  the  conflict  in  the  1990s,  of  which  5,792 still  live  in  collective  centres 
and  alternative  accommodation.  Minority  returnees  are  among  the  most  common  targets  of 
ethnically  driven  hate  speech  and  hate  crimes.  The  2010  revised  strategy  for  the 
implementation  of  Annex  VII  to  the  Dayton  Peace  Agreements  has  not  yet  been  fully 
implemented. To complete the process of return and fulfil its obligations to allow closure of 
Annex  VII,  Bosnia  and  Herzegovina  should  ensure  full  cooperation  among  all  levels  of 
government  in  order  to  ensure  the  enjoyment  of  the  rights  of  returnees  and  harmonise  their 
access  to  services  and  resources.  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.  Arbitrary  limitations  to  the  human  rights  of  foreigners,  including  restrictions  of 

32 

 
 
movement  introduced during the pandemic, should be removed, and the respect  of the  non-
refoulement principle should be ensured. (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 
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.  Very  limited  progress  was  made  in  this  chapter,  in  particular  as  regards  the  Opinion 
key  priority  8  on  the  management  of  migration  and  asylum.  Last  year’s  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 uneven and unsatisfactory.  

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

  adopt  a  strategy  for  preventing  and  combating  terrorism  and  improve  capacities  by 
enhancing the exchange of criminal intelligence  and establishing programmes to prevent 
radicalisation and facilitate disengagement from violent extremism;  

  significantly  improve  the  management  of  migration  and  asylum  system,  and  ensure 
effective  coordination;  ensure  sufficient  and  suitable  accommodation  facilities,  fairly 
distributed among  all entities and cantons;  ensure access  to  asylum procedures;  increase 
border  surveillance,  including  human  resources  and  equipment;  improve  the  legal 
framework and capacities for voluntary and forced returns; 

  adopt the action plan on drugs.   

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 last year’s recommendations, which remain valid. The 
country has several strategies in place, notably on 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  non-harmonised  criminal  legislation,  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  are  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. While the authorities have taken some preparatory steps, 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:  

  develop  and  adopt  a  strategy  and  action  plan  for  the  fighting  against  organised  crime, 
based on a new serious and organized crime threat assessment (SOCTA) in line with the 
Europol methodology involving competent authorities from all levels of government; 

  strengthen  cooperation  among  law  enforcement  agencies,  notably  by  establishing 

33 

 
 
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 

  finalise the establishment of  a fully-functional 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 

There  are  multiple  law  enforcement  agencies  in  the  country,  out  of  which  15  have 
investigative  powers.  There  are  481  police  officers  per  100,000  inhabitants,  compared  with 
the EU average of 326 in 2017, according to Eurostat.   

There was no progress in harmonising police legislation at all levels, which hampers effective 
police  cooperation,  in  line  with  European  standards.  Failure  to  adhere  to  rule  of  law  and 
democratic  principles,  including  political  influence  remain  a  source  of  major  concern.  The 
professionalism  and  accountability  of  law  enforcement  agencies  needs  to  be  significantly 
improved.  No  progress  was  achieved  in  ensuring  appointments  and  promotions  based  on 
merit, including for independent board members.  

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, but they are 
rarely  used  (no  case  in  2020).  The  country  should  establish  or  designate  an  asset  recovery 
office  in  charge  of  the  identification  and  tracing  of  criminal  assets  in  order  to  enhance 
effectiveness  and  facilitate  operational  cooperation  with  EU  Member  States.  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. In 
May 2021 the Una-Sana canton adopted a new law on weapons, broadly in line with the EU 
acquis,  which  should  be  used  as  a  model  law  by  other  cantons  and  entities.  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,  including  on  marking  and 
deactivation standards, as in some cases regulations from former Yugoslavia still apply  

Legislation on anti-money laundering and counter terrorism financing need to be aligned 
with  the  4th  and  5th  EU  directives  on  anti-money  laundering  and  countering  financing  of 
terrorism  (AML/CFT).  An  updated  risk  assessment  needs  to  be  prepared,  followed  by  an 
action plan. 

The strategy for preventing and combating terrorism expired in December 2020. Its absence 
hampers  the  country’s  capacity  to  combat  terrorism  and  prevent  violent  extremism.  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 prepare a new serious and organised crime threat assessment (SOCTA), in line with 
Europol  methodology,  followed  by  strategic  and  operational  action  plans.  Bosnia  and 
Herzegovina  contributed  to  the  preparation  of  the  EU  SOCTA,  providing  data  on  12  crime 
areas  and  29  organised  crime  groups.  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 

34 

 
 
Srpska entity. In February 2021, Bosnia and Herzegovina adopted a 2021-2024 strategy and 
action plan for the control of small arms and light weapons, in line with the objectives and 
indicators  of the roadmap for a sustainable solution  to  arms control in  the Western Balkans 
(WB SALW Control Roadmap).  

Implementation and enforcement capacity 

In 2020, there were 52 investigations into organised crime with 359 suspects, 22 indictments 
with  103  accused,  7  convictions  with  54  convicted,  and  23  acquittals  (compared  to  55 
investigations  against 417 suspects,  25 indictments  with  134 accused and 26 sentences with 
91  convicted  in  2019).  In  4  cases,  plea  bargain  agreements  were  concluded  with  27 
individuals. As regards cybercrime, in 2020 there were 125 orders to conduct investigations, 
including for online child sexual abuse, against 129 individuals, with 41 indictments against 
45  individuals.  The  number  of  convictions  in  2020  is  still  very  low  (26  convictions  for  31 
individuals)  with  more  than  50%  being  suspended  sentences  (14  convictions  for  18 
individuals).  

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 timely and systematic 
basis and, where those were conducted, results have been insignificant. The guidelines on the 
mandatory use of financial investigations for corruption, organised and economic crime of the 
state-level Prosecutor’s Office have lead to some results. There was an increase of the use of 
financial  investigations  ordered/led  by  the  Prosecutor’s  Office  in  2020  (13  investigations 
against 45 persons), compared to 2019 (8 investigations against 28 persons). Authorities need 
to  adopt  and  implement  standard  operating  procedures  on  the  conduct  of  financial 
investigations.  In  one  case  of  high  level  corruption  with  public  resonance,  SIPA  refused  to 
perform financial investigation as ordered by Prosecution Office, claiming that there were no 
basis  to  believe  that  money  laundering  was  committed  even  after  an  indictment  with  such 
qualification was confirmed by the Court. 

The Financial Investigation Unit within SIPA needs to become more efficient in fulfilling its 
legal responsibilities. In 2020, 10 reports against 26 natural persons and 10 legal entities, and 
5 additions to the reports against 13 persons, were sent by SIPA to the competent prosecutors’ 
offices  on the suspicion  of committing money laundering in  the  amount of  EUR 6,587,977. 
Cooperation and exchange of crime-related data between domestic law enforcement agencies 
and  with  other  countries  of  the  region  need  to  be  improved.  In  2020,  there  was  an  overall 
increase  in  the  number  of  investigations  and  confirmed  indictments  of  money  laundering, 
with  134investigations  of  money  laundering  (53  in  2019)    involving  144  individuals,    121 
confirmed  indictments  (37  in  2019)  against  125  suspects,  and  120    convictions  against  123  
defendants. It is however concerning that only 5 prison sentences were rendered, while having 
1 conditional sentence and 114 fine sentences.  

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  and 
used as a tool to improve the effectiveness of management. The value of asset confiscations in 
2020  amounted  to  over  EUR  11.5  million  for  87  cases  in  first  instance  and  14  final 

35 

 
 
convictions, compared to EUR 11.8 million in 2019.  

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

Arangements  for practical  cooperation between prosecutors’ offices  and the police  are in 
place,  but  require  structural  improvements  to  guarantee  a  more  effective  judicial  follow-up, 
prevent procedural delays, and replicate good practices. Weaknesses in cooperation have been 
notably exposed in the investigation on alleged fraud related to the procurement of COVID-
19 medical equipment (ventilators). The poor cooperation between SIPA and the State-level 
prosecutor’s  office  is  a  cause  of  major  concern  given  its  serious  impact  on  investigations, 
especially  in  cases  of  high-level  corruption. Leaks  of  information  on  ongoing  investigations 
have also been reported.   

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. 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.  The  establishment  of  a  new  automated  fingerprint  information 
system (AFIS) is long overdue.  While required by law, there is no effective, coordinated and 
consistent countrywide approach on using undercover investigators.  

The  March  2017  agreement  on  operational  and  strategic  cooperation  with  Europol  remains 
unimplemented.  In  January  2021  the  Ministry  of  Security  issued  an  instruction  on  the 
establishment  of  a  contact  point  for  Europol.  A  coordinator  was  appointed  in  July  2021.  A 
venue  in  the  Ministry  of  Security  has  been  allocated  and  needs    to  be  equipped.  The 
deployment of the liaison officer to the Hague is also delayed. Exchange of information with 
Europol  is  still  taking  place  through  a  unit  within  the  Directorate  for  Police  Cooperation, 
whose  mandate  has  expired,  and  with  which  the  Republika  Srpska  entity  has  suspended 
operational  cooperation.  Putting  into  full  operation  the  Europol  contact  point  will  allow  to 
resuming  direct  cooperation  between  Europol  and  all  police  bodies  in  the  country.  The 
number of messages exchanged through the SIENA system decreased during 2020, compared 
to  2019;  the roll-out  of  SIENA connections  across  the country  should continue. Bosnia and 
Herzegovina has no access to the SIENA database on counter-terrorism. In 2020, the number 
of new cases opened bases of cooperation with Europol decreased by 13% compared to 2019. 
Bosnia  and  Herzegovina’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 2020, Bosnia and Herzegovina participated in the Joint Action Days  under the EMPACT 
(European  Multidisciplinary  Platform  against  Criminal  Threats)  against  cybercrime,  illegal 
arms  trafficking,  migrant  smuggling  and  drug  trafficking;  participation  intensified  in  the 
beginning  of  2021.  The  country  should  establish  an  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. 
Bosnia  and  Herzegovina  has  not  yet  signed  the  agreement  between  the  parties  to  the  police 
cooperation  convention  for  Southeast  Europe  on  the  automated  exchange  of  DNA  data, 
dactyloscopic  data  and  vehicle  registration  data  and  its  implementing  agreement.  In  2020, 
Bosnia and Herzegovina participated in 2 cases at Eurojust related to organised crime, one of 
which involved participation in a joint investigation team (JIT). The country also participated 
in a JIT related to trafficking in human beings and money laundering. 

36 

 
 
he legislation on trafficking in human beings needs to be further aligned with the EU acquis, 
notably  for  sanctions.  In  2020,  70  potential  victims  of  trafficking  in  human  beings  were 
detected,  and  34  perpetrators  convicted  (61  and  30  in  2019).  38  investigation  orders  were 
issued  against  43  individuals.  Bosnia  and  Herzegovina  still  lacks  a  referral  mechanism  for 
victims of trafficking in human beings. To strengthen inter-institutional cooperation, regional 
monitoring teams and a network of specialized prosecutors and investigators were established, 
with  limited  participation  of  representatives  of  the  Republika  Srpska  entity.  The  authorities 
should  improve  detection  and  identification  of  both  victims  and  perpetrators  by  using 
appropriate  risk  analysis  and  vulnerability  assessment  methods.  The  country  still  needs  an 
appropriate  compensation  scheme  for  victims  and  mechanisms  for  confiscation  of  illegally 
gained  assets  of  perpetrators.  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.  

Bosnia and Herzegovina does not have a comprehensive legislative nor strategic framework 
on  cybersecurity  (a  law  on  information  security  is  in  place  only  in  the  Republika  Srpska 
entity).  The  country  lacks  an  institutional  set-up  for  cybersecurity.  A  Computer  Security 
Incident Response Team (CSIRT) is operational only in the Republika Srpska entity. 

As regards arms control, a total of 1,316 pieces of weapons, 20.343 pieces of ammunition, 18 
pieces  of  mine-explosive  materials,  and  13,75  kg  of  explosives  were  seized  in  2020,  while 
1,864  pieces  of  weapons  and  weapons  parts  were  destroyed  (compared  to  3,479  weapon 
pieces destroyed in 2019, 2,500 in 2018, and 10,800 in 2017). In 2020, there were 285 orders 
to conduct investigations into weapons-related criminal offences (illegal production, illegal, 
possesion,  illegal  trafficking) with  315 suspects, 225 indictments with  245 accused  and 248 
convictions  (21  prison  sentences,  37  fine  sentences  and  190  suspended  sentences)  with  270 
convicted. Bosnia and Herzegovina still needs to establish a firearms focal point. The criminal 
codes are not yet harmonized with the UN Firearms Protocol. Bosnia and Herzegovina stands 
out for the relatively high number of voluntarily surrendered firearms. 

Cooperation  between  Bosnia  and  Herzegovina  and  the  EU  Agency  for  Law  Enforcement 
Training  (CEPOL)  is  well  established  and  based  on  a  working  arrangement.  A  dedicated 
contact  point  is  in  place.  Bosnia  and  Herzegovina  has  full  access  to  the  CEPOL  Exchange 
Programme as well as to the free of charge electronic learning system of CEPOL. 

Cooperation in the field of drugs  

Institutional set-up and legal alignment 

The legal framework is only partly in line with the EU acquis, notably on minimum rules on 
drug-related criminal offences and sanctions. The legislation 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  designate  by  law  a  correspondent  for  cooperation  with  the 
European  Monitoring  Centre  for  Drugs  and  Drug  Addiction  (EMCDDA).  An  operational 
national  drug  observatory  (NDO)  remains  to  be  established  to  provide  factual,  objective, 
reliable  and  comparable  information  concerning  drugs  and  drug  addiction  and  their 
consequences. Preparatory steps were taken to establish an early warning system to liaise with 
the  EMCDDA  on  new  psychoactive  substances  and  new  trends,  but  this  is  not  fully 
operational  yet.  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 and a rulebook on the use of cannabis for medical purposes. 

Bosnia  and  Herzegovina  has  a  2018-2023  strategy  on  supervision  over  narcotic  drugs, 

37 

 
 
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. In 
September 2020, the Council of Ministers re-activated a Commission for suppression of the 
abuse of narcotic drugs, composed of members of all entities at political level.  

Implementation and enforcement capacity 

In  2020  there  were  2613  reported  crimes  related  to  drug  abuse,  2166  orders  to  conduct  an 
investigation, 5 judgments rejecting charges, 1245 filed indictments, 19 indictments with plea 
agreement,  730 indictments  with  sentencing  warrant,  30 acquittals,  103 fine convictions, 15 
convictions with reprimand, 1,208 convictions with suspended sentence and 453 convictions 
with prison sentence. 

Bosnia  and  Herzegovina  remains  a  country  of  transit  and  a  final  destination  for  drugs.  The 
Council of Ministers has not updated the list of criminalised psychoactive substances, in line 
with the recommendations of the Commission for the suppression of abuse of narcotic drugs 
since  2011,  with  the  consequence  that  a  number  of  psychoactive  substances  may  circulate 
freely.  A  more  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.  Overall,  the  data  collection,  analysis  and 
reporting on drugs  remains slow and the quality uneven. The necessary funding to maintain 
the ongoing data collection for all drug related indicators needs to be secured. The fact that 
most  monitoring  systems  are  not  coordinated  nationally  but  remain  separate  for  each  entity 
remains an obstacle to data collection. A Commission for drugs destruction is in place but the 
destruction of drugs takes place very rarely. The lack of secure storage prior to destruction is a 
matter 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 EU acquis (4th and 
5th AML/CTF directives) needs to be adopted. Laws on the protection of critical infrastructure 
(only  present  so  far  in  the  Republika  Srpska  entity)  should  be  developed  and  adopted  at  all 
levels of government.   

The  strategy  and  a  framework  action  plan  for  the  prevention  of  and  fight  against  terrorism 
have expired. A follow-up strategy should be adopted in  line with  EU policy, especially on 
preventing and countering violent extremism, covering all forms of radicalisation and violent 
extremism  (political,  ethno-nationalist  and  religious)  and  addressing  them  also  in  field 
activities on preventing/countering violent extremism (P/CVE).  

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.  The  policy 
dialogue  on  counter-terrorism  between  the  EU  and  Bosnia  and  Herzegovina  takes  place 
regularly. In February 2021 the country submitted its second report on the implementation of 
the  2019  arrangement  to  the  2018  joint  action  plan  on  counter-terrorism  for  the  Western 
Balkans. The report shows a number of shortcomings and limited progress. The Ministry of 
Security needs to appoint a contact point for  the implementation of this arrangement, which 
needs to continue. 

38 

 
 
Implementation and enforcement capacity  

Shortcomings still exist regarding the implementation of counter-terrorism laws as well as the 
structured  and  efficient  cooperation  between  security  agencies  at  all  levels  of  government. 
The  high-security  State  prison  is  operational  since  December  2020,  and  is  now  nearing  full 
capacity.  Very  limited  assistance  is  available,  in  prison  or  upon  release,  for  disengagement 
from violent extremism. Significant further efforts are needed to prepare inmates for release, 
including former foreign terrorist fighters. Since 2015, there have been no reports of citizens 
of Bosnia and Herzegovina departing for conflict zones. Around 140 citizens of Bosnia and 
Herzegovina, including women and children, are deemed to remain in Syria and Iraq. In the 
reporting  period,  Bosnia  and  Herzegovina  has  not  repatriated  any  of  them.  A  reintegration 
programme  for  former  foreign  fighters  and  their  family  members  continues  to  be 
implemented.  Comprehensive  approaches  are  required  to  address  challenges  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. 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 its work. 

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.  Coordination, 
cooperation and intelligence sharing between security agencies need to be improved, 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 put into practice with the long-overdue establishment of an operational contact point. 

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). 

Legal and irregular migration  

Institutional set-up and legal alignment 

The  Law  on  Foreigners  needs  to  be  further  aligned  with  the  EU  acquis,  notably  as  regards 
access to rights for vulnerable migrants. Amendments adopted in May 2021 risk weakening 
the protection from refoulement. A new strategy and action plan  on migration and asylum 
2021-2025, which is under development, needs to be adopted urgently. 

Bosnia and Herzegovina has concluded readmission agreements with the EU and Schengen 
associated  countries,  all  the  Western  Balkan  countries,  Turkey,  Russia,  Moldova  and 
Pakistan,  as  well  as  implementation  protocols  with  16  EU  Member  States.  Their 
implementation  is  overall  satisfactory.  The  readmission  agreement  with  Pakistan,  signed  in 
November  2020,  entered  into  force  in  July  2021.  Bosnia  and  Herzegovina  has  proposed  to 
initiate negotiations on readmission agreements with Bangladesh, Afghanistan, Morocco and 
Egypt.  

Implementation and enforcement capacity 

In  2020,  the  numbers  of  persons  irregularly  entering  Bosnia  and  Herzegovina  significantly 
decreased.  In  2020,  the  authorities  detected  16,183  arrivals,  compared  to  29,302  in  2019,  a 

39 

 
 
decrease    primarily  due  to  the  impact  of  the  pandemic  on  global  mobility.  Overall,  the  top 
three declared countries of origin were Afghanistan, Pakistan and Bangladesh. In June 2021, 
approximately 6,000 migrants and asylum seekers were present in the country. Some 3,000 of 
them were sheltered in 5 EU-funded  temporary reception centres  and one emergency tent 
camp in the Una-Sana and Sarajevo cantons. However, facilities remain insufficient to ensure 
shelter  and  protection  to  those  in  need.  The  authorities  are  not  hosting  evacuees  from 
Afghanistan. 

The Ministry of Security has stepped up efforts to improve migration management. However, 
its  competent  agencies  (Sector  for  Immigration  and  Readmission;  Service  for  Foreigners’ 
Affairs)  remain  significantly  understaffed  and  partly  underequipped.  Despite  constant  EU 
advocacy,  the  authorities  at  all  levels  of  government  have  failed  to  coordinate  their  efforts, 
allocate suitable premises for reception centres and share the responsibility in hosting asylum 
seekers and migrants across the entire country. On 30 September 2020, the Una-Sana cantonal 
government  unlawfully  closed  the  EU-funded  Bira  temporary  reception  centre  in  Bihać, 
further  stretching  the  already  limited  reception  capacities.  The  December  2020  decisions  of 
the Council of Ministers to reopen the centre were not implemented.  

In  April  2020,  an  emergency  tent  camp  in  Lipa,  near  Bihać,  was  opened  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. 
Due to the failure of the authorities to put in place the necessary infrastructure to winterise the 
Lipa facility, the site had to close. The camp was subsequently damaged by fire. As a result, 
over  900  refugees  and  migrants,  including  minors,  were  left  without  access  to  shelter  and 
basic services in winter conditions. Alternative available locations as well as the expansion of 
remaining accommodation centres were repeatedly vetoed by local authorities. The failure to 
act  directly  contributed  to  a  humanitarian  and  security  crisis.  Following  extensive  EU 
engagement  and  support,  an  emergency  tent  camp  was  established  in  Lipa  and  living 
conditions  gradually  improved,  although  they  remained  below  standards.  The  authorities 
subsequently  decided  to  establish  a  permanent  multi-purpose  reception  centre  at  Lipa  for 
1,500  asylum  seekers,  with  EU  funding  and  the  support  of  IOM  and  other  partners.  The 
centre,  which  is  managed  by  the  Service  for  Foreigners’  Affairs,  should  provide  adequate 
living conditions and access to rights for asylum seekers and migrants, until a final decision is 
taken  on  asylum,  other  protection  status  or  return.  Bosnia  and  Herzegovina  must  reinforce 
capacity  and  take  all  necessary  measures  to  effectively  manage  the  centre,  fully  respecting 
fundamental  rights, domestic legislation and international  standards, including  for screening 
and registration, the protection of vulnerable persons and detention.   

Arbitrary  restrictions  on  the  maximum  number  of  migrants  in  the  canton  imposed  by  the 
government  of  Una-Sana  canton  in  2019  remain  in  place.  Cantonal  authorities  repeatedly 
attempted  to  prevent  the  arrival  of  migrants  and  refugees  and  imposed  discriminatory  and 
disproportionate restrictions of movement, leading to significant protection risks, in particular 
for the most vulnerable ones. The Republika Srpska entity authorities also continued to refuse 
access  to  migrants  and  to  transport  them  to  the  inter-entity  boundary  line.  Restrictions  also 
affected  the  work  of  humanitarian  partners  and  hindered  their  crucial  access  to  vulnerable 
persons. The Ministry of Security has taken steps to improve access coordination.  

Crisis  response during the COVID-19 outbreak  was overall satisfactory, preventing  a larger 
spread  and  more  severe  consequences  for  the  migrant  population.  Humanitarian  partners 
continued to provide key assistance and to monitor that international standards are respected.  

There  has  been  some  progress  in  the  provision  of  essential  services,  in  cooperation  with 
humanitarian  partners,  to  refugees  and  migrants.  In  2020,  authorities  demonstrated  limited 

40 

 
 
progress  in  providing  vulnerable  persons,  especially  minors,  with  protection  and  access  to 
rights. Bosnia and Herzegovina must step up efforts to improve the protection of their human 
rights. The most vulnerable persons, such as unaccompanied and separated children, pregnant 
women, single parents, persons with disabilities, sick persons and victims of violence, need to 
be identified and referred for adequate assistance 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.  The  authorities  opened  an 
additional  shelter  for  unaccompanied  minors  in  Duje  with  adequate  accommodation, 
protection  and  living  conditions,  but  capacities  do  not  suffice  to  address  all  the  needs. 
Assigning  legal  guardianship  and  access  to  education  for  all  unaccompanied  minors  in  the 
entire  country  remains  a  challenge.  In  2020,  the  authorities  registered  351  unaccompanied 
minors in the country. 

Migration  and  asylum  management  remains  inadequate  and  shows  significant  institutional 
and coordination weaknesses. Most of the responsibilities have fallen upon the Una-Sana and 
Sarajevo cantons. The lack of political  responsibility and negative rhetoric on the migration 
situation negatively affect the authorities’ ability to provide necessary assistance. Bosnia and 
Herzegovina should take over full responsibility for the management of reception centres and 
adopt  contingency  plans  to  cope  with  possible  increases.  There  should  be  fairer  burden 
sharing  among  all  entities  and  cantons  and  with  the  full  ownership  of  State  authorities  in 
migration  management.  The  growing  resentment  towards  the  presence  of  migrants  requires 
active  measures  to  address  concerns  of  local  communities.  The  Ministry  of  Security  has 
increased  efforts  to  improve  coordination  among  the  State  and  local  level  and  take  over 
responsibility in managing migration, which should be supported by all levels of government.  

On  voluntary  and  forced  return,  the  return  procedure  for  persons  who  are  not  in  need  of 
international  protection  requires  improvements,  also  as  it  is  mostly  based  on  donors’ 
assistance.  Both  the  legal  framework  and  its  implementation  require  improvements.  There 
was  an  improvement  in  the  mechanisms  for  collecting,  sharing  and  analysing  statistics  on 
migration  in  the  Information  System  for  Migration.  However,  biometric  data  collection 
requires  further  improvements.  Violent  collective  expulsion  (pushbacks)  of  migrants  and 
asylum seekers back into Bosnia and Herzegovina continued to be reported in 2020 and 2021.  

Cooperation  needs  to  be  improved  on  identification  and  return  procedures.  Bosnia  and 
Herzegovina  should  increase  efforts  to  establish  readmission  agreements  with  countries  of 
origin  and  further  improve  the  mechanisms  for  assisted  voluntary  return  and  reintegration. 
Ensuring  return  and  readmission  remains  challenging,  as  neighbouring  countries  suspended 
accelerated  readmission  procedures  due  to  the  pandemic.  In  2020,  195  foreigners  were 
returned  to  neighbouring  countries  following  readmission  agreements  (139  to  Serbia,  53  to 
Montenegro  and  3  to  Croatia),  compared  to  329  in  2019.  The  number  of  third-country 
nationals returned to Bosnia and Herzegovina in 2020 under various readmission agreements 
amounted to 686, compared to 783 in 2019 and 652 in 2018. In 2020, 232 foreigners returned 
to their countries of origin via assisted voluntary return with support from the EU and IOM, 
compared to 837 in 2019. In 2020, authorities did not carry out any forced returns and did not 
repatriate any potential victims of human trafficking.  

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. In 
2020, the immigration centre held a total of 515 persons, including 17 accompanied minors. 

Asylum  

Institutional set-up and legal alignment 

41 

 
 
The legislation on asylum is broadly in line with international standards and the EU  acquis. 
Further  alignment  is  needed  in  particular  in  relation  to  procedural  safeguards  to  ensure 
standardised procedures  for the examiniation of applications for international protection and 
systematic  access  to  procedural  guarantees,  on  interview  techniques,  evidence  assessment, 
guarantees for vulnerable groups and unaccompanied minors, access to rights and legal aid, as 
well  as  on  the  definition  of  asylum-seekers  and  refugees.  Inter-agency  cooperation  and 
coordination needs to be further improved, in particular in the exchange of biometric data.   

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  5  employees  working  on  the  registration  and  assessment  of 
asylum  claims  for  the  entire  country,  which  is  highly  insufficient  to  ensure  access  to  the 
asylum procedure. 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  fully  taken  over  the 
legal  responsibility  for  all  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 authorities should ensure access to information, which 
is so far largely provided by international organisations and NGOs. The system for collecting 
and storing biometric identifiers requires additional improvements, especially for inter-agency 
information exchange. In 2020, out of 15,162 persons expressing intention to claim asylum in 
Bosnia  and  Herzegovina,  244  persons  managed  to  apply  for  international  protection,  while 
625  asylum  requests  were  pending  from  2019.  Of  them,  one  person  was  granted  refugee 
status, 31 persons were granted subsidiary protection, 54 individual applications were rejected 
on merit, and applications of 546 persons  were  closed as the  applicants  left  or attempted to 
leave  the  country  or  failed  to  show  up  for  an  interview.  By  end  August  2021,  91  persons  
managed  to  complete  asylum  application  in  Bosnia  and  Herzegovina  in  the  new  year, 
compared  to  182  in  the  same  period  in  2019,  over  a  total  of  10,279  persons  expressing 
intention to claim asylum. 

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. In June 2021, there were on average 12 asylum seekers in the centre. 

In  December  2020,  Bosnia  and  Herzegovina  adopted  a  2020-2021  roadmap  for  cooperation 
with  EASO  on  strengthening  the  asylum  and  reception  systems  in  line  with  the  Common 
European  Asylum  System  (CEAS)  and  EU  standards.  Cooperation  with  EASO  should  be 
further strengthened, including via implementation of the joint roadmap.  

Visa policy  

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

42 

 
 
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 requires 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. 8,145 citizens of 
Bosnia and Herzegovina were refused entry in the Schengen+ area in 2020 (up from 4,270 in 
2019),  while  3,670  nationals  of  Bosnia  and  Herzegovina  were  found  irregularly  in  the  EU 
(4,290 in 2019). First time asylum applications also further decreased to 1,040 in 2020 (1,570 
in 2019); 485 were lodged in the first five months of 2021, 52% more than in the same period 
of  2020.  The  asylum  recognition  rate  in  the  EU  further  decreased  to  2.6%  (5.1%  in  2019), 
excluding for humanitarian protection. Bosnia and Herzegovina continued  good cooperation 
on  readmission  of  its  own  and  third  country  nationals  on  the  basis  of  the  readmission 
agreement with the EU and implementing protocols. 935 citizens of the country returned from 
EU Member States in 2020, out of 2,710 who received an order to leave (a return rate of 34%, 
compared  to  40%  in  2019).  Attention  should  continue  for  the  successful  reintegration  of 
returnees.  The  Commission’s  fourth  report  under  the  visa  suspension  mechanism  of  August 
2021  concluded  that  Bosnia  and  Herzegovina  continues  to  meet  the  visa  liberalisation 
benchmarks.7  

Schengen and external borders  

Institutional set-up and legal alignment 

The  state-level  Border  Police  are  responsible  for  managing  the  state  border.  The  legal 
framework  for  border  control  is  partly  aligned  with  the  EU/Schengen  acquis  and  is 
implemented  smoothly.  Recently  adopted  legislation  on  border  crossing  control  had  limited 
impact, in particular in the border surveillance segment and is under revision.  

The integrated border  management (IBM) strategy and its action plan for 2019-2023, are 
broadly aligned 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.  Risk 
analysis was improved in the process of exchanging data.  

The training process was improved for further alignment with the common core curriculum of 
the  European  Border  and  Coast  Guard  (EBCG).  The  Border  Police,  despite  its  limited 
capacity  and  with  support  of  other  law  enforcement  agencies,  demonstrated  adequate 
operational flexibility in border management operations. 

Implementation and enforcement capacity 

Following  the  increased  influx  of  refugees  and  migrants  since  2018,  the  authorities  have 
redeployed available border guards. However, the response remains inadequate despite inter-
agency  redeployments  in  staff  and  support.  The  Border  Police  remains  understaffed. 

7 COM(2021)602 final and SWD(2021)206 final 

43 

 
 
 
                                                           
Specialised training is  regularly provided to  improve the quality of border checks  and other 
operations in the field but further improvements are needed.   

The  new  IBM  strategy  for  2019-2023  is  in  place.  Its  implementation  should  be  further 
improved,  in  particular  in  the  area  of  border  surveillance,  inter-agency  cooperation  and 
capacity  management.  Activities  on  establishing  the  Advanced  Passenger  Information  / 
Passenger Name Record (API/PNR) systems are in early stages.  

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. It demonstrated satisfactory risk analysis capabilities. Data 
exchange  with  neighbouring  countries  improved,  as  well  as  data  exchange  between  JRAC 
participating agencies. Overall risk analysis capacities require adequate training of additional 
specialized officers in the field. Further improvements on infrastructure and equipment are 
needed at border crossing points.  Border surveillance resources remain limited and require 
additional  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 at border crossing points requires further improvement, especially 
in  the  fight  against  human  smuggling  and  trafficking,  migration  response,  and  migration 
contingency  planning.  The  central  investigation  office  of  the  Border  Police  has  executive 
powers  across  the  country.  Investigation  capacities  improved.  The  combined  efforts  of  the 
Border Police  with  other agencies in  fighting human smuggling  resulted  in  higher detection 
rates.  In 2020, the Border Police detected 7 cases of human smuggling and raised 6 charges 
against  12  suspected  perpetrators.  Cooperation  with  the  Europol’s  European  Migrant 
Smuggling  Centre  is  limited  in  data  exchange  and  participation  of  agencies  of  Bosnia  and 
Herzegovina. 

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, that would allow 
Frontex  to  deploy its  standing  corps  at  the  country’  border  with  the  EU,  to  carry  out 
operational activities together with the Border Police. Bosnia and Herzegovina participates in 
the Western Balkan Risk Analysis Network (WB-RAN) led by Frontex.  The country should 
sign border agreements with Croatia and Serbia and demarcate the border with Montenegro. 
The  joint  police  cooperation  centre  in  Trebinje  improved  information  exchange,  despite 
limited  capacity.  The  local  border  traffic  agreements  with  neighbouring  countries  are 
satisfactorily implemented. Joint patrols with neighbouring countries are suspended due to the 
pandemic, with limited activities at joint locations.  

Judicial cooperation in civil and criminal matters  

The  legislative  framework  for  mutual  legal  assistance  in  civil  and  criminal  matters  is  not 
always  applied effectively. There has been an overall decrease in  the number of request  for 
judicial cooperation in 2020 due to the pandemic. In 2020, the Ministry of Justice recorded a 
total of 2,698 requests for judicial cooperation in civil matters, 70% of them originating from 
EU Member States (primarily Croatia, Slovenia, Austria, Germany and Italy). In 2020, there 
were  2,090  requests  for  judicial  cooperation  in  criminal  matters,  38%  originating  from  EU 
Members  States (primarily Croatia, Slovenia,  Austria, Germany  and  Italy). The statistics on 
enforcement of foreign judgments in criminal matters (transfer of convicted persons and take-
over of enforcement of criminal sentences) have remained stable, with 61 requests in 2020 out 

44 

 
 
of  which  57  were  granted,  compared  to  52  in  2019.  17  requests  were  originating  from  EU 
Member States and the average completion rate remains 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.  

osnia  and  Herzegovina  does  not  have  a  cooperation  agreement  with  Eurojust;  it  appointed 
four contact points for relations with Eurojust. In 2020, the country was involved in 14 cases 
at  Eurojust, a significant increase compared to  6 in  2019. With the new Eurojust regulation 
becoming  applicable  in  December  2019,  Bosnia  and  Herzegovina  needs  to  relaunch 
negotiations  with  the  Commission  for  an  international  agreement  on  cooperation  with 
Eurojust.  As  a  prerequisite,  Bosnia  and  Herzegovina  needs  to  adopt  a  new  law  on  personal 
data  protection  in  line  with  the  EU  acquis  and  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. Bosnia and Herzegovina also needs to establish cooperation with 
the European Public Prosecutor’s Office (EPPO), which started its activities in June 2021. 

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

2.3. ECONOMIC CRITERIA  

45 

 
 
 
 
'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) 
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.' 

2.3.1. 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 country took measures to counter the negative effects of the 
COVID-19  pandemic  on  the  economy  and  the  labour  market.  The  Central  Bank  undertook 
significant measures to improve its analytical capacities. Some steps were taken to strengthen 
the financial sector’s shock resilience. However, there have been no significant measures to 
improve  the  functioning  of  the  product  markets.  Cooperation  and  coordination  among  the 
country’s stakeholders has further deteriorated. Resistance from the  Republika Srpska entity 
against  EU  acquis-related  country-wide  reforms  has  further  slowed  down  the  country’s 
compliance  with  the  EU  accession  criteria.  As  a  result,  the  country’s  institutional  set-up  as 
well  as  its  internal  market  remains  fragmented.  No  improvement  has  been  reached  with 
respect  to  the  rule  of  law  and  the  functioning  of  country-wide  supervisory  and  regulatory 
institutions.  This  continues  to  impede  the  country’s  business  environment.  The  quality  of 
public  spending  has  not  improved,  while  the  public  sector  has  remained  inefficient  and 
oversized. The implementation of last year’s country report recommendations for improving 
compliance with the functioning market criteria has been limited.  

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

  Improve the business environment by streamlining, simplifying business registration and 
licencing  procedures  and  strengthen  the  country’s  internal  market  by  harmonising  and 
mutually recognising licences and certificates between entities; 

  In  order  to  improve  the  efficiency  of  tax  collection,  ensure  an  effective  exchange  of 
taxpayer information between the country’s tax authorities, and in particular create in line 
with  the  EU  acquis  a  central  (i.e.  country-wide)  registry  of  bank  accounts  of  private 
individuals; 

  Strengthen  country-wide  regulatory  and  supervisory  institutions,  reinforce  country-wide 
analytical and policy-formulating capacities and publish complete and consistent country-
wide data in a timely manner, in particular in the area of public finances;  

  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 governance of publicly owned enterprises to reduce 
their burden on tax-payers;  

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

46 

 
 
 
earners.  

Economic governance  

in 

implementing  country-wide  reforms 

Economic  policy  suffered  from  a  further  deteriorating  cooperation  at  entity  level  and 
line  EU-accession 
disagreements  on 
requirements.  In  order  to  mitigate  the  negative  effects  of  the  COVID-19  pandemic,  the 
authorities  supported  the  health  sector,  enterprises  and  households,  by  financing  medical 
equipment,  providing  loan  guarantees  and  co-financing  social  security  contributions  and 
wages.  Furthermore,  the  country’s  two  banking  agencies  have  adopted  and  extended  loan 
repayment  moratoria  for  restructuring  credit  arrangements  for  individuals  and  legal  entities 
that  were  severely  affected  by  the  COVID-19  pandemic.  However,  allocated  funds  (about 
2.5% of GDP for financial assistance and another 0.5% of GDP for loan guarantees) and the 
efficiency  of  spending  have  been  relatively  low.  Coordination  of  the  authorities  as  well  as 
consultations with the social partners in the context of COVID-19 were limited. Furthermore, 
the  implementation  of  adopted  measures  has  been  inadequate,  in  particular  in  view  of 
protecting the most vulnerable parts of the population. 

Political  disagreements  have  further  aggravated,  leading  to  a  further  deterioration  of 
cooperation  between  the  various  levels  of  government  and  institutions.  The  country’s  IMF 
arrangement  from  2016  expired  (the  country  withdrew  less  than  a  third  of  the  total  amount 
available) and after lengthy negotiations the authorities failed to reach an agreement with the 
IMF on a new loan arrangement. Implementation of the policy guidance jointly adopted at the 
Economic and Financial Dialogue with the EU in May 2020 has been partial, with financial 
sector-related measures having the highest degree of implementation. The Economic Reform 
Programme  (ERP)  continued  to  demonstrate  significant  weaknesses  in  cooperation  and 
country-wide policy formulation as well in data availability and quality. 

Macroeconomic stability  

The  COVID-19  pandemic  led  to  a  marked  drop  in  economic  activity  in  2020.  While 
during  2015-2019  a  relatively  favourable  external  environment  helped  to  achieve  average 
economic growth of 3.5%, economic output 
dropped  by  about  4.5%  in  2020.  On  a 
quarter-to-quarter  base, 
the  seasonally-
adjusted  output  dropped  by  10.4%  in  the 
second quarter, but recovered by 3.9% and 
2.9% in the third and fourth quarters. In the 
first  quarter  of  2021,  a  moderate  year-on-
year  recovery  of  1.5%  set  in,  largely 
benefitting 
export 
from 
in  2020 
performance.  The  downturn 
predominantly  reflected 
impact  of 
the 
travel restrictions and lockdown measures on private consumption and exports, in particular 
of  tourism  services.  Investment  also  dropped  markedly  as  a  result  of  the  pandemic  from  an 
already  relatively low level,  which reflected a poor business  environment  and high political 
uncertainties.  The  drop  in  domestic  demand  triggered  a  severe  contraction  of  merchandise 
imports,  which  turned  the  contribution  of  net  exports  to  growth  into  positive  territory.  Per 
capita  GDP  stood  at  some  33%  of  the  EU-27  average  in  2020,  only  slightly  higher  than  in 
previous years. 

strong 

a 

47 

-8-6-4-20246201520162017201820192020Graph 1: Bosnia and Herzegovina -Real GDP growth and contributionsPriv. cons.Gov. cons.GFCFStocksNet exportsreal GDP growthSource: Macrobond, own calculations% y-o-y 
 
largely  financed  by 

The  current  account  deficit  remained  stable  in  2020,  as  weaker  exports  were  largely 
compensated by lower imports due to weak domestic demand.  After a slight drop in the 
current  account  deficit to 4.1% of GDP on average during the last five pre-pandemic  years, 
the  deficit  remained  at  a  similar  level  (3.2%  of  GDP)  in  2020  as  in  the  year  before,  and 
improved  in  the  first  quarter  of  2021  to  a  deficit  of  1.4%  of  GDP,  mainly  benefitting  from 
stronger exports. The trade deficit continued 
to  be 
inflows  of 
transfers,  such  as  remittances.  Net  foreign 
direct 
remarkably 
stable at a low level, accounting for 1.9% of 
GDP  in  2020  and  increasing  to  2.9%  of 
GDP  in  the  first  quarter  of  2021,  mainly 
consisting  of  reinvested  earnings.  Official 
net  foreign  exchange  reserves  rose  on  the 
back of foreign currency inflows in the form 
of  emergency  assistance  as  well  as  due  to 
declining imports, reflecting weak domestic 
demand. As a result, reserves reached a comfortable level of about 10 months of imports at 
the  end  of  2020,  compared  to  7.8  months  a  year  before.  Short-term  debt  accounts  for  only 
0.1%  of  foreign  exchange  reserves.  The  coverage  of  imports  of  goods  and  services  through 
exports  improved  during  2015-2019,  reaching  73%  in  2019,  largely  thanks  to  a  favourable 
export  performance  in  this  period.  In  2020,  the  coverage  dropped  back  to  70%,  as  the 
reduction in exports was more significant than the drop in imports. 

investment 

remained 

The  monetary  policy  regime  has  supported  stability.  The  currency  board  arrangement 
(CBA)  with  the  euro  as  the  anchor  currency  was  maintained.  This  approach  has  served  the 
economy well so far. The fact that the CBA remained stable and did not get under stress even 
during the pandemic demonstrates the public confidence and trust it enjoys and thereby this is 
an  important  pillar  of  macroeconomic  stability.  However,  it  also  implies  that  the  burden  of 
adjustment  to  external  shocks  has  to  be  accommodated  by  other  policy  areas,  in  particular 
fiscal policy, necessitating 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 
credibility  of  the  Central  Bank’s  independence  has  been  threatened  during  last  year  by  the 
highly  politicised  appointment  by  the  Presidency  of  three  member  of  its  board  in  2020,  as 
well  as  by  the  failure  of  the  Presidency  to  appoint  a  new  governing  board  ahead  of  the 
expiration  of  its  mandate  in  August  2021,  due  the  boycott  of  State-level  institutions  by 
politicians  from  the  Republika  Srpska  entity.  As  a  result,  the  governing  board  is  operating 
with a caretaker mandate only. 

Consumer  price  inflation  turned  negative  in  2020,  due  to  low  import  prices  and  low 
domestic price pressures. Average consumer prices dropped by 1.1% in 2020, compared to 
an  increase  by  0.6%  the  year  before.  In  the  first  seven  months  of  2021,  average  consumer 
prices were 0.4% higher than a year before, although from May onwards, inflation registered 
a marked year-on- year increase towards nearly 2%. Besides low prices for imported energy, 
price  declines  for  clothing  and  footwear  contributed  to  the  low  overall  inflation  rate  in  the 
first  half  of  the  year.  Prices  for  transport,  accounting  for  nearly  13%  of  the  basket,  also 
contributed negatively  to overall consumer price  inflation in  the first three months of 2021, 
but  were  a  key  contributor  to  the  overall  price  increase  since  then.  However,  the  inflation 
measure  still  suffers  from  an  outdated  consumer  basket  and  insufficient  cooperation  among 
key data providers. 

48 

-6-303-20-1001020162017201820192020Graph 2: Bosnia and Herzegovina -Current account selected components and FDIPersonal Transfers (= Workers' Remittances)Goods and services trade balanceCurrent account balance (rhs)Net FDI (rhs)% of GDPSource: IMF and Central Bank of Bosnia and Herzegovina 
 
in 

last 

revenue,  while 

The general government accounts deteriorated markedly in 2020, as a result of a decline 
in  revenues,  while  COVID-19  related  spending  rose  sharply.  Due  to  the  poor  quality  of 
country-wide fiscal data, the country’s overall fiscal position is still difficult to assess. During 
the 
five  pre-pandemic  years,  public 
finances  have  registered  frequent  surpluses  of 
up  to  2%  of  GDP,  largely  due  to  politically 
induced  delays  in  implementing  investment 
projects.  In  2020,  the  pandemic  resulted  in  a 
sharp  drop 
spending 
increased,  transforming  the  surplus  of  2.2%  of 
GDP in 2019 into a deficit of more than 5% of 
GDP  in  2020.  Overall,  the  authorities  adopted 
additional  spending  measures,  amounting  to 
about  2.5%  of  GDP  for  health  related  spending  and  general  support  measures,  such  as 
providing  support  to  troubled  companies  and  subsidising  wages  and  social  security 
contributions.  Furthermore,  up  to  0.5%  of  GDP  has  been  reserved  for  providing  pandemic-
related  loan  guarantees.  These  figures  largely  reflect  funds,  which  the  country  received  as 
emergency assistance, in particular from the IMF and the World Bank. This relatively limited 
approach probably mirrors the country’s financing constraints, administrative bottlenecks and 
in  particular  political  stalemates,  delaying  the  decision  process  and  the  implementation  of 
spending  decisions.  The  required  financing  of  the  deficit,  coupled  with  the  fall  in  nominal 
GDP,  increased  the  country’s  debt  ratio  from  31.7%  of  GDP  in  2019  to  35.2%  in  2020.  In 
terms  of  quality  of  public  finances,  policy  decisions  are  primarily  focused  on  short-term 
issues, while the spending structure is still plagued by a strong emphasis on current spending 
for wages and transfers, while investment continued to be neglected. 

Overall,  the  country’s  macroeconomic  policy  mix  still  suffers  from  an  insufficient 
medium-term  orientation  and  a  missing  focus  on  growth-enhancing  policy  measures. 
While macroeconomic stability has been preserved during the pandemic,  fiscal  planning for 
the  post-pandemic  years  is  still  insufficiently  geared  towards  growth  enhancing  measures. 
Given  that  the  country’s  currency  board  regime  limits  the  room  for  monetary  policy,  fiscal 
policy is one of the country’s key macroeconomic policy tools.  However, due to the strong 
focus of policy makers to maintain the status quo, this tool is not adequately used to steer the 
country  towards  stronger  growth  and  a  faster  catching-up  with  EU  income  levels.  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. 

Functioning of product markets  

Business environment  

Barriers to market entry and exit have remained high and barriers within the country’s 
internal  market  persist.  On  entity  level,  some  efforts  were  made  to  proceed  with  the 
implementation  of electronic  registrations of businesses and to  facilitate foreign investment. 
However,  no  progress  has  been  achieved  in  removing  the  barriers  to  the  country’s  internal 
market.  In  order  to  be  able  to  operate  in  the  whole  country,  multiple  registrations  are  still 
required,  increasing  costs  of  establishing  a  company  and  protecting  incumbent  companies 
from competition. So far, no data for 2020 is available concerning the number of registered 
companies.  The  country’s  ranking  in  the  World  Bank’s  doing  business  report  in  terms  of 
business  environment  has  been  on  a  declining  trend  in  recent  years.  The  country’s  position 

49 

01020304050-6-4-20246201520162017201820192020 *Graph 3: Bosnia and Herzegovina -Fiscal developmentsPrimary balance (lhs)Interest (lhs)GG balance (lhs)Public Debt (rhs)Source: National sources% ofGDP* 2020 data from IMF, 2021 Art.IV Cons. 
 
dropped  among  190  countries  from  the  79th  in  2015  to  the  90th  place  in  2019,  largely 
reflecting a lack of reforms  in  Bosnia and Herzegovina, as political  uncertainty is  impeding 
the  functioning  of  markets  and  institutions.  Contract  enforcement,  in  particular  settling 
commercial disputes, remains problematic, together with a substantial backlog in court cases, 
problems  with  establishing  property  rights  in  some  areas,  such  as  real  estate  registration. 
Cooperation and coordination among the various stakeholders has further deteriorated and 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. Overall, the country's business environment is 
still  hampered  by  numerous  and  lengthy  procedures,  political  interference,  corruption  and 
diverging rules in different parts of the country, complicating the operation of companies and 
creating additional costs. 

The  institutional  and  regulatory  environment  for  the  functioning  of  the  country’s 
internal  market remains a crucial weakness. During the last  year, no significant progress 
has  been  achieved  in  this  area.  The  resource  endowment  and  independence  of  numerous 
regulatory and supervisory institutions continue to be insufficient.  

The  informal  economy  has  remained  significant  during  the  pandemic.  Despite  some 
progress  in  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.  Thus, 
informality still provides substantial (unregistered) employment and income, but also distorts 
competition and erodes the base for taxation and social security contributions. 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  

Government  policy  and  legislation  still  leads  to  significant  distortions  in  the  economy. 
The  still  oversized  public  administration  as  well  as  poorly  performing  publicly  owned 
enterprises (SOEs) are negatively affecting the economy. Transparency on COVID-19 related 
spending has  remained limited so far. Anecdotal evidence points to  bureaucratic procedures 
and a poor targeting of support measures, leading to overall limited effectiveness of COVID-
19 related public spending. The amount of contingent  liabilities has increased  as a result of 
governmental  anti-crisis  measures,  such  as  providing  loan  guarantees.  Many  public 
companies  rely  on  state  support  or  delay  due  payments  to  the  social  security  systems  or  to 
private suppliers, in order to remain in operation. This creates substantial 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,  continues  to  be 
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  (see 
also  chapter  5  –  public  procurement).  There  is  still  a  wide  range  of  administrated  prices  and 
during  the  pandemic,  prices  of  certain  products,  such  as  hygiene  products,  have  been 
regulated.  

The level of officially recorded state aid has still been relatively low (about 1.3% of GDP 
in  2019).  However,  in  view  of  significant  indirect  state  support,  the  level  playing  field  
nevertheless  is  impeded.  In  2020,  as  part  of  the  COVID-19  crisis  support  package,  many 
companies benefitted from discretionary state assistance. Unfortunately, so far available data 
on provided assistance is incomplete. Nevertheless, in combination with the accumulation of 
payment arrears of taxes and, in particular social security contributions, the level of de-facto 

50 

 
 
state aid appears to have been significant in 2020. The monitoring of state aid control is still 
hindered  by  the  only  partial  legal  alignment  with  European  standards  and  the  lack  of 
consistent enforcement of state aid rules throughout the country. The competences of the State 
Aid Council continue to be limited. This leaves room for unfair distortions of competition in 
the country. 

Privatisation and restructuring  

No significant progress was achieved in proceeding with the privatisation process. Due to 
the COVID-19 crisis, measures to restructure or to dissolve public enterprises remained very 
limited. 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 at around 80%, and it generates a 
similar share of the country’s employment.  

Functioning of the financial market  

Financial stability 

The  fragmentation  of  the  institutional  and  regulatory  set-up  continues  to  impede 
banking supervision. The institutional and regulatory environment for the functioning of the 
financial market is largely in place, although key elements are decentralised and  the Central 
Bank’s  role  is  limited  to  coordinate  the  local  regulatory  and  supervisory  agencies. 
Furthermore,  the  Republika  Srpska  entity  contests  the  Central  Bank’s  competence  in 
regulating  and  monitoring  certain  aspects  of  the  country’s  financial  markets,  such  as  the 
registration of bank accounts of natural persons. The functioning of the Federation’s Security 
Commission had been impeded for more than one and a half years, due to politically driven 
difficulties in agreeing on filling top-level vacancies. Among others, this delayed the increase 
of capital endowment of some banks through the capital market. The new Deposit Insurance 
Law  contributed  to  the  confidence  in  the  sector’s  stability.  However,  the  bank  resolution 
framework is not  completed  yet  and the absence of a country-wide Financial Stability Fund 
increases  the  risk  that  financial  sector  tensions  could  spill  over  into  the  real  sector  and 
increase  fiscal  costs.  The  monitoring  of  macroprudential  indicators  has  been  a  positive 
development,  although  there  are  still  obstacles  to  a  country-wide,  uniform  macro-prudential 
framework.  

The  banking  sector’s  stability  has  been  maintained  during  the  COVID-19  pandemic, 
although  credit  growth  decelerated  and  the  sector’s  profitability  declined  in  2020. 
Annual  loan  growth  decelerated  to  1.1%  in  2020  and  turned  negative  in  the  first  quarter  of 
2021. This was mainly driven by weak corporate lending. Household lending, accounting for 
some 29% of total credits, largely stagnated. However, loans to public enterprises, accounting 
for some 3% of total loans, rose markedly. Bank deposit growth remained relatively strong, at 
5.6% in  2020 and some 5% in  the first  quarter of 2021. The share of non-performing loans 
(NPLs) in total loans declined during 2020 and reached 6% in the first quarter of 2021 as the 
implementation  of  stricter  accounting  standards  at  the  beginning  of  2020  accelerated  NPL 
write-offs  but  also  affected  credit  growth.  Banking  sector  profitability  deteriorated  during 
2020,  but  recovered  markedly  in  the  first  quarter  of  2021,  with  the  return-on-equity  ratio 
rising from 6% at the end of 2020 to 10.8% at the end of Q1, and the return-on-assets ratio 
recovering from  a low of 0.8% at  the end of 2020 to  1.4% at the end of the first  quarter of 
2021.  The  banking  system's  overall  capital  adequacy  ratio  improved  during  2020,  reaching 
19.2% at the end of 2020, and 18.9% in the first quarter of 2021. The main reasons for these 
improving indicators are (i) the entering into force of stricter rules before the outbreak of the 
pandemic,  requiring  among  others  higher  capital  endowments,  (ii)  the  sector’s  efforts  to 
improve  shock  resilience  by  increasing  the  banks’  capitalisation,  largely  using  undisbursed 

51 

 
 
2019 profits and (iii) aligning risk assessment rules with EU standards. However, there are big 
differences among the country’s 23 banks, with some pockets of vulnerability remaining, in 
particular in the case of some smaller local banks. Furthermore, there is a notable difference 
between  foreign  and  domestic  banks  in 
terms  of  soundness  indicators,  with  the 
former being more successful in reducing 
NPLs  or  improving  loan  provisioning. 
significantly 
The  central  bank  has 
its  analytical  capacities  by 
improved 
strengthening 
its  forecasting  and  risk 
assessment activities.  

introduced 
from 
consequences  of 
COVID-19,  including  debt  repayment  moratoria,  as  well  as  the  suspension  of  dividend 
payments  and  stricter  rules  on  the  remuneration  of  board  members.  Furthermore,  the 
governments  of  the  two  entities  supported  lending  by  providing  temporary  guarantees  to 
private sector loans. The volume of those guarantees amounts up to about 0.5% of GDP. 

The 
measures 
negative 

to  enable 
economic 

recovery 

agencies 

banking 

Access to finance 

Lending continued to increase during 2020, but small firms’ access to finance remained 
particularly constrained. The loan-to-GDP ratio increased slightly during the last five years 
from 56% in 2015 to close to 58% in 2020. The improvement in 2020 is to a large extent due 
to the drop in nominal GDP by 2.2%, while lending increased by 1.1%. Interest rate spreads 
for consumer loans have 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 
elevated risks and/or a lack of competition. The five largest banks account for about 80% of 
the sector’s assets. Private sector debt accounted for some 54.5% of total debt at the end of 
2020,  which  is  higher  than  at  the  beginning  of  the  year,  and  also  markedly  above  the 
country’s  5-year  average  before  the  pandemic.  Financial  literacy  is  limited  in  particular 
among  small  enterprises.  The  size  of  the  non-bank  alternative  financing  sector  and  of  the 
capital  markets  has  remained  small,  with  a  market  capitalisation  of  the  country’s  stock 
markets of about 26.5% of GDP at the end of 2020. The use of venture capital has continued 
to  be  very  limited.  The  governments’  loan  guarantees  had  a  positive  impact  on  the  private 
sector’s access to finance. However, for many micro and small companies gaining access to 
those guarantees appears to have been difficult.  

Functioning of the labour market  

The immediate effects of COVID-19 on the labour market have remained limited, due to 
governmental  support  measures.  In  the  first  half  of  2021,  the  number  of  registered 
employed was some 0.8% (7 thousand persons) lower than a year before, while the number of 
unemployed was 1.8% lower. (7.5 thousand persons). This resulted in a further decline in the 
labour  force  by  about  1.2%,  or  14  000  persons.  During  the  last  year,  the  largest  job  losses 
took place in trade and tourism, while some limited employment increases were registered in 
the health and IT sectors. Due to the high share of informal employment, in particular in the 
trade and tourism industry, administrative data might underestimate job losses. According to 
Labour  Force  Survey  (LFS)-based  data,  the  unemployment  rate  in  the  age  group  15-74 
increased to 19.1% in the first quarter of 2021, compared to 16.7% in the first quarter of 2020. 
Youth unemployment (15-24 years) stood at 40.4% in the first quarter of 2021, compared to 
36%  in  the  first  quarter  of  2020.  Key  factors  for  the  persistently  high  unemployment  are  a 

52 

2030405060700102030402014201520162017201820192020Graph 4: Bosnia and Herzegovina -Labour market trends (15-64 age group)Unemployment rate (lhs)Participation rate (rhs)Employment rate (rhs)Source: BiH Agency of Statistics 
 
lack of adequate employment possibilities in the economy, a mismatch of education curricula 
with  labour  market  needs,  and  the  high  tax  wedge,  in  particular  for  low-wage  earners.  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 about 75% 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  efficiency  of  the  measures  is  not  sufficiently 
rigorously  evaluated.  These  active  measures  support  the  employment  of  vulnerable  or 
disadvantaged  groups.  The  still  substantial  discrepancy  between  unemployment  data 
according to administrative and according to survey based data points to the need to further 
improve the country’s labour market statistics.  

The  labour  market  suffers  from  a  lack  of  qualified  labour.  Labour  mobility  within  the 
country  is  low.  The  shortage  of  qualified  labour,  partly  due  to  emigration,  has  supported 
relatively high increases of nominal wages in some sectors (+3.8% in 2020 for the country as 
a  whole,  and  +4.6%  in  the  construction  sector).  In  combination  with  a  negative  overall 
consumer  price  inflation,  those  wage  increases  translated  in  real  increases  of  nearly  5%. 
Public sector wages are also relatively high, in particular when taking into account the sector's 
productivity, which to some extent crowds out qualified labour supply from the private sector. 

2.3.2.  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.  The  implementation  of  last  year’s  recommendations  to 
support long-term growth was largely limited to some education-related measures. 

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 the share of government capital spending in GDP, in particular by focusing on 
transport  and  energy  infrastructure  and  on  improving  environmental  standards  by 
measures  to  improve  public  investment  management  and  through  an  accelerated 
implementation of those investment projects that have been subject to a clear positive 
cost-benefit assessment. 

  Support further trade integration with the EU and CEFTA, among others by supporting 
alignment with European safety and quality standards, such as those envisaged in the 
context of the implementation of the Common Regional Market Action Plan.  

Education and innovation  

Investment in education remains inadequate. Public spending on education accounted for 
some  4%  of  GDP  in  2019.  When  adding  private  spending  and  foreign  donors,  the  overall 
amount  stands  at  nearly  5%  of  GDP.  Despite  this  significant  spending,  in  particular  when 
taking into account the number of students, it fails to provide the country’s labour force with 
the skills and knowledge necessary for a smooth integration in the labour market. This is one 
factor for a particularly high youth unemployment rate (40.4% at the end of the first quarter of 
2021 according to LFS), twice the country’s overall unemployment rate.  

53 

 
 
 
The  education  system  is  highly  fragmented  and  poorly  coordinated,  leading  to  varied 
standards within the country. There has been some progress by adopting a Common Core 
Curriculum Framework which should provide common learning standards for pre-university 
education. However, overall the lack of common standards for various levels of education is 
still substantial, as well as in differences in the quality of teachers’ training and performance 
evaluation.  Teaching  curricula  still  continue  to  be  outdated  and  are  still  not  sufficiently 
aligned with the country’s needs. The country participated for the first time in the 2018 PISA 
study. Results indicate that the students’ performance ranks well below the OECD average, in 
particular with respect to the minimum skills, which is a clear impediment for the country’s 
competitiveness and growth potential. The country’s illiteracy rate continues to be around 3%, 
largely as a result of a relatively high illiteracy rate among women.  

Research and 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  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.  The country’s 
research  capacities  remain  very  limited,  while  the  trend  of  a  brain  drain  continues,  most 
notably  in  the  health,  medical,  and  IT  sectors  with  no  systematic  measures  having  been 
introduced so far to address the issue. 

Physical capital and quality of infrastructure  

In  addition  to  the  COVID-19  related  uncertainty,  investment  in  the  country’s  capital 
stock  remained  impeded  by  continued  political  tensions  and  uncertainties  and 
administrative weaknesses.  In the context  of the COVID-19  crisis,  gross capital  formation 
dropped by  nearly  13%  in  2020, after  an increase by 6.2% the  year before. During the  five 
years before COVID-19, average  gross  fixed capital  formation  amounted  to  some 18.4% of 
GDP.  Public  investment  remained  low,  reflecting  a  focus  on  COVID-19  related  current 
spending.  Inflows  of  foreign  direct  investment  (FDI)  remained  at  1.8%  of  GDP  in  2020, 
which is only slightly lower than the 2.1% average during the five years before COVID-19. A 
large share of those FDI inflows are actually re-invested earnings of foreign investors in the 
financial sector as well as in tourism. As in the case of gross fixed investment, the low level 
of inflow of foreign investment is impeding the country’s ability to achieve a higher growth 
trajectory.  Environmental  standards  have  remained  low  and  are  often  neglected,  leading  to 
high levels  of pollution, impeding the health (and thus  productivity) of the country’s labour 
force and constituting an additional factor supporting the brain drain. Overall, the insufficient 
momentum  in  investment  and  negligence  of  environmental  standards  continues  to  hamper 
improvements in the country’s growth potential and labour productivity.  

COVID-19,  as  well  as  delays  in  the  implementation  of  investment  projects  due  to 
political  disputes,  also  had  a  negative  impact  on  investment  in  transport  and  energy 
infrastructure.  After  some  positive  developments  with  the  connection  of  new  renewable 
energy  projects  to  the  grid  in  2018  and  2019,  as  well  as  efforts  to  diversify  natural  gas 
imports, the need to focus on the crisis response as well as continued  delays in  government 
formation  in  the  Federation  had  a  negative  impact  on  public  infrastructure  investment. 
Furthermore, necessary steps for updating 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.  Infrastructure  connections  with  neighbouring 
countries as well as the country’s level of digitalisation remain on an inadequate level.  

Sectoral and enterprise structure  

54 

 
 
 
As  a  result  of  COVID-19,  the  recently  observed  trend  of  structural  change  from  the 
public sector to trade and manufacturing has been put on hold.  At the end of 2020, the 
share value-added of trade and manufacturing was some 2.5 percentage points of GDP lower 
than a year before, while the share of public administration and agriculture had increased, by 
some 0.9 pps and 0.8 pps, respectively. In the five years before the pandemic, the company 
structure  registered  some  increase  in  the  share  of  medium-sized  companies,  employing 
between 50-249 employees. However, the majority of new companies were micro companies 
(0-9 employees), which are often trading companies with lower value added, and which are 
disproportionally  affected  by  the  COVID-19  crisis.  Some  95%  of  all  companies  are  in  the 
group of small and micro businesses, i.e. with less than 50 employees.  

Economic integration with the EU and price competitiveness  

Trade  and  investment  integration  with  the  EU  remained  largely  unchanged  in  2020, 
despite  the  COVID-19  shock.  The  country’s  international  trade  shrank  by  11.6%  in  2020, 
mainly due to a 13.4% decrease in commodity imports, while exports dropped by 8.5%. More 
than  two  thirds  of  this  decline  is  due  to  lower  exports  to  neighbouring  countries,  including 
Italy as well. However, during five years before the pandemic, trade slightly shifted towards 
the  neighbouring  region,  reflecting  stronger  export  increases  with  countries  such  as  Serbia, 
but  also  Croatia.  Exports  to  the  EU-27  accounted  for  72.4%  of  total  exports  in  2020, 
compared to 73% in 2019. Exports to CEFTA countries dropped slightly during 2020, to 16% 
of total exports. The country’s openness to trade (exports and imports as a percent of GDP) 
dropped  sharply  in  2020,  from  nearly  95%  in  2019  to  83.4%  in  2020,  which  is  a  level  last 
seen in 2013. Even before the pandemic, the country’s openness to trade was relatively low, 
in particular in view of its relatively small economic size. The export structure relies mainly 
on manufactured goods, machinery and transport equipment, chemicals and related products, 
food  and  live  animals,  furniture,  textiles  and  basic  metals.  While  some  further  progress  has 
been  achieved  in  addressing  non-tariff  barriers  to  trade  with  the  EU,  such  as  required 
phytosanitary  and  sanitary  standards,  overall  compliance  with  these  requirements  remains 
weak. The integration of the country’s financial and capital markets with the EU is still 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 the EU countries. Annual FDI inflows 
largely show a similar pattern.  

The country’s overall price competitiveness still appears intact, despite a relatively high 
wage  growth.  During  the  last  five  years,  the  real  effective  exchange  has  supported  Bosnia 
and Herzegovina’s international price competitiveness by registering a slight depreciation by 
some  3%  during  2015-2020,  benefitting  from  the  country’s  low  inflation  rate,  in  particular 
when  using  the  CPI  as  indicator  for  inflation.  However,  in  nominal  effective  terms,  the 
currency appreciated by nearly 6%, mainly reflecting the exchange rate movements of the US 

55 

0255075201220132014201520162017201820192020Graph 5a: Bosnia and Herzegovina -Exports of goodsEUCEFTAOtherSource: WiiW% ofGDP0255075201220132014201520162017201820192020Graph 5b: Bosnia and Herzegovina -Imports of goodsEUCEFTAOtherSource: WiiW% ofGDP 
 
 
dollar,  the  Turkish  lira  and  the  Russian  rouble  against  the  euro,  to  which  the  Convertible 
Mark is pegged.  

2.4. PUBLIC PROCUREMENT, STATISTICS; FINANCIAL CONTROL  

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  backsliding  in  the  reporting  period  resulting  from  the  preferential  treatment  for 
domestic bidders in awarding public contracts from June 2020 till May 2021, in breach of the 
SAA and 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 
continue  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: 

  ensure continued equal treatment of domestic and EU bidders in awarding public contracts 

in line with provisions of the SAA; 

  adopt the amendments to the law on public procurement; 

  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  legal  framework  is  partially  in  line  with  the  EU  acquis.  The  principle  of  non-
discrimination is not applied as in May 2020 the Council of Ministers adopted  a decision on 
obligatory  application  of  domestic  preferential  treatment  for  domestic  bidders  at  the  rate  of 
30% as of 1 June 2020. The decision, which was in breach the SAA,  was in force until 1 June 
2021. No further extension of preferential treatment of domestic bidders has been adopted so 
far; the Council of Ministers rejected several such proposals, the latest in July 2021.Although 
this preferential treatment was not extended, there remains a significant risk that it could be 
re-imposed, making the public procurement environment uncertain for potential bidders.  

he law on public procurement includes exemptions which are not covered by the EU acquis. 
Amendments to the public procurement law, which would further align it with the EU acquis, 
remain  to  be  adopted  by  Parliament.  The  legislative  framework  on  concessions  and  public 
private partnerships is highly fragmented and needs to be aligned with the EU acquis. In the 
reporting  period,  the  Republika  Srpska  entity  amended  its  law  on  public-private  partnership 
(PPP) and adopted regulations on launching PPP projects, private partner selection procedure 
and procedure for contracting PPP projects process with the aim to align its framework with 
the  EU  acquis;  however,  the  legal  framework  remains  fragmented.    All  legal  and  financial 
instruments  used  for  public  procurement  and  concessions,  including  inter-governmental 
the  principles  of 
agreements  concluded  with 
transparency, competition, equal treatment and non-discrimination. 

third  countries,  should  comply  with 

The implementation of 2016-2020 strategy for the development of public procurement is 

56 

 
 
 
delayed.  The  Procurement  Portal  is  functioning  satisfactorily,  but  there  was  no  progress 
concerning  the  coordination  with  audit  institutions.  By  the  end  of  2020,  930  Public 
Procurement Officer were trained and 490 examined and certified. 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.  

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  use  of  electronic 
procurement enables any interested person to download tender documents. 

Implementation and enforcement capacity 

In  2020,  Bosnia  and  Herzegovina’s  public  procurement  market  represented  8.05  of  the 
country’s GDP, slightly below the 2019 level. The average number of bids per tender was 2.0 
in 2020, the same as in 2019. 

On  monitoring  the  awarding  and  implementation  of  contracts,  the  Public  Procurement 
Agency’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 slight decrease in the use of the 
negotiated procedure without prior publication (8.53% of the value of all contracts awarded in 
2020 compared to 8.55% in 2019). The Agency’s monitoring role should be strengthened to 
enable it to identify potential weaknesses and irregularities in procurement procedures. 

The capacity to  manage public procurement  processes  is weak. Specialised procurement 
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 legislation on the right to appeal is broadly in line with the EU  acquis although time 
limits  are  excessively  short.  Concessions  and  private  public  partnerships  are  covered  by 
separate regulations and need to be aligned with the EU acquis. The institutions responsible 
for  the  review  procedures  are  the  contracting  authority  in  first  instance,  the  procurement 
review body in  second-instance  and the Court of Bosnia and Herzegovina in  third instance. 
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 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 
strengthening its capacity. Only a small number of decisions have been challenged before the 
Court  of  Bosnia  and  Herzegovina.  The  transparency  of  the  decision-making  of  the 
procurement review body needs to be significantly enhanced. 

Chapter 18 - Statistics  

EU rules require Member States to be able to produce good quality statistics in line with the 
principles  of  the  European  statistics  Code  of  Practice  and  statistics  based  on  professional 
independence,  impartiality,  reliability,  transparency  and  confidentiality.  Common  rules  are 
provided for the methodology, production and dissemination of statistical information. 

57 

 
 
Bosnia and Herzegovina is at an early stage of preparations in the area of statistics. Limited 
progress was made during the reporting period, including by the submission of an excessive 
deficit procedure notification to the European Commission and a few improvements related to 
business  statistics.  Last  year’s  recommendations  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  equivalent  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 survey on income and living conditions;  

  adopt  a  methodology,  responsibilities  and  budgetary  aspects  of  the  next  agricultural 

census and adopt a roadmap for preparation of the future 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.  Some  work  continued  in  view  of  using  administrative  data  for 
statistical  purposes  by  comparing  and  analysing  2020  administrative  data  from  the  Indirect 
Taxation Authority with data from the Statistical Business Register (checking data on activity 
status, code of the main activity and address). 

On  classifications  and  registers,  there  was  limited  progress  in  further  developing  the 
Statistical Business Register, but data received from relevant administrative sources remains 
insufficient.  A  base  for  production  of  main  business  demography  has  been  prepared,  but 
business demography data is still not transmitted 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, 
GEONOM and ISCED 2011) are in place. The equivalent to 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 equivalent to NUTS III level as well.  

On  macroeconomic  statistics,  the  production  of  and  responsibility  for  national  accounts 
continue  not to be 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  fully  in  place.  Annual  accounts  are  compiled  using 
production, expenditure and income approaches, while quarterly accounts are compiled only 

58 

 
 
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 is 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  not  compiled  by  sub-sectors. 
Moreover,  the  responsibility  for  practical  implementation  is  still  unclear.  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  2015-2019,  data  was  processed  and  transmitted  to  Eurostat.  Bosnia  and 
Herzegovina  made  some  progress  in  terms  of  submission  of  an  excessive  deficit  procedure 
notification,  transmission  of  quarterly  balance  of  payments  and  international  investment 
position and some progress on national accounts time series. Bosnia and Herzegovina has also 
put  in  place  adequate  infrastructure  for  data  transmissions  to  Eurostat  and  the  European 
Central Bank. 

On business statistics, some progress continued to be made by using an improved production 
method  to  publish  results  of  structural  business  statistics.  Structural  business  statistics  for 
2017 and 2018 were produced using a combined method (statistical survey and administrative 
data  sources)  for  enterprises  with  less  than  20  employees.  Short-term  statistics  for  industry, 
construction and services are not fully available and will need to be established in line with 
requirements  of  the  EU  acquis.  Producers  Price  Indices  for  low-rise  construction  for  the 
reference  period  2017-2020  have  been  published  for  the  first  time.  The  structure  for  all 
required  sets  of  data  for  short-term  business  indicators  has  been  prepared  and  the  data  was 
transmitted  to  Eurostat  using  SDMX-ML  format.  The  PRODCOM  industrial  production 
survey  is conducted and results are sent to Eurostat on an annual basis. 

Foreign  affiliates  statistics  (FATS)  are  produced  by  the  Agency  for  Statistics  for  inward 
statistics  and  by  the  Central  Bank  for  outward  statistics.  Inward  foreign  affiliates  statistics 
(IFATS) for 2018 were submitted to Eurostat. Full compliance with FATS regulations needs 
to be ensured. Regarding tourism, Bosnia and Herzegovina is only producing accommodation 
statistics, but has conducted a private and business travel survey. Research and development 
statistics  are  compiled  for  four  sectors  –  business,  government,  higher  education  and  non-
governmental  organisations  –  and  are  published  annually.  For  the  first  time,  data  were 
submitted  to  Eurostat  for  government  budget  allocations  for  research  and  development 
(GBARD) and gross domestic expenditure on research and development (GERD) in SDMX 
format. The Community Innovation Survey is conducted on a regular basis. ICT statistics for 
enterprises and households were also provided to Eurostat. 

On  social  statistics,  preparation  for  the  next  population  and  housing  census  has  hardly 
progressed. Related legislation is still at an early stage of preparation and has not been agreed 
among  entity  statistical  institutes.  A  new  master  sample  frame  is  now  available  and  will  be 
used  not  only  for  the  household  budget  survey  (which  started  in  April  2021),  but  also  for 
upcoming surveys, such  as the labour force survey  (LFS) 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. LFS data 
for  all  four  quarters  of  2020  were  published.  Both  the  questionnaire  and  methodological 
documents were modified to be aligned with Eurostat recommendations and were used  in the 

59 

 
 
LFS survey for the first quarter of 2021. 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  (ESSPROS  –  European  System  of  Integrated  Social 
Protection  Statistics)  are  submitted  to  Eurostat,  including  revised  ESSPROS  data  for  the 
period  2013-2018.  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  crime 
statistics,  which  is  collected  on  a  monthly  basis  and  submitted  annually  for  the  UNODC 
questionnaire. The negative effects of the COVID-19 pandemic were reflected in a reduction 
in the budget by governments to carry out some surveys. 

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.  An  annual  farm  survey  (AFS)  has  been  conducted  for  2020. 
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. For the first time,  the SHARES (harmonised calculation of the share of energy from 
renewable sources) questionnaire for the reference year 2018 was submitted to Eurostat. 

Regarding environmental statistics, the Agency for Statistics continued to publish 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.  

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.  Some  progress  was  made  in 
fulfilling last year recommendations, notably in developing and adopting strategies on public 
internal  financial  control  in  all  entities.  All  central  harmonization  units  need  to  continue 
strengthening  their capacities and monitor the effectiveness  of internal  control functions in 
the  public  sector,  with  particular  attention  to  the  risk  management  and  internal  audit 
functions The financial and operational independence of supreme audit institutions must be 
ensured  in  practice.  Bosnia  and  Herzegovina  should  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: 

  continue with the implementation of the recently adopted PIFC strategies; 

  improve the quality of the monitoring framework on public internal financial control and 

the implementation of the PIFC report recommendations across budget entities; 

60 

 
 
   ensure  the  functional,  financial  and  operational  independence  of  supreme  audit 
institutions  at  all  levels  of  government  and    improve  the  impact  of  SAIs  work  through 
communication strategies 2021-2025. 

Public internal financial control 

A  comprehensive  strategic  framework  for  public  internal  financial  control  (PIFC)  for  all 
levels  of  government  is  in  place  together  with  individual  2020-2025  PIFC  strategies.  The 
PIFC  strategies  and  their  action  plans  have  been  adopted  in  2020.  The  strategies  have 
identical  monitoring  and  reporting  frameworks.  The  PIFC  reform  is  coordinated  by  the 
Coordination  Board  of  the  Central  Harmonisation  Units  (CHU),  which  needs  to  be 
strengthened. The enabling conditions for implementing managerial accountability are not yet 
in  place,  as  there  is  no  countrywide  strategic  framework  on  public  administration  reform. 
Annual PIFC reports are adopted by each government, however there is no systematic follow 
up on the reports’ recommendations.  

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. Public entities have no strategic plans with clear 
objectives  and  performance 
indicators  against  which  managers  and  staff  members 
performance is assessed. 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  all  levels  of 
government.  The  legal  provisions  on  internal  control  are  not  consistently  integrated  in  the 
general  Public  Finance  Management  regulations,  business  processes  and  management 
information systems at all levels of government and in the public enterprises. A countrywide 
management  information  system  for  risk  management,  internal  control  and  monitoring  and 
reporting  of  the  financial  management  and  control  activities  is  in  advanced  stage  of 
development (PIFC application). The reporting will also include key performance indicators 
of public enterprises. The network will cover all levels and all public sector organisations in 
Bosnia and Herzegovina allowing for consolidation and monitoring of information on major 
risks, internal control actions and their impact. 

The  majority  of  the  first-level  budget  spending  units  and  public  enterprises  submit  to  the 
CHUs  an  internal  control  self-assessment  report,  which  is  in  its  essence  a  statement  of 
assurance  on  internal  control  systems.  State  level  institutions,  67  out  of  80,  submitted  their 
self-assessment  reports  for  2020  online.  Risk  management  is  in  the  initial  phase  of 
implementation.  Some  progress  was  made  in  December  2020  with  the  adoption  of  the  risk 
management guidelines for State-level institutions to support the uniform organization of risk 
management  processes.  Public  sector  managers  need  to  establish  risk  registers  and  define 
adequate  risk  mitigation  measures,  integrated  in  the  management  decision-making  cycle. 
Budget inspection is in place at each level, dealing with complaints and checking compliance 
of actions. There is no overlap with the internal audit function. 

Internal audit practice is regulated at state and entity levels and Brčko District and is in line 
with  international  audit standards.  The  internal  audit  function  remains  inefficient  due  to  the 
fragmentation of the public sector. Some efforts are under way to better regulate the internal 
audit function at the Federation entity and the Brčko District  and  provide tailored trainings 

61 

 
 
for internal auditors at the state level and Republika Srpska entity.The internal audit manuals 
at  all  levels  are  being  updated  in  parallel  to  the  development  of  internal  audit  management 
software. Internal audit units remain weakly staffed and many of them operate with only half 
of  positions  filled.  Nearly  all  appointed  internal  auditors  in  the  public  sector  are  certified, 
comprising a total of  721 certified  internal auditors since 2016 when the cerfications started. 
While most of the internal audit job positions available are occupied, such as 322 out of 451 
or 71%, the persisting problem lies in the fragmentation of the internal audit system and weak 
capacities of those units. Hence, in  the reporting period their added value in  contributing to 
effective practices  in internal auditing remains weak across all levels of government. Internal 
audit certification procedures are in place and implemented at all levels of government except 
in the Brčko District. 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, entity levels and Brčko 
District.    The  three  CHUs,  except  in  Brčko  District,  prepare  yearly  consolidated  reports  to 
their  respective  governments  on  PIFC  implementation.  The  reports  are  adopted  by  each 
government  with  decisions  requiring  further  action  for  implementing  the  PIFC  strategies  in 
each  individual  public  sector  organisation,  focusing  mostly  on  monitoring  the  trends  on 
number  of  financial  management  and  control  self-assessment  reports,  establishment  of 
internal audit units, their staffing and execution of annual audit plans. The quality of the PIFC 
reports needs to be strengthened, by including risk management, among others. Their impact 
on  internal  control  remains  weak,  as  recommendations  remain  not  well  implemented  across 
public entities at all levels. The CHUs do not have sufficient staff and administrative capacity 
to  provide  methodological  guidance,  promote  and  monitor  PIFC  reforms  in  a  conventional 
way. The coordination Board of Central Harmonisation Units continued its work according to 
the  workplan,  but  its  effectiveness  in  driving  refomrs  need  to  improve.  Since  2020  a  PIFC 
application  with  business  analytics  is  being  developed  with  the  aim  of  providing  quality 
information  for  the  PIFC  reports  and  supporting  the  monitoring  capacity  of  the  CHUs.  The 
CHUs should start to implement quality reviews on internal control and internal audit. 

External audit 

With regard to the constitutional and legal framework,  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).  However,  the  requirements  of  the  SAI  laws  with  respect  to 
financial  independence  need  to  be  better  respected  by  the  executive  and  effectively 
implemented. All  audit offices  should be able to use and manage their approved budgets  as 
they see fit, without any interference, or requirement for approval, by the respective Minitries 
of Finances, particulalry so at 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  levels.  All  SAIs  have  develeoped    a  new  cycle  of  strategic  development  plans  for 
2021-2025, which are adopted across all levels of government. 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. The Coordination Board of State Audit 
Institutions  needs to be further strengthened in  effectively following up with audit offices on 
how the legal framework and relate procedures on external audit  can be implemented across 
levels and as well estblaish a better monitoring system on progress undertaken by  the various 
audit offices. 

62 

 
 
ith  regard  to  the  quality  of  audit  work,  all  the  SAIs  have  a  broad  mandate,  which  covers 
financial, compliance and performance audit. The trend on number of performance audits has 
remained  stable  across  levels.  The  SAIs  have  INTOSAI  compliant  methodologies  and 
manuals.  The  SAIs  should  consider  improving  the  quality  of  their  audits  in  providing 
compliance  assurance,  bringing  up  the  causes  of  the  identified  weaknesses  and  increase  the 
number of performance audits. Each SAI report includes assessment of the internal control of 
the audited organisation. However, the assessments  are of general  nature. The SAIs need to 
apply  comprehensive  internal  control  assessments  tailored  to  the  audited  areas,  types  of 
transactions and type of organisations. 

The  impact  of  the  audit  work  of  all  SAIs  is  limited.  The  audit  recommendations  are 
predominantly focused on formal compliance targeting outputs, do not address the causes of 
the  weaknesses  or  the  likelihood  of  implementation.  This  leads  to  high  number  of 
recommendations and low rate of implementation across levels of government, which remains 
in  average  across levels  between 25% to  60% fully implemented or in  the process  of being 
implemented.    Additionally,  SAIs  should  consider  terminating  the  practice  of  including 
recommendations  in  audit reports that are out  with  the mandate of the particular auditee,  as 
such is  not  in  line with  international  standards.  While parliaments have  procedures in  place 
for examining audit reports, the level of parliamentary scrutiny to these reports varies across 
levels  of  government.  SAIs  need  to  step  up  efforts  in  establishing  closer  partnerships  with 
respective  parliaments  in  making  the  recommendations  of  audit  institutions  buding  for  the 
government. 

The  quality  of  the  audit  findings  need  to  be  improved.  The  results  should  be  presented  in 
terms of value added by the SAIs 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. In the reporting period, no changes in this area have been 
made. The scope and definitions of the offences are not always in line with the Directive: for 
example  in  the  case  of  corruption  and  misappropriation  offence.  Further  alignment  of  the 
legislation is needed, including on the freezing and confiscation of criminal assets. Effective 
implementation and enforcement of the legislation also needs to be ensured. 

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 
needs to be adopted. 

While  there  is  no  solid  track-record  on  cooperation  with  the  Commission  during 
investigations, the State Investigation and Protection Agency and the Ministry of Finance and 
Treasury  ensure  cooperation  on  an  ad-hoc  basis.  Although  limited,  cooperation  on 
investigations has been positive. 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 

63 

 
 
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. 

3. 

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  maintained  its  engagement  in  a  number  of  regional  cooperation 
initiatives,  such  as  the  Central  European  Free  Trade  Agreement  (CEFTA),  Energy 
Community, Transport Community, the South-East European Cooperation Process (SEECP) 
and  the  Regional  Cooperation  Council,  of  which  it  hosts  the  seat.8  In  2020,  the  country 
presided over the US-Adriatic Charter and the CEFTA Agreement.  

The  Covid-19  pandemic  has  accelerated  the  ambition  to  enhance  regional  integration,  by 
displaying the important links between markets in the region as well as between the EU and 
the six Western Balkans economies. Given the European perspective of the Western Balkans, 
the EU has continued to treat the region as privileged partners by associating them with the 
Union’s  mechanisms  and  instruments,  including  an  exemption  from  temporary  EU  export 
restrictions of medical equipment.  

At  the  Sofia  Summit  on  10  November  2020,  the  six  Western  Balkans  leaders  adopted  the 
Declaration on the Common Regional Market and the Declaration on the Green Agenda for 
the  Western  Balkans.  This  followed  upon  previous  commitments  taken  at  the  EU-Western 
Balkans  Zagreb  summit  in  May  2020  and  the  recognition  of  the  role  of  deepened  regional 
economic integration to support the economic recovery of the Western Balkans. 

The  Common  Regional  Market  is  structured  around  the  four  freedoms  (free  movement  of 
goods,  services,  capital  and  people)  while  also  covering  aspects  of  digital,  investment, 
innovation and industrial policy. This makes it the most ambitious regional integration effort 
to  date  in  the  Western  Balkans.  The  Common  Regional  Market  builds  on  EU  rules  and 
standards  and  represents  a  stepping-stone  to  integrate  the  region  more  closely  with  the  EU 
Single Market already before accession. 

The  Common  Regional  Market  will  be  critical  in  increasing  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 and to maximise the benefits of the infrastructure investments 
under  the  Economic  and  Investment  Plan.  It  is  therefore  important  that  all  parties  play  a 
constructive  role  in  building  the  Common  Regional  Market  and  deliver  on  their  joint 
commitments.  

The Green Agenda for the Western Balkans aims at reflecting, the European Green Deal in a 
proportionate  and  adapted  manner  in  the  Western  Balkans.  The  objective  is  to  turn 
environmental  and  climate  challenges,  similar  in  the  region,  into  opportunities.  Given  that 

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. 

64 

 
 
 
                                                           
natural  resources  and  climate  change  do  not  know  any  border,  the  Green  Agenda  foresees 
joint  actions,  which  will  contribute  to  the  sustainable  socio-economic  development  and  the 
green  recovery  of  the  entire  region.  in  the  post-pandemic  period.  Bosnia  and  Herzegovina 
should  contribute  to  successfully  implement  this  joint  regional  vision,  with  high  level  of 
ambition.   

The Berlin Process summit on 5 July 2021 was an occasion for the Commission to announce 
targeted assistance related to  combating the COVID pandemic  and post-pandemic recovery, 
as well as the preparations of a 2021 financial package under WBIF for the implementation of 
the Economic and  Investment  Plan. The participants  also  took  stock of the achievements of 
the  connectivity  agenda  with  the  region,  which  now  includes  45  investment  projects, 
supported  by  EUR  1  billion  in  EU  grants  that  have  leveraged  EUR  3.8  billion  in  loans. 
Regrettably,  despite  good  technical  progress,  the  Western  Balkan  partners  were  not  able  to 
conclude several important agreements related to the Common Regional Market and CEFTA, 
because of bilateral and status issues. The participating Member States and the Commission 
called  for  a  constructive  approach  to  making  progress  on  the  Common  Regional  Market, 
which will help the region take full advantage of the Economic and Investment Plan.   

In  July  2021,  the  regional  agreement  on  roaming  fees  signed  at  the  April  2019  Western 
Balkans digital summit in Belgrade entered into force, enabling ‘roam like at home’ (RLAH).   

Bosnia  and  Herzegovina  has  continued  to  closely  cooperate  with  Croatia,  Montenegro  and 
Serbia  under  the  Sarajevo  Declaration  Process,  which  aims  to  find  sustainable  solutions  
close  to  74,000  people  or  27,000  households  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),  around  3,133  families  will  be 
supported  with  housing  solutions  out  of  which  1,808  housing  units  have  been  built  or 
reconstructed in Bosnia and Herzegovina so far. Significant challenges remain with regard to 
the economic and social integration and wellbeing for many families, required to ensure the 
sustainability of return.  

The  unresolved  fate  of  missing  persons  who  disappeared  in  relation  to  the  conflicts  of  the 
1990s remains a key issue to be solved in the Western Balkans. By March 2021, over 9,996 
people were still missing as a result of the conflicts in the region. Further efforts on a regional 
scale are needed to establish the unresolved fate of 6,377 people still missing as a result of the 
conflict, of which 55 were identified in 2020, and 8 until May 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  Presidency  Chair  and  the  Foreign  Minister  visited  Albania  in  October 
2020 and in March 2021 respectively. The two countries also agreed to establish full-fledged 
bilateral embassies. 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 citizens of Kosovo is still pending.  

Concerning  Montenegro,  bilateral  relations  are  good.  There  are  no  border  issues  but  the 
agreed border demarcation is yet to be physically marked on the terrain. The first joint border 
crossing point Deleuša/Vraćenovići was opened in October 2020.  

 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. 

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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,  including  on  borders.  Bilateral  high-level  visits  are 
regular. The two countries also need to reach an agreement on two river dams on the Drina 
river and a portion of the Belgrade-Bar railway which crosses into Bosnia and Herzegovina’s 
territory. Serbia and the Republika Srpska entity launched construction of three hydroelectric 
power  plants  on  the  upper  Drina;  as  this  was  done  without  the  involvement  of  Bosnia  and 
Herzegovina’s State institutions, upon appeal the Constitutional Court ruled that a decision of 
the  Commission for Concessions is required; this is pending.  

Turkey is a strong international supporter of Bosnia and Herzegovina and exchanges at high 
level  are  frequent.  Bosnia  and  Herzegovina  and  Turkey  signed  a  memorandum  of 
understanding and cooperation in the field of diplomatic archives and protocols in November 
2020. In March 2021, the two countries signed an agreement on cooperation in infrastructure 
and  construction  projects  (particularly  in  regards  to  the  Sarajevo-Belgrade  highway  which 
Turkey committed to finance), an agreement on mutual recognition of driving licenses and an 
agreement  on  military-financial  cooperation.  Turkey  opened  a  consulate  general  in  Banja 
Luka in September 2020. 

Relations  with  Croatia  are  overall  good,  although  affected  by  outstanding  bilateral  issues. 
Bilateral visits took place at foreign ministers’ level. The 1999 border 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.  In  support  to  the  State-level  coordination  body,  in  October 
2020 Bosnia and Herzegovina established an expert and a legal team 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.  

4.  

ABILITY TO ASSUME THE OBLIGATIONS OF MEMBERSHIP 

CLUSTER 2: INTERNAL MARKET  

This cluster covers chapters 1-free movement of goods, 2-freedom of movement for workers, 
3-right  of  establishment  and  freedom  to  provide  services,  4-free  movement  of  capital,  5-
company law, 7-intellectual property law, 8-competition policy, 9-financial services, and 28-
consumer  and  health  protection.  This  cluster  is  key  for  Bosnia  and  Herzegovina’s 
preparations  for  the  requirements  of  the  EU’s  internal  market  and  is  of  high  relevance  for 
early integration and the development of the Common Regional Market. 

Major  steps  are  required  to  align  the  legislative  framework  with  the  EU  acquis  on  free 
movement  of  goods,  in  particular  on  technical  requirements  for  products,  conformity 
assessment and on market surveillance; the country should adopt a countrywide strategy for 
the quality infrastructure. Bosnia and Herzegovina should also  aligned with the EU Services 
Directive,  provide  for  the  mutual  recognition  of  foreign  qualifications  for  regulated 
professions, and open up the postal market for competition. Bosnia and Herzegovina should 
remove unjustified restrictions to the free movement of capital and adopt a new law on  anti 
money  laundering  and  countering  the  financing  of  terrorism.  In  the  field  of  company  law, 
Bosnia and Herzegovina took some steps on electronic registration of companies, but needs to 
establishing  a  central  registry  of  businesses  and  a  single  authority  for  the  oversight  of 
statutory  auditors.  Bosnia  and  Herzegovina  also  needs  to  implement  the  strategy  on 
enforcement  of  intellectual  property  rights  and  amend  the  Law  on  Patents.  On  competition 

66 

 
 
 
policy, Bosnia and Herzegovina further aligned the law on State aid with the acquis; it should 
now  ensure  the  operational  independence  of  the  State  Aid  Council  and  improve  its 
enforcement  record,  and  align  existing  aid  schemes  with  the  SAA.  On  financial  services, 
Bosnia and Herzegovina needs to urgently appoint qualified members of the Federation entity 
Securities  Commission,  sign  a  Financial  Stability  Memorandum  of  Understanding,  and 
improve  coordination  in  supervision  and  enforcement.  On  consumer  and  health  protection, 
Bosnia  and  Herzegovina  neeeds  to  align  with  the  EU  acquis  on  serious  cross-border  health 
threats  including  communicable  diseases,  on  tobacco  control  ((including  the  introduction  of 
prohibition to smoke in public places), on substance of human origin, on medicines for human 
and vetrinary use and the the state-level law on consumer protection. 

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. Limited progress was made in this area with the appointment of the members of the 
Metrology Council, but the other two of last year’s recommendations were not addressed and 
remain valid. Major steps still 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; 

  examine all existing legislation and administrative practices in the non-harmonised area to 
assess if they are in compliance with Articles 34-36 of the Treaty on the Functioning of 
the European Union, and start to plan how to address all non-compliant elements. 

General principles  

As  regards  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  

There  are  no  plans  to  ensure  that  legislation  and  administrative  practices  for  the  non-
harmonised  area  are  aligned  to  the  obligations  of  Articles  34-36  of  the  Treaty  on  the 
Functioning  of  the  European  Union  and  the  relevant  case  law  of  the  European  Court  of 
Justice.  There  is  no  specific  body  established  or  empowered  to  fulfil  the  obligation  of 
notifying technical regulations.  

Harmonised area: quality infrastructure  

While  the  legal  basis  and  administrative  structure  for  technical  regulations,  standards, 
conformity assessment, accreditation, metrology and market surveillance are in place, 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 

67 

 
 
coordination  between  them  remains  weak.  There  is  still  no  countrywide  strategy  to  put  in 
place  quality  infrastructure,  which  is  necessary  for  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)  and  of  the  European  Committee  for 
Electro-technical  Standardisation  (CENELEC).  Between  15  June  2020  and  14  June  2021 
ISBIH  adopted  2  057  European  standards  (ENs)  as  national  standards.  The  percentage  of 
adopted  European  standards  is  89.71%.  However,  conflicting  ex-Yugoslav  mandatory 
standards have still not been withdrawn in a systematic manner across the country, and there 
is still no countrywide register of the legislation in force.  

The  Institute  for  Accreditation  of  Bosnia  and  Herzegovina  (BATA)  is  the  single  national 
accreditation body. It is an associate member of the European Cooperation for Accreditation. 
BATA  is  understaffed,  with  20  employees  out  of  the  28  required  under  the  implementing 
legislation, one less than in 2020. There are 145 conformity assessment bodies in Bosnia and 
Herzegovina:  79  testing  laboratories,  2  medical  and  8  calibration  laboratories,  4  product 
certification body and 52 inspection bodies. The Law on accreditation is still 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 EU technical 
committees, European development programmes and cooperation projects with EU metrology 
institutes, and the BiH Metrology Council was appointed. Metrology institutes in Bosnia and 
Herzegovina need to cooperate and coordinate their activities in implementing the legislation 
in this area. IMBiH remains understaffed, with 51 of the 72 members of staff required under 
the implementing legislation, two less than in 2020.  

In  the  reporting  period,  the  Market  Surveillance  Agency  and  the  inspection  bodies  of  the 
entities and the Brčko District implemented 19 checks as part of proactive surveillance, and 
16 were initiated on reactive surveillance. As a result of 190 product safety inspections, 4 857 
unsafe  products  were  withdrawn  from  the  market  (of  which    1  613    were  destroyed),  and 
businesses  brought  2  658  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’,  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.  There  is  no  countrywide  approach  to  alignment  to 
alignment to EU  ‘old approach product legislation’ or in regard to prodedural measures. 
On the pricing of medical products, Bosnia and Herzegovina is partly 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 

68 

 
 
unlawfully  removed  from  the  territory  of  an  EU  Member  State  is  not  aligned  with  the  EU 
acquis.  

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  and  last  year’s 
recommendations remain therefore valid. 

 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  does  not  differentiate  between  EU 
workers and other third-country nationals. In order to work in Bosnia and Herzegovina, an EU 
citizen  has  to  obtain  a  work  permit  and  meet  certain  conditions,  with  several  exceptions  as 
provided  by  the  law  on  foreigners.  Employment  in  public  administration  is  reserved  for 
Bosnia  and  Herzegovina  citizens.  In  2020,  884  work  permits  were  issued  to  third-country 
nationals, of which 372 work permits were issued to EU citizens. Main sectors are processing 
industry, sales, civil construction, and services.  

The laws of the entities’ and the Brčko District on the employment of  foreigners still need to 
be  fully  harmonised  with  the  state-level  law  on  foreigners,  especially  when  it  comes  to 
regulating the issuance/approval of a residence permit for the purpose of work.  

Bosnia and Herzegovina still lacks a countrywide database of vacancies.  

As  regards  the  coordination  of  social  security  systems,  Bosnia  and  Herzegovina  has  10 
bilateral agreements on social security in place, of which 6 are with EU Member States, and 
another 16 agreements (of which 12 with EU Member States) are implemented on the basis of 
succession from the former Yugoslavia. 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 (EHIC). 

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.  Last 
year’s recommendations have not been addressed and remain valid. The existing legislation 
remains to be aligned with the EU Services Directive and it does not 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 

69 

 
 
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,  to  further  align  the  legislation  with  the  EU 
acquis, including the Regulation on cross-border parcel delivery services, 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  acquis.  In  particular,  no  progress  was  made  on  developing  a 
horizontal  law  enshrining  the  principles  of  the  Services  Directive,  reviewing  the  sector-
specific legislation to identify laws that need to be aligned with it, and establish the point of 
single  contact.  Legislative  alignment  at  all  levels  of  government  requires  building  up 
sufficient administrative capacity and 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 and strategy on postal services need to be prepared and adopted in order to ensure a 
consistent  regulatory  framework  aligned  with  the  EU  Postal  Services  Directive.  The  legal 
framework  for  providing  universal  postal  services  across  the  country  remains  to  be 
harmonised  and  the  postal  market  needs  to  be  fully  opened  up  to  competition.  The 
institutional and financial independence as well as the administrative capacities of the Agency 
for Postal Traffic should be strengthened to enable it to perform its regulatory function. There 
was  no  progress  on  aligning  legislation  with  the  EU  Regulation  on  cross-border  parcel 
delivery services. 

The  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.  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. 

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 no progress in the alignment with the EU acquis on the free movement of capital. 
Last year’s recommendations were addressed only to a limited extent and remain valid.  

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

  reduce  the  extensive  administrative  requirements  for  short-term  capital  transactions  and 
amend the legislation to comply with SAA commitments on the acquisition of real estate 
by EU citizens; 

  adopt  a  new  law  on  anti  money  laundering  and  countering  the  financing  of  terrorism, 
including a register of beneficial ownership information for legal persons and a register of 
beneficial ownership information for legal arrangements. 

70 

 
 
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  residents’  payments  of  life  insurance  premiums  to  non-
residents. Investment rules for institutional investors are subject to limitations on investment 
in foreign securities. In March 2021, the Republika Srpska entity simplified the conditions for 
opening a foreign currency account abroad, especially for domestic companies that invest or 
perform economic activities through a business unit established abroad. 

The state-level Law on 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. The 
restriction therefore remains in force and is not in line with the requirements of the EU acquis 
on  the  free  movement  of  capital,  unless  justified  on  grounds  of  public  policy  or  public 
security.  

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.  

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

As  regards  the  payment  systems,  the  Central  Bank  of  Bosnia  and  Herzegovina  (CBBH) 
operates a modern payment system since introducing a new gyro clearing system in 2019.  All 
interbank  transactions  up  to  10,000  BAM  go  through  this  system.  Bosnia  and  Herzegovina 
needs  to  adopt  legislation  to  align  with  the  EU  acquis  (Payment  Service  Directive  II,  the 
Electronic Money Directive  II and the SEPA Regulation) to  be  able to  adhere to  the Single 
Euro  Payment  Area  (SEPA)  schemes  for  communities  of  banks  or  financial  institutions 
outside  the  European  Economic  Area.  In  2021,  the  Federation  entity  adopted  legislation 
aimed  at  improving  transparency  and  comparability  of  fees  of  payment  service  providers, 
amongst others by defining maximum fees for debit and credit card transactions. 

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  new  law  on 
anti-money-laundering  and  countering  the  financing  of  terrorism  (AML/CFT)  in  line  with 
international  standards,  and  further  align  with  the  EU  acquis  on  anti-money  laundering  and 
countering  the  financing  of  terrorism.The  new  law  should  in  particular  cover  customer  due 
diligence  requirements,  the  reporting  of  suspicious  transactions,  and  the  transparency  of 
beneficial ownership. While Bosnia and Herzegovina has been removed from the EU list of 
high-risk  third  countries,  the  country  should  continue  to  improve  its  AML/CFT  framework, 
including by introducing a register of beneficial ownership information for legal persons and 
a register of beneficial ownership information for legal arrangements.   

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, and establish an asset recovery office. Preventive measures, 
supervisory action and sanctions in case of breaches – especially in the non-financial sector – 

71 

 
 
also still need to be implemented.  

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. Some steps were taken in the area of electronic registration of 
companies in both entities and the Brčko District. However, there was no progress towards 
establishing a central registry of businesses, connecting the business registers with each other 
throughout the country, and ensuring 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:  

  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  among  entities  and  the 

Brčko District.  

Company  legislation  at  all  levels  of  government  remains  aligned  only  to  a  limited  extent 
with the EU acquis. No central registry of businesses has been set up, nor has any connection 
been  made  among  the  company  registers  of  the  entities  and  Brčko  District.  Electronic 
registration of businesses was launched in the Republika Srpska entity in the reporting period. 
Such a system was also established in Brčko District. Legislation to simplify the registration 
process, including electronic registration, is still pending adoption in the Federation entity.  

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 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. In 
the  reporting  period,  both  entities  amended  their  legislation  on  accounting  and  auditing  in 
order  to  further  align  their  legal  frameworks  with  the  EU  acquis.  In  January  2021,  the 
Federation entity also adopted a Law on the Register of Financial Statements to enhance the 
quality of financial reporting in line with best international practice. 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.  

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  IPR  cover,  for  instance, 

72 

 
 
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.  The  recommendations  from  last  year 
were not addressed and remain valid. 

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

  implement the strategy on enforcement of intellectual property rights; 

  amend the Law on Patents. 

The  Institute  for  Intellectual  Property  of  Bosnia  and  Herzegovina  (IIP)  operates  as  an 
independent  administrative  body.  The  Institute’s  development  strategy  gives  it  the  role  of 
coordinator in the system of enforcing intellectual property rights. 

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. 

Copyright works and related rights were deposited and registered in the IIP. Six organisations 
in the country are authorised for the collective management of copyright and related rights.  

In the area of industrial property rights, the legislative framework is partially aligned with 
the  EU  acquis.  Further  alignment  is  needed,  in  particular  for  patents,  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 relevant amendments to the Law on Patents.  

Regarding  enforcement,  in  the  reporting  period  the  Indirect  Taxation  Authority  received  
only 69 requests for customs measures based on protected trademarks and issued 57 decisions 
on temporary retention and seizure of goods. The State Investigation and Protection Agency 
investigated only 36 cases of which 6 were closed while the remaining 30 cases are still under 
investigation. 

The administrative  and judicial  capacity of the enforcement  institutions  remains insufficient 
and  their  cooperation  needs  to  be  strengthened.  Bosnia  and  Herzegovina’s  strategy  on  IPR 
enforcement has yet to be implemented. The country still does not have a reliable system for 
collecting  and  analysing  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 such cases in a more efficient 
and consistent manner. 

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. 

73 

 
 
Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  area  of  competition  policy. 
There  was  some  progress  in  this  area  in  the  reporting  period,  in  particular  with  further 
alignement  of  the  law  on  State  aid  with  the  EU  acquis.  Bosnia  and  Herzegovina  should 
further align its implementing legislation in the area of competition and State aid with the EU 
acquis. Recommendations from last year were not addressed and remain valid. 

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

  step  up  efforts  to  improve  the  enforcement  record  of  the  State  Aid  Council  by  ensuring 

that State aid measures are notified ex ante by granting authorities;  

  in line with SAA provisions, ensure that the State Aid Council operates independently and 
align  with  the  EU  acquis  the  existing  aid  schemes,  introduced  before  the  State  Aid 
Council was established,  

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 the reporting period the Competition Council took 
27 decisions, including 10 on prohibited agreements, 7 on abuse of dominant position and 10 
authorising  concentrations.  The  imposed  fines  amounted  to  circa  EUR  250 000.  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. In June 2020, the Law on State Aid System was amended to 
further align it with the acquis. The implementing legislation is not developed evenly across 

74 

 
 
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.  The  mandate  of  the 
members of the State Aid Council from the Republika Srpska entity expired in July 2020 and 
no actions have been taken to nominate new ones yet.  

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.  Furthermore,  staff  expertise 
needs to be developed through relevant training. On implementation, the State Aid Council 
issued  only  two  (positive)  decisions  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 19 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. 

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.   

financial  services.  There  was  some  progress 

Bosnia and Herzegovina has some level of preparation / is moderately prepared in the area 
of 
last  year’s 
recommendations.  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.  

implementing 

in 

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

  sign a Financial Stability Memorandum of Understanding; 

  strengthen the bank resolution framework by amending the entities’ banking laws and the 

law on deposit insurance to enable the creation of a financial stability fund   

  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, 

75 

 
 
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. A common methodology to determine systemically important banks remains 
to be adopted. 

Banking  agencies  coordinated  their  response  to  support  the  financial  sector  and  the  general 
economy during the pandemic, including by a temporary  moratorium on debt repayments of 
up  to  six  months  and  a  possible  loan  restructruring.  The  moratorium  was  renewed  in  2021. 
Banking agencies also  suspended dividends and limited remuneration in  the banking sector. 
Banking  agencies,  in  a  coordinated  manner,  adopted  implementing  legislation  primarily 
related to liquidity, credit, foreign exchange risk as well as capital calculation in order to ease 
the  requirements  and  assist  banks  to  deal  with  COVID-19  consequences,  thus  stimulating 
lending  activity.  Financial  stability  will  have  to  be  closely  monitored,  also  through  more 
frequent  meetings  of  the  Standing  Committee  for  Financial  Stability. The  deposit  insurance 
system is operational, but the amount of insured deposits is not in line with the requirements 
of  the  EU  acquis.  While  the  implementation  of  the  Law  on  deposit  insurance  enhances  the 
bank resolution framework, this framework should be further strengthened.  

Implementation  of  the  Supervisory  Review  and  Evaluation  Process  (SREP)  methodology 
continued, which enabled identifying risks and corrective measures for individual banks. 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 (NPL) declined to 6.1% of the outstanding loan portfolio at 
the  end  of  2020.  Nevertheless,  institutional  and  legal  obstacles  to  swift  and  effective  NPL 
resolution  need  to  be  reduced,  also  as  NPL  are  likely  to  increase  after  COVID-19  related 
support measures expire.  

Fragmentation  of  the  institutional  and  regulatory  set-up  continues  to  impede  banking 
supervision.  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.  

Bosnia  and  Herzegovina  made  some  progress  on  insurance  and  occupational  pensions. 
Both  entities  adopted legislation on compulsory  vehicle insurance in  July 2020 to  gradually 
liberalise their insurance markets. The Federation entity adopted a new law for liberalising the 
premium  tariffs  by  October  2025.  It  also  adopted  implementing  decisions  on  insurance 
conditions and tariffs, providing amongst others for implementation of a bonus/malus system 
harmonised between  entities. The  Republika Srpska entity  amended its legislation to  extend 
the  deadlines  for  the  tariffs  liberalisation  until  October  2026,  with  a  view  to  alleviating  the 
consequences  of  the  pandemic  on  the  insurance  sector.  Both  entities  adopted  implementing 
legislation,  including  on  conditions  and  premiums  for  third  party  liability  in  the  Federation 
entity,  and  on  reporting  requirements  to  the  Insurance  Agency  as  well  as  on  payment 
conditions in voluntary pension funds in the Republika Srpska entity.  

Both  entities  adopted  a  methodology  for  the  supervision  of  branch  offices  in  inter-entity 
operations  to  implement  the  existing  protocol  on  cooperation  and  harmonisation  of  inter-
entity  business  operations.  In  October  2020,  the  Multilateral  Guarantee  Agreement  entered 
into  force,  abolishing  green  card  checks  for  vehicles  registered  in  Bosnia  and  Herzegovina 
entering  the  European  Union.  Despite  some  incremental  awareness  raising  initiatives  and 
surveys on qualitative requirements for alignment carried out by the insurance companies, no 

76 

 
 
progress  has  been  made  in  preparing  for  transition  into  the  Solvency  II-based  regulatory 
framework.  

Alignment  with  the  acquis  governing  financial  supervision  of  institutions  for  occupational 
retirement provision remains to be addressed.  

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

The  regulatory  framework  for  securities  markets  and  investment  services  is  under  the 
entities’  competences.  Both  entities  have  a  securities  market  regulator  (Securities 
Commission) and a dedicated, though not  harmonised legal  framework on securities market 
and  investment  funds.  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. Since the end of 2019, the Securities Commission of the  
Federation entity had lost the quorum of three members required to operate even its technical 
mandate, rendering it unable to perform its regular duties. As a result, all requests for capital 
increase,  mergers  and  acquisitions  have  come  to  a  halt,  creating  serious  problems  for 
businesses and the capital market. Members of the Securities Commission of the Federation 
entity were appointed only in September 2021. 

With the aim to simplify issuance of debt securities and to enhance broker-dealer activity, the 
Republika  Srpska  entity  amended  its  legislation  on  securities  markets.  With  the  entry  into 
force  of  the  Law  on  factoring  in  December  2020,  this  entity’s  Securities  Commission  is 
authorised to license factoring companies.  

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 during the reporting period; last year’s 
recommendations  remain  valid.  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 
acquis and ratify the protocol to eliminate illicit trade in tobacco, and start to enforce both 
measures;  

  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; 

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

Consumer protection 

On horizontal aspects, the legal framework for consumer protection is still enshrined in the 
Law  on  consumer  protection,  adopted  in  2006  at  state  level.  This  needs  revision  to  ensure 

77 

 
 
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.    However,  the 
reports on the execution of the 2019 State-level annual consumer protection programme and 
the 2020 State-level annual consumer protection programme were not adopted.  

The  Ombudsman’s  office  for  consumer  protection  issued  decisions  in  249  consumer 
complains.  The  Ombudsman  delivered  20  expert  opinions,  provided  365  pieces  of  legal 
advice, answered 37 requests for information and signed a cooperation agreement with all 15 
consumer associations from both entities. 

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  19  checks  as  part  of  proactive  surveillance,  and  16  were 
initiated on reactive surveillance. As a result of 190 product safety inspections, 4 857 unsafe 
products were withdrawn from the market (of which  1 613 were destroyed), and businesses 
brought 2 658  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.  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  still  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. Though one entity 
adopted  legislation  designed  to  be  aligned  with  the  EU  acquis  on  biomedically  assisted 
fertilization, this is not the case across the country as the legal framework is fragmented.  The 
country lacks the necessary administrative capacities to  fulfil the requirements laid down in 
the EU acquis on human organ, tissue and cell transplantation. The entities have established 
institutes for transfusion medicine. Transplantation programmes are organised at entity level 
with very limited cooperation between them. 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 
has  not  yet  been  aligned  with  the  EU  acquis  at  all  levels  of  government.  Bosnia  and 
Herzegovina’s  participation  in  the  technical  activities  of  the  European  Centre  for  Disease 
Control  and  Prevention  (ECDC)  remains  limited  and  Bosnia  and  Herzegovina  has  not  yet 
taken  part  in  the  ECDC  assessment  on  the  status  of  comunicable  diseases.  Bosnia  and 
Herzegovina needs  to  strengthen coordination between the entities and the state level  in  the 
field  of  communicable  disease  surveillance  and  response.  Measures  to  promote  healthy 
lifestyles in connection with the prevention of non-communicable diseases are regulated and 

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partially implemented by the competent institutions of the entities and the Brčko District. 

In  relation  to  COVID-19,  the  authorities  at  all  levels  reacted  promptly  and  introduced 
mitigation measures to slow down the transmission of the virus, but these measures were not 
well  coordinated  throughout  the  country.  Official  COVID-19  information  is  gathered, 
presented  and  reported  on  locally  and  internationally  through  the  pre-existing  international 
health  regulation  mechanism.  Bosnia  and  Herzegovina  also  continued  to  use  the  EU  joint 
procurement  agreement  for  medical  counter-measures.  As  regards  to  vaccination  against 
COVID-19,  the  authorities  ensured  successful  participation  in  the  COVAX  facility.  At  the 
beginning of the vaccination process, Bosnia and Herzegovina mainly relied on the donations, 
only  the  Republika  Srpska  entity  directly  purchased  vaccines.  Mass  vaccination  across  the 
country has not fully started, and there is no central database on the vaccinated citizens. The 
EU is providing EUR 7.76 million in assistance to support public health institutions, adapted 
to  respond  to  the  needs,  and  a  grant  of  EUR  13.7  million  for  the  purchase  of  vaccines 
(including transport costs, and up to 15% of which can be used for vaccine-related supplies 
and  equipment).  The  country  received  214  110  doses  between  May  and  August  2021, 
facilitated  by  Austria,  through  this  EU4health  grant.  Bosnia  and  Herzegovina  also  received 
multiple donations from the EU Member states (500 000 from Austria, 170,000 from Croatia, 
120,000 from Greece, 52 8000 doses from Slovenia, 200,000 doses from Hungary and 50,000 
doses  from  Bulgaria  by  end  August  2021),  bringing  the  total  COVID-19  vaccines  doses 
provided by the EU to over 1.3 million by the end of August. 

On cancer screening, Bosnia and Herzegovina has no countrywide cancer control plan, or a 
countrywide  early  detection  programme.  The  Federation  entity  has  no  systematic  cancer 
registers  or  screening  programmes  for  the  treatment  of  cancer,  due  to  legislative  issues  and 
limited  financial  capacity.  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. 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,  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 
marginalised  groups  is  one  of  Bosnia  and  Herzegovina’s  key  reform  priorities.  Roma  have 
access  to  healthcare  services  only  if  they  are  registered  at  the  employment  or  education 
administrations.  Due to  this  many  Roma lack health insurance.  During the declared state of 
emergency  /  natural  disaster,  all  levels  of  government  passed  measures  on  temporary 
universal health protection coverage with regard to COVID-19. 

CLUSTER 3: COMPETITIVENESS AND INCLUSIVE GROWTH  

The cluster covers chapters 10 - information society and media, 16 - taxation, 17 - economic 
and monetary policy, 19 - social policy and employment, 20 - enterprise and industrial policy, 
25 - science and research, 26 - education and culture, 29 - customs union.  

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Bosnia  and  Herzegovina  needs  to  develop  and  adopt  laws  electronic  communications  and 
electronic media, and on electronic identity and trust services, in line with the EU acquis, and 
pursue the digital switchover. On taxation, it should bring excise duties on beer in line with 
the  EU  acquis,  and  ensure  the  interoperabilty  of  e-signature.  It  should  improve  cooperation 
and coordination of macroeconomic and fiscal policies, also in the context of the Economic 
Reform  Programme  (ERP),  and  guarantee  the  independence  of  the  Central  Bank  and  the 
integrity  of  the  currency  board.  On  economic  and  monetary  policy,  it  should  ensure 
consistent political  support for and high visibility, countrywide ownership and coherence of 
the Economic Reform Programme. On social policy, it should adopt employment strategies, 
develop a develop a Youth Guarantee implementation plan and enhance social dialogue. On 
industrial  policy, it should  simplify and harmonise business  registration  and update strategy 
documents.  It  should  develop  and  adopt  a  smart  specialisation  strategy,  and  a  roadmap  for 
research  infrastructure.  It  should  ensure  a  fully  functional  system  of  (re-)accreditation  of 
higher  education  institutions  and  study  programmes,  and  continued  participation  in 
international assessment studies. It should implement the law on customs policy, and increase 
administrative capacities. 

Socio-economic reforms must be pursued to help address the existing structural weaknesses, 
low competitiveness, high unemployment, as well as the impact of the pandemic, which has 
further increased their and urgency. This cluster and the reforms concerned have significant 
links to Bosnia and Herzegovina’s Economic Reform Programme.  

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 in implementing last year’s recommendations, 
which remain valid. 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. The Regional Roaming Agreement entered into force in July 2021, enabling ‘roam like 
at home’ (RLAH).  

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

  develop and 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; 

  develop  and  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  has  still  made  no  progress  in  adopting  the  legislation  related  to    electronic 
communications  and  electronic  media  in  line  with  the  2018  EU  regulatory  framework.. 
Bosnia and Herzegovina has not developed  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.  

80 

 
 
 
In  2020,  there  were  60  internet  providers  and  3,336,591  internet  users  (94.49%  penetration 
rate),  with  a  penetration  rate  of  21.39%  for  broadband  internet.    The  Regional  Roaming 
Agreement enabling ‘roam like at home’ entered into force in July 2021, leading to a further 
decrease of the price of roaming services.  

Regarding  information  society  services,  Bosnia  and  Herzegovina  made  no  progress  in 
adopting a  countrywide strategyand action plan for development of the information society. 
No progress was made for the adoption of the 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. Also,  no progress has been made in ensuring the interoperability of the electronic 
signature system throughout the country. 

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 made no progress in developing and 
adopting  a lawon 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. 
Bosnia and Herzegovina 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 still not 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. 

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. No  progress 
was  made  in  the  reporting  periodThe  Commission’s  recommendations  of  2020  were  not 
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  needs  to  further  align  VAT  legislation  with  EU  acquis  and  improve  cooperation 
between the Indirect Taxation Authority (ITA) and the tax administrations of the entities and 
Brčko District, including through joint audits.  

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, 

81 

 
 
structures and minimum rates. The country needs to align its law on excise tax fully with the 
EU acquis.  

On direct taxation,  in August  2020, the  Republika Srpska entity adopted a new law on tax 
procedure  allowing  the  e-registration  of  business  entities,  and,  in  December  2020,  amended 
the law on income tax. There was no progress in the field of direct taxation in the Federation 
entity as new legislation on income taxation and social contributions to reduce tax burden on 
labour and harmonise with the Republika Srpska entity remain to be adopted.  

On administrative cooperation and mutual assistance, Bosnia and Herzegovina ratified the 
OECD/Council of Europe multilateral convention on mutual administrative assistance in tax 
matters  (MAC)  and  deposited  the  instrument  of  ratification  in  September  2020.  The 
convention  entered  into  force  on  1  January  2021.  The  country  has  not  yet  committed  to 
automatically  exchange  financial  account  information  based  on  the  OECD  single  global 
standard.  Bosnia  and  Herzegovina  has  signed  double  taxation  agreements  with  20  EU 
Member States. 

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

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  2020  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: 

  enhance  cooperation  and  coordination  on  socio-economic  reforms  among  the  different 
levels  of  the  government  and  strengthen  the  analytical  capacities  of  governmental 
institutions, in particular of the state-level Ministry of Finance and Treasury. 

  ensure  consistent  political  support  for  and  high  visibility,  countrywide  ownership  and 
coherence of the Economic Reform Programme (ERP), including its medium-term macro-
fiscal  framework;  enhance  administrative  capacity  to  design,  implement  and  monitor 
reforms; 

   Maintain  the  independence  of  the  Central  Bank  and  the  integrity  of  the  currency  board 

arrangement and appoint the Governing Board members without any further delay.  

As  regards  monetary  policy,  the  exchange  rate  regime  continues  to  be  characterised  by  a 
currency board arrangement, which links the convertible mark (KM) to the euro as the anchor 
currency. This provides stability within the country’s complex institutional environment. 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.  

82 

 
 
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 
with  the  EU  acquis.  In  2020,  three  new  members  were  appointed  to  the  central  bank’s 
Governing Board. Two members were appointed following a change in the composition of the 
state  presidency,  which  appoints  board  members.  The  circumstances  of  appointments  (and 
previous dismissals) may raise concerns of political interference. In August 2021, the mandate 
of the central bank’s Governing Board expired and the Presidency of Bosnia and Herzegovina 
failed to adopt a decision to appoint the Governing Board.  On the last day of its mandate, the 
Governing  Board  adopted  the  decision  to  apply  the  principle  of  continuity  to  enable 
undisturbed performance of core tasks and functions of the central bank, until the Presidency 
appoints new members of the Governing Board. The Serb member of the Presidency has also 
repeatedly proposed to use central bank reserves for fiscal purposes which would undermine 
the currency board arrangement.  Therefore, a continued focus on preserving the integrity of 
the currency board arrangement and the independence of the central bank in line with the EU 
acquis is crucial.  

Banking  supervisory  powers  lie  with  the  two  entities’  banking  agencies.  While  the  banking 
system weathered the pandemic shock relatively well so far, the efficiency of banking sector 
supervision is impeded by fragmented competences and insufficient coordination.  

Regarding  the  EU  acquis  on  economic  policy,  the  quality  of  Bosnia  and  Herzegovina's 
medium-term economic reform programme points to significant weaknesses in administrative 
coordatination and policy formulation. Implementation of the jointly adopted policy guidance 
was  partial.  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,  consistent and 
based on a jointly agreed prioritisation. In that vein, the coordination role of the Directorate of 
Economic  Planning  should  be  strengthened,  including  the  provision  of  necessary  resources. 
During  the  Economic  and  Financial  Dialogue,  the  country  did  not  succeed  to  formulate  a 
common  position  towards  two  issues  in  the  policy  guidance  contained  in  the  Joint 
Conclusions,  namely  (i)  to  create  in  line  with  the  EU  acquis  a  central  (i.e.  countrywide) 
registry of bank accounts of private individuals and (ii) to adopt the law on electronic identity 
and trust  services for  electronic transactions with  a single supervisory body in  line with  the 
acquis.  

The  governments’  response  to  the  COVID-19  pandemic  remains  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,  no  meetings  held  during  the  reporting 
period. 

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  limited.  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 

83 

 
 
monitor and enforce compliance with  countrywide fiscal rules. The medium-term budgetary 
framework remains insufficiently developed and underused as a policy-guiding instrument. 

Chapter 19 - Social policy and employment 

EU rules in the social field include minimum standards for labour law, equality, health and 
safety at work and non-discrimination. They also promote social dialogue at European level. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  field  of  social  policy  and 
employment. Limited progress was achieved in implementing last year’s recommendations, 
especially when it comes to labour legislation, 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. Some progress 
was achieved related to development of entities and countrywide employment strategies and 
efforts sshould be taken to adopt them. No steps were taken to strengthen and promote social 
dialogue.  

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

  adopt  entity-level  and  countrywide  employment  strategies  as  a  policy  framework,  while 

providing for additional capacities for implementation and monitoring; 

  take  steps  to  establish  and  implement  the  Youth  Guarantee  by  developing  a  Youth 

Guarantee Implementation Plan in line with the EU model and guidance; 

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

The  labour  laws,  in  place  at  the  level  of  the  entities  and  Brcko  District,  apply  to  all 
employees, except to civil servants, and guarantee a minimum level of protection of employee 
rights.  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 by the laws on striking that 
are  in  place  at  all  levels  of  the  government.  Beside  the  existing  legislation  on  the  amicable 
settlement  of  labour  disputes  in  the  Republika  Srpska  entity,  the  Federation  entity  adopted 
legislation on the issue in April 2021. These laws are generally based on ILO principles and 
recommendations,  despite  some  differences  when  it  comes  to  institutional  arrangements. 
Implementation  of  the  labour  laws  remains  inadequate,  especially  when  it  comes  to  social 
dialogue, protection for workers and the enforcement of labour inspection.  

The pandemic exposed the need to  amend the labour laws to  address  deficiencies 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. In 
October  2020,  a  new  law  on  occupational  safety  came  into  force  in  the  Federation 
entity,setting  basic  principles  of  occupational  safety  and  health.  The  bylaws  regulating 
specific aspects of occupational safety and health need to be adopted and harmonised with the 
EU  acquis  throughout  the  country.  Enforcement  and  implementation  of  legislation  remains 
partial,  especially  when  it  comes  to  inspection  capacities,  control  over  proper  prevention  of 
injuries  at  work,  investment  in  safety  and  relevant  training  for  employers  or  assistance  to 
conduct  a  proper  risk  assessment  in  the  workplace.  The  system  of  collection  and 
dissemination  of  statistical  data  on  work-related  injuries  and  diseases  still  needs  to  be 

84 

 
 
improved. Official data on reported accidents and fatalities, along with most affected sectors, 
were not published for 2020.  

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. 

Social dialogue remains weak at all levels and no significant improvements have been made. 
The  involvement  of  social  partners  in  the  implementation  of  policies  is  limited  and  their 
internal  capacities  require  improvements.  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. 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. The new legislation in the Federation entity introduced mechanisms for individual 
and collective amicable labour dispute settlement in expedited and less costly manner 

Regarding  employment  policy,  there  is  still  no  countrywide  employment  strategy  in  place. 
Entity  strategies  have  expired  too.  New  entity-level  and  countrywide  draft  employment 
strategies  for  2021-2027  are  being  prepared.  The  Federation  entity  Government,  in 
cooperation with the ILO, also adopted in May 2021 a draft employment strategy for period 
2021-2027 and forwarded it for parliamentary procedure.  Efforts should be taken to  finalise 
and adopt them.  

According  to  the data of  the  Labour  Force  Survey  in  2020, the activity rate was 47,7% 
(reference  age  20-64y),  the    employment    rate    40.1%  (reference  age  20-64y),  the  
unemployment  rate 15.9% (reference age 15-74y), and the inactivity rate 52.3%. Out of the 
total  active  population,  60.4%  are  men  and  39.6%  women.    Out  of    the    total    number    of  
employed  persons,  61.7% are men and 38.3% are  women,  while  out  of  the  total  number  
of    unemployed  persons    53.7%    are    men    and    46.3%  are  women.  The  unemployment  is 
especially affecting the 25-49y cohort which makes 60.6% of the unemployed person, (22.9% 
belong to the 15-24y, 16.4% to the 50-64y and 0.1% to the 65+).The educational structure of 
that  67.5%  have  completed  secondary  school  and 
persons 
specialization,  20.7%  have  a  college,  university,  master  or  doctoral  degree,  and  11.7% 
completed primary school or lower education.  

in  employment  shows 

The  highest  share  in  educational  structure  of  the  unemployed  persons  have  those  with 
completed  secondary    education    and  specialization  (70.8%),  followed    by  those  with  a  
college,  university,  master  and  doctoral  degree  (15.1%),  and  those  with  completed  primary 
school or lower education (14.1%). 

Public  employment  services  are  implementing  various  labour  market  programmes,  with 
special focus on mitigation of impact of the COVID-19 pandemic. Results of the implemented 
active  labour  market  policies  are  under  evaluation.  The  capacity  of  the  public  employment 
services to provide quality services to jobseekers has been gradually improving but remains 
weak.  The  administration  of  social  benefits  further  limits  the  ability  of  public  employment 
services to assist active jobseekers.  

Bosnia and Herzegovina took part in bilateral and regional awareness-raising meetings on the 
Youth  Guarantee.  In  the  upcoming  period,  the  country  needs  to  put  in  place  coordination 
mechanisms  involving  all  relevant  actors  and  take  concrete  steps  to  gradually  establish  and 

85 

 
 
implement the Youth Guarantee scheme by developing the Youth Guarantee Implementation 
Plan, in line with the commitment taken by Bosnia and Herzegovina in the Western Balkans 
Declaration on ensuring sustainable labour market integration of young people. 

The  level  of  informal  employment  remains  high.  The  measures  to  reduce  informal 
employment  are  supported  within  active  employment  measures  such  as  self-employment, 
incentive programmes for employers and improvement of business  climate, as well as some 
repressive measures and efforts to reduce para-fiscal charges. 

There  has  been  no  progress  in  preparations  for  using  the  European  Social  Fund.  (See 
Chapter 22 - Regional policy and coordination of structural instruments). 

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 
strategies and laws related to 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. 
Deinstitutionalisation  requires  comprehensive  reform  with  regard  to  financing  of  the  new 
services  for  both,  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 at country level. Bosnia and Herzegovina should adopt a new action plan for children.  

The EU Statistics on Income and  Livings Conditions  (EU-SILC) is  still not  available in  the 
country. 

The principle of equal opportunities and equal treatment of men and women in matters 
of  employment  and  social  policy    is  regulated  by  the  laws  on  gender  equality  and 
antidiscrimination,  and  by  the  entity-level  labour  laws.  These  laws  contain  provisions  on 
gender  equality  covering  different  areas  (employment,  education,  training  and  professional 
qualification) but in practice the enforcement of non-discrimination legislation remains low. 
In 2020, the employment rate for the population  aged 20-64 was 40% for females and 65% 
for men, resulting in a high gender employment gap of 25 percentage points. 

In  February  2021,  the  Federation  entity  government  adopted  a  development  strategy  2021-
2027. One of the goals is inclusive social development within which support to and promotion 
of  women’s  entrepreneurship  is  emphasised.  A  2019-2023  strategy  for  development  of 
women’s entrepreneurship is in place in the Republika Srpska entity too.  

86 

 
 
On non-discrimination in employment and social policy, 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  labour  market  and  the  social  policies  have  not  been  very  successful  in 
addressing  the  specific  needs  of  vulnerable  population,  including  Roma.  The  weak  links 
between the responsible ministries and lack of cooperation constitutes a barrier for progress. 
The  Human  Rights  Ombudsman  institution  is  the  body  in  charge  of  protection  from 
discrimination.  In  2020,  the  Ombudsman  dealt  with  35  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, nor they seek judicial protection 
for  fear  of  being  fired.  Most  public  bodies  do  not  have  mechanisms  for  dealing  with 
complaints  of  mobbing  and  discrimination,  which  is  not  in  line  with  the  antidiscrimination 
law. 

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 
progressed; 
to  be 
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  needs  of  businesses,  particularly  SMEs,  when  it  comes  to  modernising  skills 
and adopt strategic guidelines for harmonisation of SMEs and entrepreneurship support. 

The  majority  of  companies  in  Bosnia  and  Herzegovina  (some  70%)  have  experienced  a 
decline  in  operations  and  a  decreased  turnover,  following  COVID-19  related  containment 
measures introduced since spring 2020. As expected, the services and tourism sectors felt the 
impact of the crisis significantly more than the rest of the economy. Textiles, furniture, basic 
and  fabricated  metals  experienced  the  worst  hit  within  the  manufacturing.  Furthermore, 
COVID-19  raised concerns on the resilience of the agri-food sector in  a  situation of supply 
chain disruptions, limitations on movement and trade restrictions. SMEs have experienced a 
more severe revenue decline compared to larger companies. They are more prone to complete 
shutdowns,  due  to  a  smaller  number  of  workers  capable  of  ensuring  the  continuity  of 
operations  in  health  crisis.  They  are  also  more  exposed  to  supply  chain  disruptions  and 
reliance on specific industry segments.  

Governments of the entities and the Brčko District continued with the COVID-19 emergency 
support measures in  form  of wage subsidies and tax reliefs from  stabilisation and solidarity 

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funds.  Guarantee  funds  are  operational  in  both  entities.  In  September  2020,  the  Federation 
entity  introduced  a  COVID-19  alleviating  measure  for  its  textile,  leather,  footwear  and 
clothing  strategy.  In  October,  this  entity  allocated  EUR  46  million  to  support  tourism, 
transport, agriculture and industry, resulting in positive effects on employment. Furthermore, 
the  Republika  Srpska  entity  adopted  a  grant  procedure  for  investments  to  assist  businesses, 
enabling over 90 companies to  procure modern  equipment  and technology worth  EUR  14,8 
million.  Brčko  District  adopted  a  law  on  mitigating  the  consequences  of  COVID-19  on  its 
the  economic 
economy.  Although  substantial  resources  were  allocated 
consequences of COVID-19, a consistent countrywide approach (coordinated with the private 
sector) is largely absent and the crisis response has been fragmented, insufficient and slow so 
far.  Delays  in  implementation  occurred,  particularly  with  the  provision  of  loan  guarantees 
which are to some extent characterised by lengthy and cumbersome procedures.  

to  mitigate 

Regarding enterprise and industrial policy principles, Bosnia and Herzegovina still lacks a 
countrywide  industrial  development  strategy  as  well  as  a  state-level  body  promoting 
consistency  between  industrial  strategies  and  coherence  with  other  policies  affecting 
industrial  competitiveness.  The  Federation  entity’s  development  strategy  for  2021-2027 
remains to be adopted by Parliament. The Republika Srpska entity is yet to finalise a strategy 
for  industrial  development  beyond  2020.  The  Brčko  District  adopted  its  2021-2027 
development  strategy  in  May  2021  and  the  Government  is  tasked  to  prepare  sectoral 
strategies. 

A  few  steps  were  made  to  improve  the  business  environment  and  to  attract  investments.  A 
register  of  business  incentives  is  operational  in  the  Republika  Srpska  entity  since  October 
2020. The Republika Srpska entity amended a set of legislation on administrative and utility 
fees,  in  addition  to  the  previously  amended  law  on  court  fees.  The  average  duration  of 
bankruptcy proceedings  in  the  Republika Srpska  entity has been significantly shortened and 
legislation  on  an  out-of-court  model  of  financial  restructuring  was  passed.  The  Republika 
Srpska  entity  also  adopted  a  law  on  free  zones  with  the  aim  to  align  with  the  state-level 
regulatory  framework.  In  2021,  the  Federation  entity  adopted  some  legislation  related  to 
bankruptcy,  financial  consolidation  of  companies  and  a  register  of  fees  and  charges.  In 
September  2021,  the  Federation  entity  also  adopted  a  law  on  crafts,  which  amongst  others 
simplifies the registration and closure of craft businesses and regulates the management of a 
crafts registry. However, overall, the investment environment and the level of competitiveness 
remain  unsatisfactory.  Bosnia  and  Herzegovina  is  still  lacking  a  countrywide  strategic 
framework to encourage foreign direct investments and to improve the business environment. 
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.  Electronic  registration  of  businesses  was  launched  in  the  Republika  Srpska 
entity.  Such  a  system  was  also  established  in  Brčko  District.    Legislation  to  simplify  the 
registration  process,  including  electronic  registration,  is  still  pending  adoption  in  the 
Federation entity.   

Regulatory  impact  assessment  is  systematically  applied  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  the  COVID-19  pandemic  represents  a  significant  additional  burden  for  the  public  sector, 
oversight and governance of public enterprises will need to be strengthened, including actions 
to  put  public  companies  on  equal  footing  with  other  industrial  enterprises  and  to  reduce 

88 

 
 
substantial payment arrears.  The Federation entity established a registry of public companies 
at  the  Federation  Information  Agency,  and  this  body  proceeds  with  updating  company 
information.  The  process  is  expected  to  be  completed  later  in  2021.    In  line  with  its 
privatisation plan, this entity aims at privatising public enterprises in the processing and mining 
industry. 

Efforts to develop a countrywide strategic framework for SME development 2021-2027 with 
harmonised  objectives,  priorities  and  measures  relevant  for  each  administrative  level  have 
been  progressing.  Strategic  guidelines  for  harmonisation  of  SME  development  and 
entrepreneurship  support  remain  to  be  adopted  by  the  Council  of  Ministers.  They  are 
addressing  the  Small  Business  Act  (SBA)  implementation  only  on  dimensions  related  to 
public  procurement,  standards  and  technical  regulations  and  internationalisation.  In  April 
2021,  the  Republika  Srpska  entity  adopted  its  2021-2027  SME  development  strategy,  but 
Bosnia  and  Herzegovina  has  no  timelines  yet  for  developing  a  comprehensive  countrywide 
SME framework for implementing the SBA as a whole. In March 2021, the SBA coordination 
working  group  developed  action  plans  2021-2023  for  support  to  SMEs  innovation  in  both 
entities  and  Brčko  District.  The  resulting  countrywide  priorities  are  planned  to  be  used  for 
development  of  a  Smart  Specialisation  Strategy,  which  will  however  need  a  fully-fledged 
analysis for evidence-informed policymaking process.  

Preparations of industry towards a green, digital transformation and global competitiveness in 
line with the EU industrial strategy are at a very early stage. While the level of internet usage 
in  enterprises  is  high  (with  98%  of  them  using  computers,  96%  having  internet  access  and 
64% having a website), the share of medium-to-high value-added and technology products is 
modest  and  technology  extension  services  are  still  non-existent.  The  economy’s  innovation 
performance  has  decreased  over  the  last  two  years,  specifically  in  the  green  technologies 
sector  as  indicated  by  the  European  Innovation  Scoreboard  2021  that  covers  Bosnia  and 
Herzegovina  for  the  first  time.  Bosnia  and  Herzegovina’s  level  of  assistance  to  SME 
innovation  is  still  the  lowest  in  the  region,  while  SME  skills  programmes  are  mainly 
supported by international donors. The collaboration of SMEs and research institutions is not 
sufficiently developed to create conditions for the application of innovative financing models 
like  innovation  vouchers  or  collaborative  grants.  The  needed  amendment  to  the  patent  law 
(see Chapter 7 – Intellectual Property Law) could improve both collaboration and financing 
of innovation activities for higher value-added business. 

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  throughout  the  country.  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. 

Bosnia  and  Herzegovina  continued  to  participate  in  the  EU’s  COSME  programme  on  the 
competitiveness  of  enterprises  and  SMEs.  In  2020,  the  partners  from  the  two  Enterprise 
Europe Network (EEN) consortia covering Bosnia and Herzegovina  – EUNORS (Republika 
Srpska  entity)  and  BITNET  (Federation  entity)  –  were  involved  in  67  international 
matchmaking  events,  to  which  they  brought  300  of  their  clients,  resulting  in  654  meetings. 
These  events  targeted  a  number  of  sectors,  including  agro-food,  energy,  ICT,  electronics, 
industrial manufacturing, medical and environmental protection. Their matchmaking activities 
resulted in 27 partnership agreements with other European SMEs.  

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As  regards  sectoral  policies,  the  Federation  entity  adopted  an  amendment  to  the  action 
programme for implementation of textile, leather, footwear and clothing strategy, to address 
the impact of COVID-19 on companies in those industrial sectors.  

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. 
Limited progress was made in the reporting period, particularly in the field of international 
research  and  innovation  cooperation.  The  inclusion  of  Bosnia  and  Herzegovina  in  the 
European Innovation Scoreboard is a major achievement Last year’s recommendations remain 
valid.  

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.  In  December  2020,  a  Council  for  Science 
was  appointed  as  an  advisory  and  expert  body;  it  held  first  constituent  session  in  January 
2021. 

The  country’s  estimated  total  allocations  for  research  remain  low  at  0.3%  of  GDP.  An 
increased budget in this area would support the country’s economic recovery, also given the 
relevance  of  innovation  to  the  Economic  and  Investment  Plan  for  the  Western  Balkans. 
Further progress should be 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 although limited due to COVID-19 outbreak, most notably in the health, 
medical, and IT sector, with no systematic measures having been introduced so far to address 
the issue.  

Regarding  the  development  of  the  of  the  Smart  SpecialisationStrategy  for  Bosnia  and 
Herzegovina  no  progress  has  been  achieved;  the  strategy  still  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  pending  adoption  and 
implementation  of  the  related  Action  Plan)  as  well  as  grants  provided  to  organisations  for 
submitting proposals under Horizon 2020 have been intensified.  

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 

90 

 
 
protective equipment, as well as sharing expert knowledge and information. 

As  regards  international  cooperation,  Bosnia  and  Herzegovina  continues  to  be  active  and 
successful  in  Horizon  2020,  having  competitively  already  received  EUR  8.6  million  (more 
than  tripling  the  amount  of  the  previous  7th  framework  programme  FP7),  as  well  as  in  the 
European  Cooperation  in  Science  and  Technology  (COST).  Bosnia  and  Herzegovina 
participated 113 times to  67 signed  grants  of  collaborative Instrument actions  of Horizon 
2020. The success  rate of applications from  Bosnia and Herzegovina is  equal  to  the overall 
Horizon  2020  success  rate  of  12,1%.  At  the  Sofia  Summit  held  in  November  2020,  the 
Protocol on Open Access to Research Infrastructures in the Western Balkans was adopted. 

The country also cooperates at regional level, with the Central European Initiative, it is active 
in EUREKA and in COST with an increasing number of participations in its actions. Bosnia 
and  Herzegovina  became  full  member  of  EUREKA  in  2021,  during  the  Austrian 
chairmanship of the network.. Bosnia Herzegovina has implemented a total of 11 EUREKA 
collaborative  projects  worth  of  over  EUR  7  million  in  total  funding  for  universities  and 
SMEs.  Bosnia  and  Herzegovina  envisages  participating  in  a  new  EUREKA  regional  call  in 
2021 in the areas of health, ICT, energy, food, agriculture and forestry.  

Bosnia and Herzegovina 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  Infrastructures,  but  still  has  to  finalise  the  roadmap  for  research 
infrastructure.  In  February  2021,  Bosnia  and  Herzegovina  concluded  an  agreement  with 
European  Organization  for  Nuclear  Research  (CERN)  on  cooperation  in  the  area  of  high-
energy  physics.  Starting  with  2021,  Bosnia  and  Herzegovina  is  included  in  the  European 
Innovation  Scoreboard,  enabling  its  participation  in  the  European  Institute  of  Innovation  & 
Technology’s regional innovation scheme (EIT RIS). 

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  adoption  of  policy  documents  related  to 
inclusive education, quality and relevance of vocational education and training and integrating 
entrepreneurial learning and key entrepreneurship competences into the education system. A 
fully functional system of accreditation of higher education institutions and in particular study 
programmes is still lacking. Bosnia and Herzegovina needs to align legislation at all levels of 
government  with  the  framework  laws  on  education,  and  ensure  application  of  the  common 
core curriculum based on learning outcomes Social inclusion at all stages of education needs 
to  be  ensured.  Youth  strategies  across  the  country  should  be  developed  and  implemented. 
COVID-19 pandemic affected the education system with the closure of the schools and shift 
to online education without prior preparation and necessary infrastructure. Having only been 
partly addressed, the recommendations of the 2020 report remain relevant.  

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; 

  ensure  continued  participation  in  international  assessment  studies  (International  Student 
Assessment – PISA, Trends in International Mathematics and Science Study – TIMSS and 

91 

 
 
Progress in International Reading Literacy Study – PIRLS); 

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

in  Bosnia  and  Herzegovina.  Activities  on 

In the area of education and training, in September 2020 Bosnia and Herzegovina adopted 
the  Recommendations  for  Action  Policies  with  the  Roadmap  for  promotion  of  inclusive 
education 
these 
Recommendations  should  be  intensified.  The  adoption  of  relevant  legislation  on  adult 
education  was  completed  throughout  the  country,  but  some  cantons  still  need  to  adopt 
relevant legislation in early childhood education and care, vocational education and training, 
as  well  as  youth  strategies.  The  education  system  lacks  common  standards  for  the  different 
levels of education, as well as in teacher training and performance evaluation.  

implementaion  of 

Although  the  legal  framework  regulating  the  collection  and  systematization  of  data  for  the 
country is in place, there is no mechanism in place to systematically measure or monitor the 
quality  of  education  inputs,  outputs,  or  outcomes.  Data  does  not  feed  back  into  the  policy-
making process. 

Due  to  demographic  changes,  the  number  of  students  enrolled  at  all  levels  of  education  is 
gradually  declining.  In  early  childhood  education  and  care  (ECEC),  the  enrolment  rate 
remains very low but with a positive  trend at  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% of children attending primary and 84.6% 
attending secondary education.  

Enrolment  of  Roma  children  in  primary  and  secondary  schools  remains  very  low,  at  only 
35%.  69% attend primary and 23% secondary education. The situation has worsened due to 
the COVID-19 crisis and the lack of possibilities to follow online classes. 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.  

Legislation  at  all  levels  needs  to  be  alignmed  with  the  framework  laws  on  education. 
Comprehensive teacher training focused on developing students' key competences should be 
provided and a systematic approach for application of the common core curriculum based on 
learning outcomes ensured.   

In  January  2021,  Bosnia  and  Herzegovina  adopted  the  countrywide  policy  document  on 
improving the quality and relevance of the vocational education and training (VET) based on 
the Riga conclusions (2021-2030). This should contribute to improving the links with labour 
markets and to increasing employability and attractiveness of VET. Small-scale activities to 
help  introduce  dual  education  in  the  VET  system  need  to  be  scaled-up  in  order  to  make  it 
more relevant for employment. In October 2020, Bosnia and Herzegovina adopted the policy 
document on priorities in the integration of entrepreneurial  learning and entrepreneurial  key 
competence in education systems in Bosnia and Herzegovina (2021-2030). 

The  further  development  of  a  national  qualification  framework  (NQF)  for  Bosnia  and 
Herzegovina has not progressed. The action plan for the development and implementation of 
the  qualifications  framework  expired  in  2020  and  should  be  revised  since  it  was  never 
operational  and  no  specific  commision  has  been  established.  The  process  of  developing 
qualifications  and  occupations  remains  slow  and  requires  better  coordination  and 
harmonisation across the entire country. Bosnia and Herzegovina’s NQF is not yet referenced 
to the European Qualification Framework, neither is there a mechanism for validation of prior 
learning.     

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The  accreditation  of  higher  education  institutions  and  study  programmes  is  still  facing 
challenges,  with  the  accreditation  of  study  programmes  being  particularly  problematic 
primarily  because  of  the  absence  of  clear  procedures  and  methodology.  However, 
implementation  of the Commission’s recommendations on the subject  remains very limited. 
Overall,  efforts  on  ensuring  a  fully  functional  accreditation  system  of  higher  education 
institutions, in particular study programmes, should be significantly intensified.  

In  September  2020, 
the  roadmap  for  systemic 
implementation  of  the  Lisbon  Convention  on  the  recognition  of  higher  education 
qualifications.  

the  Council  of  Ministers  adopted 

BParticipation  in  the  2022  PISA  and  2021  PIRLS  is  not  yet  ensured  as  Bosnia  and 
Herzegovina  has  not  concluded  agreements  on  participation  in  these  studies.  Additional 
efforts  to  ensure  continuous  participation  in  international  assessment  studies,  in  particular 
PISA 2022, should be taken to track the country's progress and define evidence-based long-
term policy reforms, and enhance visibility and comparability in a larger context.  

Bosnia and Herzegovina’s participation in the Erasmus+ programme resulted in the selection 
of  246  International  Credit  Mobility  projects  in  2020,  involving  around  3800  students  and 
staff going to and from Bosnia and Hercegovina.. Higher education institution are involved in 
3 Erasmus Mundus Joint Master Degrees projects. Although the number of capacity building 
project  proposals  in  the  field  of  higher  education  increased  from  40  to  49  proposals,  the 
number of selected projects with partners from Bosnia and Hercegovina remained constant at 
8  in  2020,  and  3  of  the  8  projects  are  coordinated  by  Bosnia  and  Hercegovina  higher 
education  institutions.  The  delay  in  the  accreditation  of  study  programs  has  hampered  the 
overall participation in curriculum development projects in the last two years (i.e. the share of 
curriculum development projects in the total selected projects was 25% in 2020 and 2019, in 
comparison to 75% in 2018).  

The  COVID-19  pandemic  had  a  serious  impact  on  education  in  Bosnia  and  Herzegovina, 
sharpening  the  socio-economical  challenges  that  the  country  faces.  During  the  reporting 
period,  more  than  400  000  children  were  strongly  affected  by  school  closures.  82%  of 
children  were  not  able  to  attend  preschool  for  extended  periods.  Lack  of  IT  knowledge  by 
staff  was  a  significant  obstacle  for  distance  learning.  In  additional  to  technological 
knowledge,  distance  learning  equally  requires  new  pedagogical  skills  as  compared  to 
classroom  learning.  Furthermore,  many  families  had  problems  in  securing  the  necessary 
equipment  and  internet  connection.  As  of  September  2020,  most  schools  had  established 
combined models of teaching (online/in-class teaching, different shifts, etc.). However, many 
challenges  remained,  such  as  the  lack  of  logistics  and  infrastructure  to  ensure  that 
epidemiological  measures  are  respected  and  the  safety  of  all  is  guaranteed.  A  strategy  for 
teachers and students on how to ensure quality in distance learning including the assessment 
of students' progress is still missing. 

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. 
The country has to ensure a permanent solution to the legal status and financing for the seven 
cultural institutions of significance for Bosnia and Herzegovina.  

Implementation of the decisions of the Commission to Preserve National Monuments 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 Herzegovina has to establish 
formal  partnership  structures  enabling  transparent  and  organised  participation  in  cultural 
policymaking. 

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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 
adressing brain drain. 

Bosnia and Herzegovina actively joined the European Week of Sport (23-30 September 2020) 
for  the  third  time,  under  the  framework  of  the  Commission’s  initiative  European  Week  of 
Sport  Beyond  Borders.The  2020  European  Week  of  Sport  in  Bosnia  and  Herzegovina  was 
implemented  via  the  designated  BiH  National  Coordinating  Body  (NCB)  including 
representatives  of    the  Ministry  of  Civil  Affairs  of  Bosnia  and  Herzegovina,  Olympic 
Committee of BiH, relevant entity ministries and Brcko District. 

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. 
Customs legislation is not fully aligned with the EU acquis.  No progress was made  during 
the reporting period. The Commission’s recommendations from 2020 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 application of the 2015 Law on Customs 
Policy,  partially aligned  with  the EU  acquis, remains  to  be implemented.  This  law provides 
for  the  introduction  of  authorised  economic  operators  and  for  additional  simplified  customs 
procedures  requiring  the  use  of  the  e-signature.  In  June  2021  the  ITA  was  accredited  for 
issuing  countrywide  e-signature  by  the  Ministry  of  Transport  and  Communication.  The 
customs  tariff  and  custom  valuation  of  Bosnia  and  Herzegovina  is  harmonised  with  the 
Combined Nomenclature (CN). Regarding the rules of origin, the country continues applying 
the Pan-Euro Mediterranean Convention. 

he  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).  

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 is needed with the EU acquis for authorised economic operators (AOP), which has 
to  be  achieved  through  implementation  of  CEFTA  Additional  Protocol  5.  Cross-border 
smuggling of tobacco products and other illicit activities in the border regions continue to be 
an important area where further improvements in cooperation and antifraud tools are needed. 
As part of the antifraud effort, the accession to the FCTC Protocol to Eliminate Illicit Trade in 
Tobacco Products is recommended. 

94 

 
 
On  administrative  and  operational  capacity,  ITA’s  administrative  capacity  should  be 
substantially strengthened.  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).  Its  capacity  to  conduct  a  risk  analysis  is  hampered  by  an 
inadequate  IT  system.  The  customs  authorities  still  perform  a  high  percentage  of  physical 
controls.  

CLUSTER 4: THE GREEN AGENDA AND SUSTAINABLE CONNECTIVITY  

This  cluster  covers  chapters  14  -  Transport  policy,  15  –  Energy,  21  -  Trans-European 
Networks,  and  27  -  Environment  and  climate  change.  The  green  transition  and  sustainable 
connectivity are key to economic integration within the region and with the European Union, 
facilitating cross-border trade within the region and creating real benefits for businesses and 
citizens.  This  cluster  and  the  reforms  concerned  have  significant  links  to  Bosnia  and 
Herzegovina’s  Economic  Reform  Programme,  the  Commission’s  Economic  and  Investment 
Plan and the Green Agenda for the Western Balkans endorsed by Bosnia and Herzegovina in 
December 2020.  

Bosnia  and  Herzegovina  actively  participates  in  the  Transport  Community  and  Energy 
Community, and it endorsed the Transport Community action plans and the Green agenda for 
the  Western  Balkans  at  the  Sofia  Summit  in  December  2020.  The  country  should  improve 
road  safety  to  reduce  traffic  fatalities,  and  strengthen  the  regulatory  bodies  on  transport, 
including civil aviation. The development of corridor Vc motorway is ongoing; further steps 
are  needed  on  connectivity  reform  measures  and  in  aligning  with  the  TEN-T  and  TEN-E 
regulations. Bosnia and Herzegovina remains heavily reliant on lignite coal and still plans to 
increase  its  energy  generation  based  on  fossile  fuels,  jeopordising  its  commitments  to 
decarbonisation and climate neutrality by 2050. Since many years its legislation on electricity 
and natural gas is not compliant with the EU and Energy Community acquis, which hampers 
regional  market  integration.  Bosnia  and  Herzegovina  needs  to  adopt  new  laws  on  gas  and 
electricity in line with the EU acquis and increase its administrative capacities to benefit from 
the  Economic  and  Investment  Plan.  It  needs  to  introduce  legislation  on  renewable  energy, 
energy efficiency and climate in line with its obligations and commitments, and significantly 
step up its ambitions towards a green transition. 

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  reached  some  level  of  preparation  in  this  area,  with  some 
progress achieved in the past year, including on implementation of the framework transport 
strategy and its action plan. The country needs to further align with and implement effectively 
the  EU  acquis  in  all  areas  of  transport  and  at  all  levels  of  government  in  line  with  the 
Transport  Community  action  plans  on  road,  road  safety,  rail  and  transport  facilitation.  This 
includes  further  strengthening  of  its  administrative  capacity,  in  particular  as  regards  road 
safety as well as enforcement, inspection and investigation bodies for road transport, railways, 
inland  waterways  and  aviation.  Last  year’s  recommendations  have  not  been  sufficiently 
addressed and remain valid. 

In  addition  to  addressing  the  shortcomings  set  out  below,  in  the  coming  year  Bosnia  and 
Herzegovina should in particular: 

95 

 
 
 
  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.  In  March  2021  the  Council  of 
Ministers adopted a first report on the implementation of the 2016-2020 framework transport 
strategy. 

Transport remains insufficiently developed and the speed of structural adjustment and reforms 
is slow. Bosnia and Herzegovina should focus on implementing the short- and medium term 
measures  as  highlighted  in  the  Transport  Community  Treaty  (TCT)  action  plans.  The 
necessary investments are being delayed by limited borrowing capacity, financial constraints, 
lack  of  focus  on  key  priorities  and  of  coordination  and  cooperation  between  government 
levels. There was no progress in completing key sector reforms. Further efforts are required to 
ensure  full  alignment  with  the  Intelligent  Transport  Systems  (ITS)  Directive  and  secure 
implementation of relevant national laws in the areas of road and rail. 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 macro-regional strategies 
for  the  development  of  the  Danube  Region  (EUSDR)  and  the  Adriatic  and  Ionian  Region 
(EUSAIR). 

The  country  is  moderately  prepared  for  road  transport.  It  made  limited  progress  in  the 
reporting  period,  in  particular  in  maintaining,  developing  and  improving  infrastructure.  It 
should  pay  particular  attention  to  implement  the  measures  agreed  in  the  TCT  road  safety 
action  plan  to  develop  climate  resilient,  intelligent  and  resource-efficient  TEN-T  road 
network.  Implementation  of road safety legislation remains  a  concern, although there was a 
slight  decrease  in  the  still  too  high  number  of  accidents  and  fatalities.  Bosnia  and 
Herzegovina  is  preparing  a  2021-2025  framework  road  safety  strategy  and  action  plans.  It 
started setting up a section on traffic safety coordination at the Ministry of Communications 
and  Transport,  which  would  need  to  be  developed  towards  a  lead  road  safety  agency  as 
requested  in  the  TCT  road  safety  action  plan.  Bosnia  and  Herzegovina  urgently  needs  to 
establish  a  countrywide  system  for  the  continuous  collection  of  road  crash  data.  Regulatory 
measures  on  access  to  the international  road transport market  and to  the occupation of  road 
transport operator, including a functional system to license such operators, are in place.  

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  reporting  period,  primarily  in  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.  Further  efforts  are  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 

96 

 
 
should  aim  at  using  contemporary  TSI  and  EU  standards,  taking  into  account  the  related 
elements of the TCT rail action plan. 

To  a  large  extent,  the  Law  on  Railways  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 to proceed with an opening 
of the railway market in compliance with the results of the ongoing capacity-building project. 
This would also require a review of the railway laws in both entities aiming to provide non-
discriminatory access to the public railway infrastructure. Alignment with the EU  acquis on 
rail passenger rights is also pending. Network statements are prepared but not published. The 
reform  concerning  the  establishment  of  independent  bodies  (railway  regulatory  authority, 
railway safety authority, railway accident investigation body) is ongoing and depends on the 
adoption of amendements to the Law on Railways. Negotiations on protocols concerning the 
railway  border  crossing  procedures  between  Bosnia  and  Herzegovina  and  Croatia  did  not 
proceed  in  the  reporting  period  due  to  technical  concerns  on  border  and  customs-related 
issues raised by Croatia.  

On maritime transport, Bosnia and Herzegovina remains at an early stage of preparation, as 
marit 
ime  transport  is  not  a  priority  on  the  agenda,  given  that  the  country  has  neither  a 
commercial port nor a maritime fleet. 

Inland  waterway  transport  is  at  an  early  stage  of  preparation,  with  some  progress  in  the 
reporting  period  mainly  at  entity  level.  Reconstruction  works  of  Brčko  Port  started  in  June 
2021.  Further  efforts  are  needed  to  develop  the  institutional,  legal  and  regulatory  setup  of 
waterway  transport  in  Bosnia  and  Herzegovina  and  too  ensure  the  safety  of  navigation  on 
inland waterways. 

The preparation of civil aviation is continuing. The 2009 Law on Civil Aviation is still under 
revision with a view to align it with the requirements of the European Common Aviation Area 
(ECAA).  Bosnia  and  Herzegovina’s  Air  Navigation  Services  Agency,  which  took  over 
responsibility  for  air  traffic  control  from  Croatia  since  December  2019,  is  operational. 
However, Bosnia and Herzegovina needs to urgently address the problem of chronic lack of 
adequately trained and qualified personnel within the Bosnia and Herzegovina Directorate of 
Civil Aviation (BHDCA), to avoid the risk of safety oversight. The recent reorganisation of 
BHDCA, while implementing major changes in its management structure, did not sufficiently 
address this problem. Moreover there is no progress on alignment with the EU Regulation on 
Passenger Rights.  

Regarding  combined/intermodal  transport,  Bosnia  and  Herzegovina  has  not  started 
developing its policy, institutions, legal and regulatory framework. 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. 

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. Only  limited progress 
was  made  during  the  reporting  period,  notably  on  renewable  energy  and  energy  efficiency. 
Bosnia and Herzegovina still needs to make significant efforts in strengthening countrywide 
cooperation  and  coordinationand  improve  thefragmented  and  inconsistent    legislative  and 
regulatory framework. Last year’s recommendations remain relevant. 

97 

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

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

state and entities level; 

  ensure  full  harmonisation  of  laws  at  entity  level  in  the  area  of  electricity  and  gas  to 
prevent  further  delays  in  opening  and  functional  operation  of  the  energy  market  and 
establishment of a day-ahead market; 

  adopt state- and entity-level legislation on renewable energy and energy efficiency in line 
with the obligations stemming from the Energy Community Treaty and the commitments 
from the 2020 Sofia summit declaration on the Green Agenda for the Western Balkans.  

Bosnia and Herzegovina has yet to adopt concrete, comprehensive and binding action plan(s) 
implementing  the  2017  framework  energy  strategy  in  line  with  its  commitments  under  the 
Sofia  Summit  Declaration  on  the  Green  Agenda  for  the  Western  Balkans,  such  as  the  2030 
energy and climate targets under the Energy Community and EU acquis and the 2050 climate 
neutrality  target.  This  requires  inter  alia  implementation  of  a  progressive  decarbonisation 
policy  and  active  participation  in  the  Coal  Region  in  Transition  initiative.  Measures  to 
improve security of supply need to be redirected from coal to renewables. Preparations for an 
extension of the Tuzla coal power plant (Block 7) continue. This may increase the country's 
security of supply, but at the same time significantly prolong dependency on coal. In 2020 the 
Energy Community Secretariat launched an infringement case on Tuzla Block 7 because of a 
state  guarantee  of  the  Federation  for  a  Chinese  loan  due  to  possible  violation  of  State  Aid 
provisions of the Energy Community acquis. Because a supplier of important equipment has 
recently stepped out, the Tuzla 7 project’s future is uncertain. Bosnia and Herzegovina is also 
committed to gradually phase out coal subsidies, to align with the EU Emissions Trading, and 
to  introduce  other  carbon  pricing  instruments  to  promote  decarbonisation.  This  will  be 
particularly challenging for a country like Bosnia and Herzegovina whose energy production 
and industry depend to a large extend on fossile fuels. 

The  level  of  security  of  electricity  supply  is  hindered  by  long-lasting  issues  with  the 
functioning of the state-level transmission company (TRANSCO), whose management is still 
not appointed due to political blockages. In June, a TRANSCO Investment Plan was adopted, 
unblocking  investments  for  the  construction  of  electric  power,  which  would  contribute  to  a 
more stable electricity supply. However, the company management remains inefficient in its 
overall operation.  

As  regards  security  of  supply  for  natural  gas,  the  country  is  fully  dependent  on  a  single 
source, rendering Bosnia and Herzegovina vulnerable in case of disruption. As of April 2021, 
Bosnia and Herzegovina started receiving natural gas through Turkish Stream.   

The  draft  law  on  the  Southern  Gas  interconnector with  Croatia  (Zagvozd  –Posušje  –Novi 
Travnik  with  a  branch  to  Mostar)  was  adopted  by  the  FBiH  Parliament.  This  project  will 
contribute  to  strengthening  the  integration  into  the  European  gas  market  and  increasing  the 
security of supply.  

In November 2020, the Republika Srpska entity Regulatory Commission for Energy certified 
the transmission system operator for natural gas.  

In  2021,  the  disused  oil  refinery  in  Brod  has  been  connected  to  the  Croatian  natural  gas 
network.  This  disputed  cross-border  project  which  connects  the  refinery  through  a  pipeline 
under the Sava River did  not  obtain prior approvals  by the Presidency and State Parliament 
which  are  the  competent  bodies  under  the  national  law  and  jurisprudence.  State-level 
authorities are examining the issue.  

98 

 
 
There was no progress in transposition of legislation on compulsory oil stocks and petroleum 
products.  Bosnia  and  Herzegovina  is  strongly  encouraged  to  develop  the  necessary 
legislation, establish a body at State level on compulsory oil stocks and ensure harmonisation 
of legislation at entity level, in line with the requirements under the EU acquis.  

There is no progress as regards creation and functioning of an internal energy market.  

In December 2020, Bosnia and Herzegovina was sanctioned by the Energy Community due to 
its serious and persistent failure to comply with the second energy package in the gas sector, 
as well as the third energy package in both electricity and gas sectors. The lack of state-level 
legal and regulatory framework for gas and electricity prevents the country from unbundling 
the  transmission  system  operator,  enabling  organised 
internal  energy  markets,  and 
establishing a  day-ahead  market. Bosnia  and  Herzegovina  needs  to  adopt  gas  and  electricity 
legal frameworks compliant with the third energy package and followed by fully harmonised 
entity laws, thus preventing further delays in the opening and unbundling of energy markets. 

At entity level,  electricity  distribution system operators  are still not  legally and  functionally 
unbundled  from  electricity  production  (Federation  entity)  or  from  other  communal  services 
(Brčko District). In June 2020, the Republika Srpska entity adopted a new Law on Electricity 
that  aims  at  unbundling  distribution  and  deregulating  prices.  In  May  2021,  the  Energy 
Community Secretariat submitted a reasoned request to the Ministerial Council following the 
failure of Bosnia and Herzegovina to rectify the breaches related to unbundling of distribution 
system operators. In Brčko District, a law on electricity is under preparation. The country still 
needs to adopt and enforce a new law for adequate restructuring, certification and operation of 
the transmission system operator according to the third energy package.  

The market still operates on the basis of bilateral contracts between dominant power utilities 
and  registered  traders.  The  regulatory  authorities  are  operational,  but  their  independence 
continues to be hampered by political interference.  

The gas 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. 

On  renewable  energy,  there  is  some  progress.  However,  there  is  still  no  state-level  legal 
framework and the legislation at entity level needs to be revised in line with principles of the 
cost effective support framework. The Brčko District remains without legislation in this area. 

In  September  2020,  the  State  Electricity  Regulatory  Commission  increased  the  permit 
capacity  for  wind  and  solar  power  plants,  which  can  be  connected  to  the  transmission 
network. The Podvelezje wind farm (48 MW) started energy production in January 2021. 

In  February  2021  and  June  2020,  the  entity  parliaments  adopted  similar  declarations  on  the 
protection  of  rivers,  calling  on  the  entity  governments  to  impose  a  moratorium  on  the 
construction of small hydropower plants until a review of the harmful impacts and all relevant 
renewable  energy  legislation  is  completed.  The  Federation  entity  is  already  revising  its 
legislative framework to stop subsidies by feed-in tariff to small hydropower plants.  

In November 2020, the Republika Srpska entity and Serbia agreed to build three hydropower 
plants  (HPP)  on  the  Drina  river  with  a  total  capacity  of  180  MW.  Construction  of  the  Buk 
Bijela  HPP  started  in  May  2021.  Since  the  concession  was  awarded  without  the  required 
state-level approval, a complaint was lodged at the Constitutional Court, which in July 2021 
ruled  that  a  decision  of  the  Commission  for  Concessions  is  required;  this  is  pending.  The 

99 

 
 
Constitutional Court had established in previous decisions that rivers and riverbeds are state 
property. Bosnia and Herzegovina should exploit and invest in  hydropower in  a responsible 
manner, in constructive dialogue between all stakeholders including the civil society as well 
as  in  compliance  with  EU  rules  and  procedures,  particularly  the  environmental  acquis,  and 
with due respect to the general principles of transparency, legal certainty and accountability. 

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 renewable energy 
in new buildings and in existing buildings subject to major renovation. 

In the area of energy efficiency, although a new national energy efficiency action plan 2019-
2021 was prepared, its adoption is still pending. The same is the case for the Republika Srpska 
entity action plans 2019-2021. The Federation entity adopted its action plan in February 2021. 
The  country  needs  to  complete  the  transposition  of  the  energy  efficiency  directive  and  the 
framework  energy  labelling  regulation.  In  close  cooperation  with  the  Energy  Community 
Secretariat, Bosnia and Herzegovina drafted a first version of the integrated National energy 
and climate plan (NECP) 2021-2030, which will replace the national energy efficiency action 
plan.  More  ambitions  are  necessary.  It  should  contain  clear  measures  designed  to  reduce 
greenhouse  gas  emissions by integrating climate  action into all relevant  sectoral  policies, in 
line  with  the  2018  Energy  Community  recommendation  and  the  Green  agenda  for  the 
Western Balkans.  

Bosnia made no progress on nuclear energy, nuclear safety and radiation protection. The 
country  is  a  party  to  the  Convention  on  Nuclear  Safety  and  to  the  Joint  Convention  on  the 
Safety of Spent Fuel Management and on the Safety of Radioactive Waste Management. The 
country  shall  consider  participating  to  the  European  Radiological  Data  Exchange  Platform 
(EURDEP)  and  to  the  European  Community  Urgent  Radiological  Information  Exchange 
(ECURIE).  

Chapter 21 - Trans-European Networks 

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

trans-European  networks 

the  areas  of 

(TEN) 

in 

Bosnia  and  Herzegovina  has  achieved  some  level  of  preparation  in  the  area  of  trans-
European networks. There was some progress in the development of corridor Vc motorway. 
The  legislative  framework  needs  to  be  aligned  with  the  TEN-T  and  TEN-E  regulations  for 
implementing  transport  and  energy  projects.  The  implementation  of  connectivity  reform 
measures  remains  slow.  In  general,  transport  and  energy  infrastructures  are  insufficiently 
developed. Bonsia and Herzegovina did not sufficiently address the recommendations of last 
year, which therefore remain valid. 

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 
networks in line with the priorities identified in the Economic and Investment Plan for the 
Western Balkan and in the Green Agenda;  

   adopt and implement the multiannual maintenance plans for road network as well as an 

efficient strategy on the funding sustainability for road maintenance;  

  align  with  Regulation  (EU)  347/2013  on  guidelines  for  trans-European  energy 

infrastructure. 

100 

 
 
On transport networks, Bosnia and Herzegovina chaired the Regional Steering  Committee 
(RSC)  meetings  from  July  2020  to  July  2021,  and  participated  actively  in  other  technical 
committees on railway, roads and road safety, transport facilitation as well as waterborne and 
multimodal transport under the Transport Community Treaty (TCT) permanent secretariat.  

Bosnia and Herzegovina as member of the  Ministerial Council of the Transport Community 
endorsed action plans for road, road safety, rail and transport facilitation in October 2020 and 
on  waterborne  and  multimodal  transport  in  July  2020.  The  country  will  have  to  mobilise 
sufficient  resources  and  administrative  capacity  to  implement  the  Transport  Community 
Treaty  and  the  numerous  measures  proposed  in  the  action  plans.  The  country  needs  to 
accelerate  the  implementation  of  connectivity  reform  measures  and  continue  with  the 
adoption  of  the  multiannual  maintenance  plans  for  the  entire  road  and  rail  core  networks. 
Border crossing agreements with neighbouring countries remain a challenge; more efforts are 
required to strengthen mutual relations and cross border cooperation.  

Priority  connectivity  projects  on  the  indicative  extension  of  the  TEN-T  core  network  to  the 
Western  Balkans  have  been  planned  through  the  single  priority  project  pipeline.  The 
preparation  and  the  implementation  of  those  projects  have  been  intensified  during  the 
reporting  period.  In  relation  to  the  Corridor  Vc  motorway,  several  subsections  are  under 
construction, while the remaining  ones  are under preparation.  In the  reporting period works 
on Tarčin - Ivan tunnel subsection started and Zenica bypass was open to traffic in July 2021. 
The works on the border crossing at  Svilaj  were completed in  August  2021 and its opening 
will ensure full functionality of the already finalised motorway section from Svilaj to Odžak 
and  the  international  bridge  in  Svilaj.  Construction  works  on  the  interstate  bridge  between 
Bosnia  and  Herzegovina  and  Croatia  at  Gradiška  are  ongoing.  The  country  should  aim  to 
close the financing gap for new projects on Corridor Vc motorway by mid 2022.  

Serious  efforts  are  needed  to  accelerate  the  development  of  the  rail  core  network  where 
investments  remain  limited.  Under  the  TCT  rail  action  plan,  Bosnia  and  Herzegovina  is 
committed  to  align  with  the  EU  technical  specifications  for  interoperability  by  the  end  of  
2021.  The  navigability  of  the  Sava  River  requires  further  demining  and  rehabilitation.  A 
WBIF  grant  for  demining  the  right  bank  was  approved  in  December  2020.  The  tendering 
procedure for the rehabilitation of the Brčko Port started in December 2020 and works began 
in  June  2021.  In  addition  to  fulfilling  EU  standards  on  public  procurement,  state  aid  and 
environmental  impact  assessments,  current  and  future  infrastructure  investments  should 
comply  with  the  TEN-T  regulatory  framework.  As  a  reaction  to  the  COVID-19  pandemic, 
green  corridors  were  established  and  are  functioning  effectively  throughout  the  major 
corridors. 

On  energy  networks,  Bosnia  and  Herzegovina  still  needs  to  align  with  Regulation  (EU) 
347/2013  on  the  guidelines  for  trans-European  energy  infrastructure.  The  country  should 
finalise the Single Project Pipeline including the energy sector. This will ensure eligibility of 
the project of Energy Community interest (Trans Balkan corridor) and the two gas projects of 
mutual interest (North and South interconnectors with Croatia). Bosnia and Herzegovina has 
to  step up efforts  to  make progress  with  the preparation and development  of those projects. 
Tender documentation for the southern gas interconnector with Croatia (Zagvozd –Posušje –
Novi Travnik  with  a branch to  Mostar) is  being  prepared.  Bosnia  and  Herzegovina remains 
heavily  dependent  on  carbon  intensive  infrastructure  and  needs  to  develop  its  regional 
connections  to  unlock  the  potential  of  the  Economic  and  Investment  Plan  and  the  Green 
Agenda for the Western Balkans.  

Chapter 27 - Environment and climate change 

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The  EU  promotes  strong  climate  action,  sustainable  development  and  protection  of  the 
environment. EU law contains provisions addressing climate change, water and air quality, 
waste  management,  nature  protection,  industrial  pollution,  chemicals,  noise  and  civil 
protection. 

Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  /  has  achieved  some  level  of 
preparation  in  the  area  of  environment  and  climate  change.  Limited  progress  was  made 
during the reporting period, mainly at entity level without a countrywide harmonisation. The 
country needs to ensure an even, countrywide harmonised and consistent approach in strategic 
planning and alignment with the EU acquis at all levels of government. Significant efforts are 
needed  on  implementation  and  enforcement.  The  recommendations  from  the  last  year  were 
not fully addressed and remain valid.  

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

  implement the countrywide environmental approximation strategy and prepare and adopt 
an  environmental  protection  strategy,  and  accordingly  enhance  the  legal  framework, 
strengthen administrative capacity and monitoring systems, and improve inter-institutional 
coordination among all relevant authorities, in accordance with the commitments  of the 
Green Agenda for the Western Balkans and the 2050 climate neutrality target;  

  urgently formalise the procedures for the appointment and functions of the national focal 
point  (NFP)  for  Bosnia  and  Herzegovina  for  the  implementation  of  all  environmental 
conventions to which Bosnia and Herzegovina is a signatory;  

  continue implementing the Paris Agreement by putting in place policies and measures to 
deliver on its updated nationally determined contribution (NDC), adopt and implement the 
revised climate change adaptation and low emissions development strategy, and adopt 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.  The  sub-sector 
strategies  and  legislative  framework  at  different  levels  of  governments  remain  countrywide 
non-harmonised  for  the  respective  areas  covered,  leaving  the  environment  sector  unevenly 
covered  regulated  across  the  country.  The  countrywide  environment  approximation  strategy 
adopted  in  2017,  and  supplemented  by  more  specific  environmental  approximation 
programmes  for  the  entities  and  the  Brčko  District,  still  needs  to  be  updated  and  fully 
implemented. A single, integrated action plan for the implementation and monitoring of this 
strategy  in  all  subsectors  remains  to  be  adopted.  The  development  of  a  countrywide 
environmental  protection  strategy  for  Bosnia  and  Herzegovina  is  underway.  Countrywide 
harmonised  efforts  are  still  required  in  transposing  the  provisions  of  environmental  impact 
assessment (EIA) and strategic environmental assessment (SEA) in the legislation at all levels 
of  government  and  across  relevant  sectors  to  ensure  a  consistent  alignment.  Enforcing  SEA 
and EIA provisions needs to be strengthened together with the necessary improvements in the 
access  to  information  and  the  participation  of  the  public  in  the  decision-making  process  on 
planned  investments.  A  strategy  on  gathering,  transferring  and  reporting  of  environmental 
data is  pending  adoption.  The legal  framework regulating  environmental  inspections and its 
enforcement needs to be improved in line with the relevant EU acquis. Institutional capacities 
need  to  be  considerably  strengthened.  Countrywide  harmonised  efforts  are  required  to 
progress  in  aligning  with  a  number  of  horizontal  environmental  directives  such  as  the 
directive  on  environmental  liability,  the  directive  on  infrastructure  for  spatial  information 
(INSPIRE)  and  the  directive  on  environmental  crime.  The  long  overdue  requirement  to 

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formalise  appointment  procedures  of  national  focal  points  for  Bosnia  and  Herzegovina 
concerning  the  implementation  of  environmental  conventions  to  which  the  country  is  a 
signatory party, and to determine their functions, still remains to be met.  

Alignment  with  the  EU  acquis  on  air  quality  remains  limited.  To  provide  reliable  data  for 
Bosnia and Herzegovina, a well-functioning countrywide harmonised air monitoring network 
still  needs  to  be  established,  together  with  the  countrywide  programme  for  air  quality 
improvement.  The  country  needs  to  align  with  the  EU  directive  on  reduction  of  national 
emissions  of  certain  atmospheric  pollutants,  to  establish  functional  national  emission 
inventories and reporting, and accelerate activities on full ratifications and implementation of 
the  Air  Convention  and  its  protocols.  Bosnia  and  Herzegovina  should  develop  a  national 
strategy  on  progressive  decarbonisation  and  clean  energy  transition  in  line  with  its 
commitments  on  depollution  under  the  2020  Sofia  declaration  on  the  Green  agenda  for  the 
Western Balkans. There has been no progress in aligning with the EU acquis on reducing the 
sulphur  content  of  certain  liquid  fuels.  In  that  respect  the  country  remains  in  serious  and 
persistent breach of the Energy Community Treaty. Sanctions are applied since January 2021. 
There  has  been  no  progress  on  alignment  with  EU  acquis  on  volatile  organic  compounds 
(VOC)  and  there  are  no  accredited  bodies  in  Bosnia  and  Herzegovina  for  monitoring  VOC 
emissions. Main emission sources in Bosnia and Herzegovina remain the thermal, coal-fired 
power plants, industry, household heating and transport.  

A  consistent  countrywide  strategy  for  waste  management  has  yet  to  be  developed  to  align 
with  the  EU  acquis.  Bosnia  and  Herzegovina  needs  to  pay  particular  attention  to  the  EU 
plastic strategy and single-use plastics directive. As in other areas of environment, Bosnia and 
Herzegovina needs to ensure a coordinated and harmonised countrywide approach in dealing 
with waste management, which is of particular importance in the context of circular economy. 
This needs to be reflected both in the legislative framework and its strategic approach. Bosnia 
and  Herzegovina  needs  to  align  with  the  Landfill  Directive  and  close  down  or  rehabilitate 
non-compliant  landfills.  Substantial  efforts  and  awareness-raising  measures  are  required  to 
reduce waste generation and promote reuse and recycling. Alignment is furthermore required 
with  the  EU  acquis  on  sewage  sludge,  batteries,  packaging,  polychlorinated  biphenyls/ 
polychlorinated terphenyls and end-of-life vehicles. 

On  water  quality,  as  in  other  areas  of  environment,  the  country  lacks  a  consistent  and 
harmonised countrywide strategy and sustainable investment plan on water management and  
urban waste water management. 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 remains to be adopted. An action plan for flood protection and 
river  management  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 remains limited. There is no progress as 
regards pending adoption of the list of potential Natura 2000 sites and secondary legislation. 
The planning for and investments in renewable energy, including hydropower, wind and solar 
power  plants,  requires  compliance  with  the  EU’s  environmental  legislation,  in  particular 
regarding  SEA,  EIA,  the  Birds  and  Habitats  Directives  as  well  as  the  EU  acquis  on  nature 
protection  and  water  management.  As  a  result  of  growing  environmental  concerns  of  many 
NGOs  and  citizens  as  regards  unrestrained  development  of  hydropower,  the  parliaments  of 
both entitities have called on their governments to impose a moratorium on the construction 
of small hydropower plants until a review of relevant legislation is completed (see Chapter 15 
– Energy). There has been no progress in establishing a system in Bosnia and Herzegovina for 
systematically  monitoring  biodiversity.  Bosnia  and  Herzegovina  needs  to  designate 

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institutions,  ensure  the  necessary  human  and  financial  resources  and  establish  structures  in 
order to fully implement the Convention on international trade in endangered species of wild 
fauna and flora (CITES). The country reports regularly to the CITES secretariat. Bosnia and 
Herzegovina  should  prepare  the  legislation  and  establish  the  conditions  for  ratification  and 
implementation of the Nagoya Protocol on access to genetic resources and fair distribution of 
profits generated by their use. 

Alignment  with  the  EU  acquis  on  industrial  pollution  control  and  risk  management 
remains  very  limited.  The  pollutants  release  and  transfer  register  (PRTR)  needs  to  be  fully 
operational  for  Bosnia  and  Herzegovina.  This  includes  enforcing  the  obligation  to  report  to 
PRTR  countrywide,  enabling  public  access  to  and  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  has  reported  on  the  implementation  of  the  national 
emissions reduction plan (NERP) in 2020 to the Energy Community Secretariat (EnCS). The 
EnCS  initiated  a  dispute  settlement  procedure  against  Bosnia  and  Herzegovina  for  not 
meeting  their  NERP  ceilings  for  emissions  of  certain  pollutants  into  the  air  from  large 
combustion plants for the reporting years 2018 and 2019. Countrywide harmonised efforts are 
required  to  further  align  with  the  directives  on  industrial  emissions,  eco-labelling  and  eco-
management  and  audit  schemes.  Bosnia  and  Herzegovina  still  needs  to  align  with  the 
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  remains 
uneven. The country still needs to align with the EU regulation on classification, labelling and 
packaging  of  substances  and  mixtures  (CLP).  Relevant  bodies  responsible  for  receiving 
information to formulate preventative and curative measures remain to be appointed. Bosnia 
and  Herzegovina  needs  to  align  with  EU  legislation  on  asbestos  and  on  the  protection  of 
animals used for scientific purposes. Further countrywide harmonised progress is required for 
implementation  of  the  Rotterdam  convention  on  the  prior  informed  consent  procedure  for 
certain  hazardous  chemicals  and  pesticides  in  international  trade,  to  which  Bosnia  and 
Herzegovina is a party. There has been no progress in acceding to the Minamata Convention. 

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

Regarding  civil  protection,  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 UCPM membership. Bosnia and Herzegovina should implement the 
2020-2025 Action plan adopted in January 2021.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 as well as 
human  and  financial  resources  of  civil  protection  authorities  also  with  regard  to  health 
emergencies.  A  single  risk  assessment  for  the  country,  systematic  inspections,  the 
establishment of civil protection stakeholder associations and civil protection education, will 
increase Bosnia and Herzegovina’s resilience vis-à-vis disasters. There is no progress on the 
highly  recommended  countrywide  introduction  of  the  112  European  unified  emergency 
number (for police, ambulance and firefighters).  

Climate change 

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The level of alignment with the EU climate acquis remains limited. Bosnia and Herzegovina 
needs  to  align  with  the  new  EU  climate  acquis  in  a  countrywide  harmonised  manner  and 
establish  a  consistent  legal  framework.  The  country  is  revising  its  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)  aiming  to  progress  towards  goals  outlined  in  the  Paris 
Agreement and 2030 Sustainable Development Goals.   

Bosnia  and  Herzegovina  was  among  the  first  countries  to  submit  in  April  2021  its  revised 
NDC  for  2020-2030  to  the  UNFCCC.  It  plans  to  reduce  GHG  emissions  for  slightly  more 
than one third by 2030, and almost two thirds (about 66%) by 2050 compared to 1990. There 
has  been  no  progress  in  aligning  with  the  EU  monitoring  and  reporting  regulation,  the 
directives on fuel quality, ozone depleting substances, fluorinated gases, carbon capture and 
storage as well  as  other  relevant  legislation.  In  May  2021  Bosnia and  Herzegovina   ratified 
the  Kigali  amendment  to  the  Montreal  Protocol  on  substances  that  deplete  the  ozone  layer. 
Under this amendment the country is required to freeze HFC production and use in 2024, with 
an  80%  reduction  by  2045.  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. 

CLUSTER 5: RESOURCES, AGRICULTURE AND COHESION  

This  cluster  covers  chapters  11  -  Agriculture  and  rural  development;  12  -  Food  safety, 
veterinary  and  phytosanitary  policy;  13  -  Fisheries;  22  -  Regional  policy  &  coordination  of 
structural instruments; and 33 - Financial & budgetary provisions.  

While  implementing  the  2018-2021  strategic  plan  for  rural  development,  Bosnia  and 
Herzegovina must step up its  efforts to  prepare and adopt  a post 2021 countrywide strategy 
for  rural  development.  The  country  has  yet  to  adopt  the  state-level  laws  on  wine  and  on 
organic  production,  and  harmonise  across  the  country  the  legislation  on  quality  policy.  The 
country needs to align the legislation on  food safety, veterinary and phytosanitary policy 
and strengthen its administrative capacities; in particular, it should speed up preparations for 
national  reference  laboratories,    provide  an  updated  National  Salmonella  Control  Plan  and 
maintain the vaccination against rabies and brucellosis. Bosnia and Herzegovina must step up 
its  efforts  to  prepare  and  adopt  a  countrywide  strategy  on  fisheries  and  aquaculture  and 
harmonise  data  collection.  It  should  start  preparing  a  countrywide  regional  development 
strategy,  improve  public  investment  planning  and  develop  a  single  project  pipeline  in  all 
relevant sectors. It should take steps to ensure the management of own resources, notably by 
reinforcing  the  capacity  of  the  Indirect  Tax  Authority  to  effectively  implement  customs 
legislation, stepping up the fight against tax and customs fraud, and adopting a master plan for 
the production of national accounts 

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. 

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Bosnia  and  Herzegovina  is  at  an  early  stage  of  preparation  in  the  area  of  agriculture  and 
rural  development.  There  was  no  progress  in  implementing  last  year’s  recommendations. 
While implementing the 2018-2021 strategic plan for rural development, though at an uneven 
pace across the country, Bosnia and Herzegovina has yet to adopt the state-level laws on wine 
and on organic production. The recommendations of 2020 were not  implemented and remain 
valid. 
In the coming year, Bosnia and Herzegovina should in particular: 
  effectively complete the 2018-2021 strategic plan for rural development, in particular by 
harmonising rural development programmes and support measures across the country, and 
prepare and adopt a new post-2021 strategic plan for rural development; 
  adopt state-level laws on organic production and, respectively, on 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. There was no progress in developing elements of an integrated administration 
and control system (IACS), a land parcel identification system (LPIS) or a farm accountancy 
data  network  (FADN).  The  country  has  to  improve  the  sector  coordination  and  strengthen 
administrative capacities at all levels of the government. An agreement has been pending for a 
long time to set-up the necessary institutional structures for the instrument for pre-accession 
assistance for rural development programme (IPARD), so that the country could benefit from 
this instrument. No progress was noted in aligning direct payments with the EU rules through 
decoupling them from production and linking payments to cross-compliance. Farm advisory 
services remain to be developed in a harmonised way across the country.  

As regards sector-specific common market organisation (CMO) schemes, the country still 
needs to prepare and set up the regulatory framework in line with the EU acquis. There was 
no progress in adopting the state-level law on wine. A register of grapes and wine producers 
or  a  vineyard  cadastre  is  yet  to  be  set  up.  Overall,  the  country  must  ensure  reliable 
countrywide statistics, particularly on the number and size of households as well as on farms 
producing grapes. 

No progress was made in harmonising rural development programmes and support measures 
across  the  country.  The  relevant  levels  of  the  government  should  address  it  in  their  policy 
implementation without further delay.  

The country delayed the reporting on the implementation of the 2018-2021 strategic plan for 
rural  development.  The  first  report,  related to  the reporting period of 2018, was  adopted by 
the Parliamentary Assembly only in February 2021. It shows that the system of collection and 
processing  of  data  for  planning  of  agriculture  and  rural  development  policies  and  their 
monitoring  has  to  be  substantially  improved  at  all  levels.  The  country  should  intensify  the 
strategy implementation and reporting. Moreover, the country has to prepare and adopt a post-
2021 strategic plan for rural development without delay.  

On  quality  policy  there  was  no  progress.  The  country  has  to  step  up  its  efforts  to  further 
improve and harmonise its legal framework with relevant EU acquis, in particular concerning 
wine  and  spirit  drinks,  and  to  ensure  a  clearer  distribution  of  competences.  As  for  organic 
farming, there was no progress.  The country is  yet  to  prepare and adopt the state level-law 
required  by  the  EU  acquis,  and  subsequently  ensure  that  regulatory  frameworks  across  all 
levels  of  the  government  are  harmonised  with  it.  Support  measures  remain  unevenly 
implemented across the country. 

Chapter 12 - Food safety, veterinary and phytosanitary policy 

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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. There was no progress 
in the reporting period. The country is yet to align with the EU acquis, particularly as regards 
official controls, animal health and plant health. Its administrative capacities regarding official 
controls and laboratories should be strengthened. The country’s central databases and animal 
registers require further improvements in order to be fully functional and in line with the EU 
acquis. The recommendations of 2020 were not implemented and remain valid.  

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

  introduce  inter-laboratory  comparative  tests  as  a  regular  practice,  particularly  between 
laboratories  in  the  country  that  are  in  charge  of  the  analysis  of  samples  for  notifiable 
diseases, to increase controls and administrative capacity, especially of inspection services 
and laboratories; 

  speed up preparations for national reference laboratories, through further alignment with 
the  acquis,  and  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; 

  provide  an  updated  National  Salmonella  Control  Plan  (NSCP),  and    maintain  the 
vaccination  against  rabies  and  brucellosis  and  reinforce  monitoring  and  surveillance 
measures. 

In the area of general food safety, food safety rules and specific rules for feed, Bosnia and 
Herzegovina continued to align with the EU requirements for the export of bovine, ovine and 
caprine meat. Nevertheless, the country needs to step up its efforts in improving its system to 
fulfil the public and animal health requirements. Regarding animal health, the official control 
system  needs  to  be  strengthened,  notably  for  the  registration  of  farm  holdings  and  the 
deregistration  of  holdings  that  are  no  longer  active  as  well  as  the  reliability  of  livestock 
numbers and species present on active holdings. The central database for animal identification 
needs  further  improvement  as  regards  the  reliability  of  its  information.  The  passive 
surveillance of notifiable diseases should be strengthened, notably the early detection system 
and awareness of farmers. The laboratory network should be improved, so that all laboratories 
in charge of disease analysis and samples could be involved in laboratory proficiency testing 
and thus take part in disease validation and verification on a regular basis. The country should 
make further efforts to meet the criteria for export of table eggs to the EU and ensure that its 
NSCP is update and aligned with the EU acquis and fully implemented.  

The  country  continued  improving  the  legislation  on  food  additives  and  the  system  for 
recognition  of  mineral  and  spring  waters.  Further  alignment  of  the  legislation  with  the  EU 
acquis needs to be accelerated, notably the state-level regulatory framework and particularly 
the laws on food and veterinary medicine. 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  is  advised  to  speed  up  the  preparations  for  national  reference 
laboratories  through  further  alignment  with  the  EU  acquis,  and  notably  by  increasing  the 
accreditation  of  laboratory  methods  used  in  hygiene,  veterinary  and  phytosanitary  controls, 
and  used  in  the  food  and  feedstuff  control  system.  Bosnia  and  Herzegovina  continued  to 

107 

 
 
implement its veterinary policy on the control, prevention and eradication of communicable 
animal diseases. The measures against brucellosis and rabies have to be improved, notably the 
monitoring and surveillance, and sustainable national resources need to be ensured. With the 
EU  support,  the  country  needs  to  continue  with  rabies  vaccination  campaings  until  this 
disease  is  considered  eradicated,  given  the  new  outbreak  of  rabies  reported  in  2020. 
Taking full ownership of  these  vaccination  campaigns,  as  of  autumn  2023  Bosnia  and 
Herzegovina should transition to using its own means for such future vaccination campaigns 
in line with obligations to harmonise with the relevant EU acquis. Following the cessation of 
vaccination  against  classical  swine  fever  in  some  parts  of  the  country  in  2020,  Bosnia  and 
Herzegovina must ensure that the contingency plan and the surveillance plan are in place. The 
country  has  to  improve  its  system  of  managing  animal  disease  notification  and  outbreak 
information.  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  a  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 be fully aligned with the EU acquis. 
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  these  sectors  with  the  acquis.  A  countrywide  strategy  for  management  of  animal  by-
products remains to be effectively implemented.  

In the area of phytosanitary policy, the country should step up its efforts to align with the EU 
acquis, particularly as regards the new Plant Health Law and official controls.  

The  country  continues  to  implement  its  programme  for  special  surveillance  of  quarantine 
pests  for  potatoes.  The  registration  of  plant  operators  in  a  single  phyto-registry  continues. 
However, 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.  

There were no developments in the area of genetically modified organisms (GMOs). 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  the 
government  are  to  be  strengthened.  There  was  no  progress  in  setting  up  the  country’s 
reference laboratory for testing, controlling and monitoring the presence of GMOs in food and 
feed.  

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. The country must step up its efforts to prepare and adopt a 
countrywide  fisheries  and  acquaculture  strategy  and  subsequently  ensure  its  effective 

108 

 
 
implementation  across  the  country  in  line  with  EU  acquis.  The  recommendations  of  2020 
were not implemented and remain valid.  

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

  prepare and adopt a countrywide strategy on fisheries and aquaculture in view of aligning 

the legislation with the EU acquis; 

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

country, and establish relevant statistics. 

There  was  no  progress  in  developing  a  countrywide  policy  framework  and  legislation  on 
inland and marine fisheries, in  order to  prepare for the EU’s common fishery policy (CFP).  
Some preparations for the design of a countrywide strategy on fisheries and aquaculture have 
started, but the country must speed up its efforts in this regard. 

Institutional capacity and administrative structures remain weak and insufficient. The country 
still  lacks  a  state-level  legal  framework  and  its  legislation  remains  fragmented  and  non-
harmonised across the country.  There are no specific structural actions in place to support 
small-scale and/or inland fisheries. 

No progress  was made in  setting up relevant  measures  and strengthening  the administrative 
capacity  to  implement  resource  and  fleet  management.   In  that  context,  the  system  for 
management and control of fishing activities in line with the CFP is yet to be set up. A fleet 
register  is  yet  to  be  in  place  and  properly  managed.  The  collection  of  data  on  catches  and 
landings per type of fishery remains to be improved and harmonised across the country. The 
country still lacks any structural and state aid measure in line with the EU acquis.  

Concerning market policy, marketing standards for certain fishery products are in place, but 
there  was  no  further  progress  including  the  establishment  of  producer  organisations  in  line 
with the EU acquis.  

Regarding international agreements, Bosnia and Herzegovina continues to cooperate on sea 
fisheries with the General Fisheries Commission for the Mediterranean (GFCM) and the UN’s 
Food and Agriculture Organisation (FAO). However, the country’s membership to the GFCM 
is  still  not  finalised  yet.  As  a  party  to  the  Malta  MedFish4Ever  Declaration,  the  country 
should contribute to its effective implementation.  

Chapter 22 - Regional policy & 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  and  coordination  of  structural  instruments.  No  progress  was  achieved  last  year, 
therefore the recommendations remain to a large extent valid. In the coming year, Bosnia and 
Herzegovina should in particular: 

  start preparing a countrywide regional development strategy; 

  improve public investment planning and develop a single project pipeline in all relevant 
sectors, 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. 

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On  legislative  framework,  Bosnia  and  Herzegovina  still  has  to  establish  a  system  for 
managing EU structural funds. Bosnia and Herzegovina has only few countrywide strategies 
in fields relevant to cohesion policy. In particular, the adoption of a countrywide strategy on 
public finance management is important as a condition for budget support.  

There is no sound countrywide regional development policy, with accompanying institutional 
structure  and  performance  monitoring  framework.  The  NUTS  II  regions  are  only 
provisionally  defined  and  accepted  by  the  European  Commission  until  Bosnia  and 
Herzegovina finalises and agrees the entire classification including definition of the NUTS III 
level.  Improvement  of  the  statistical  and  analytical  basis  (including  definition  of  NUTS 
regions) is required to develop sound strategic framework for cohesion policy. GDP per capita 
figures harmonised at NUTS II level are still to be provided. 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 
across  administrative  levels.  Legislative  frameworks  establishing  financial  control  and 
independent internal audit structures are in place at both state and entity levels. 

The  institutional  framework  for  planning,  implementation  and  monitoring  of  the  EU  pre-
accession assistance (IPA) is set up and operational. An agreement is overdue on coordination 
modalities  for  the  effective  use  of  pre-accession  funds  while  respecting  the  role  of  the 
National  IPA  Coordinator  (NIPAC)  as  provided  for  in  the  IPA  Framework  Agreement.  In 
view  to  IPA  III  assistance,  necessary  decisions  in  order  to  set  up  the  internal  coordination 
platform for IPA programming and implementation are still missing. 

Weaknesses in the administrative capacity in key institutions managing EU funds still need 
to be addressed. Human resources should be further developed through relevant trainings. The 
capacity  for  programming  and  managing  EU  pre-accession  funds  and  introducing  cohesion 
policy  needs  to  be  improved.  A  systematic  plan  such  as  a  management  and  control  system 
roadmap to help prepare administrative capacities to implement EU regional policy should be 
developed already now, in order to avoid an absorption shock at a later stage. The role of the 
NIPAC as principle coordinator and EU contact point for the management of EU funds needs 
to be strengthened.  

It  should  also  be  noted  that  Bosnia  and  Herzegovina  is  one  of  the  five  accession  countries 
participating to the European Strategy of Adriatic Ionian Region (EUSAIR), which promotes 
cooperation and synergies among the participating EU and non-EU countries. 

Despite  difficulties  stemming  from  the  lack  of  agreement  on  the  way  to  reconcile  the  IPA 
legal  framework  with  the  system  of  coordination  of  European  integration,  Bosnia  and 
Herzegovina’s  authorities  delivered  as  required  on  the  programming  of  IPA  III.  The 
authorities submitted the Action Documents for the Programme IPA 2021. However, project 
preparation  and  strategic  planning  capabilities  still  need  to  improve  in  order  to  secure  full 
absorption capacity for IPA III programme.  

The  National  Investment  Committee  adopted  a  revised  single  project  pipeline  for  the 
environment sector in August 2020. The process of drafting a pipeline of investments for the 
energy sector is still ongoing while the one for the social sector has not yet started. 

The 2021-2027 territorial cooperation programmes are being developed. Bilateral IPA cross-
border  cooperation  (CBC)  programmes  were  submitted  to  the  Commission  in  July  2021. 
There is a need for an efficient and systematic coordination of cross-border, transnational and 
interregional cooperation. 

Regarding  monitoring  and  evaluation,  no  progress  was  made  during  the  reporting  period. 
The capacities within the NIPAC office remain insufficient. 

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With  the  exception  of  cross-border  cooperation  programmes,  the  country  is  still  missing  a 
financial  management,  control  and  audit  system  for  EU  funds.  Structures  and  bodies 
defined in Annex A of the Framework Agreement remain to be established. 

Chapter 33 - Financial & 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;  (iii)  the  non-recycled  plastic  resource  and  (iv)  a 
resource based on value-added tax. Member States must have the appropriate administrative 
capacity to adequately coordinate and ensure the correct calculation, collection, payment and 
control of own resources.  

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.  Last  year’s  recommendations  have  not  yet 
been  implemented  and  remain  valid.  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 customs duties to distinguish recovered debts and outstanding debts in line with the EU’s 
traditional own resources accounting.  

Several aspects of the country’s law on VAT, concerning special schemes and exceptions, are 
not aligned with the EU acquis. 

On Gross National Income (GNI) resource, definitions and accounting rules of ESA 2010 
are  used  for  compilation  of  the  GNI.  Some  progress  on  methodological  issues  and  on  the 
coverage  of  the  non-observed  economy  has  been  achieved  over  the  last  years.  However,  a 
common,  coordinated,  and  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  the  full  and  correct  application  of  EU  rules  concerning  payments  into 
the 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.  

CLUSTER 6: EXTERNAL RELATIONS  

This cluster includes  chapters 30 - External relations, which covers the EU’s common trade 
and commercial policy as well as its humanitarian aid and its development  policy, and 31  - 
Foreign, security and defence policy.  

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Bosnia and Herzegovina has ratified CEFTA Additional Protocol  6 on trade in services, and 
should now implemented it, together with Additional Protocol 5 on trade facilitation. It should 
also  finalise  its  accession  to  the  WTO  and  consider  establishing  a  development  and 
humanitarian aid policy. While it adopted a new strategy for control of small arms and light 
weapons  (SALW),  the  country’s  alignment  with  EU  foreign  policy  sharply  declined.  The 
country  should  improve  its  alignment  with  the  EU  foreign  policy  statements  and  restrictive 
measures,  appoint  the  ‘political  director’  and  ‘European  correspondent’,  and  reinforce  arms 
control  and  monitoring  regimes.  The  country  continued  to  participate  in  EU  crisis 
management missions. 

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 with the ratification of the 
the  CEFTA  Additional  Protocol  (AP)  6  on  trade  in  services.  The  capacity  to  tackle  key 
challenges in trade policy is  yet to be strengthened. The Commission’s recommendations of 
2020 were not implemented and remain valid. 

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

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

  implement the AP 5 on trade facilitation to the Central European Free Trade  Agreement 
(CEFTA), CEFTA AP  6 on trade in  services and the  Common Regional Market  (CRM) 
Action Plan 2021-2024;  and   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  as  regards  Bosnia  and 
Herzegovina's accession to the WTO, although membership negotiations have been at a very 
advanced stage for some time. 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 the issue of pending amendments to the legislation on the quality 
of  liquid  petroleum  fuels  in  the  framework  of  multilateral  discussions.  The  decision  on  the 
amendments to the legislation is yet to be approved by the Council of Ministers of Bosnia and 
Herzegovina. In 2020, Bosnia and Herzegovina held the chairmanship of CEFTA, which was 
marked  by  two  main  achievements:  maintaining  and  facilitating  trade  during  COVID-19 
pandemic  and  adoption  of  the  Common  Regional  Market  (CRM).  The  country  ratified  in 
August  2020  the  CEFTA  AP  6  on  trade  in  services.  Bosnia  and  Herzegovina  needs  to 
negotiate and ensure a swift adoption of the CEFTA AP 7 on dispute settlement and proceed 
with  the  implementation  of  the  CRM  Action  Plan  2021-2024.  During  the  chairmanship  of 
Bosnia  and  Herzegovina,  the  CEFTA  Joint Committee  adopted  the  Decision  on  Facilitating 
Trade in Fruits and Vegetables aiming to simplify inspections related to clearance procedures 
and  reduction  of  border  formalities,  establishment  of  relevant  data  and  notification  system 
between  competent  authorities,  as  well  as  establishment  of  the  register  of  Professional 
Operators and their mutual recognition by CEFTA parties. 

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 

112 

 
 
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,  Bosnia  and  Herzegovina  signed  no 
new agreements in the reporting period.  Bosnia and Herzegovina needs to further strengthen 
the administrative capacity and improve cooperation and coordination between ministries and 
the different levels of competent authorities in order to ensure consistency of implementation 
and enforcement. 

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.  

Chapter 31 - Foreign, security & defence policy 

Member States must be able to conduct political dialogues under the EU foreign, security and 
defence policy, align with EU statements, take part in EU actions and apply agreed sanctions 
and restrictive measures. 

Bosnia  and  Herzegovina  has  some  level  of  preparation  in  the  area  of  common  foreign, 
security  and  defence  policy.  There  was  no  progress  in  the  reporting  period.  While  a  new 
strategy  for  control  of  small  arms  and  light  weapons  (SALW) was  adopted,  the  country’s 
alignment  with  the  EU  foreign  policy  declined.  The  country  should  improve  its  alignment 
with  the  EU  foreign  policy  statements  and  restrictive  measures  towards  third  countries  and 
entities,  which  significantly  declined  in  2021.  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: 

  improve its alignment with EU common foreign and security policy; 

  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  hosted  the  sixth  informal  EU-Western 
Balkans  meeting  of  political  directors  in  Sarajevo.  Bosnia  and  Herzegovina’s  2018-2023 
foreign policy strategy includes as main goals and priorities the following: full membership of 
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  among  the  members  of  the 
Presidency.  

Bosnia  and  Herzegovina  still  needs  to  appoint  the  persons  in  charge  of  performing  the 
functions  of  ‘political  director’  and  of  ‘European  correspondent’  within  the  Ministry  for 
Foreign Affairs. Regulations and practices based on ethnic quotas applied in the appointment 
of diplomatic and consular network negatively impact the capacity of the Ministry of Foreign 

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Affairs, adversely affecting the country’s foreign policy objectives.  

On  Common  Foreign  and  Security  Policy,  in  2020,  the  country’s  alignment  rate  with 
relevant  High Representative statements on behalf of the EU and Council Decisions was  of 
70%, compared with 61% in 2019. At the beginning of 2021, the country’s rate of alignment 
sharply declined, mainly due to disagreements within the Presidency, to reach 43% by August 
2021, which is worrying. Among others, the country did not align with EU Council Decisions 
on  restrictive  measures  related  to  the  Russian  Federation,  China,  Venezuela,  and  Syria. 
Reversing this trend would signal Bosnia and Herzegovina’s commitment to its EU path.    

Bosnia  and  Herzegovina  ratified  the  Rome  Statute  of  the  International  Criminal  Court 
(ICC) in 2002; the ratification of the Kampala Amendments is pending.  There has been one 
confidential  instance  where  cooperation  with  the  Court  was  undertaken.  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, the country 
does  not  comply  with  the  EU  common  positions  on  the  integrity  of  the  Rome  Statute  or 
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.   

osnia  and  Herzegovina  supports  all  EU  measures  and  instruments  for  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.  On  non-
proliferation, 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 is  party to  the Chemical  Weapons Convention (CWC). 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. The Council 
of  Ministers  adopted  the  2021-2024  strategy  for  control  of  small  arms  and  light  weapons 
(SALW) as  well  as  its  action  plan  in  February  2021.  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. The marking and registration of small arms and 
light weapons held by the Armed Forces of Bosnia and Herzegovina has progressed well and 
is  nearly  complete.  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  major  international  organisations, 
including the  United Nations,  the Council of Europe, and the Organisation  for Security  and 
Cooperation  in  Europe  (OSCE).  The  negotiations  for  its  accession  to  the  World  Trade 

114 

 
 
Organization  are  in  the  final  stage.  In  addition,  Bosnia  and  Herzegovina  has  been 
participating in in NATO’s Membership Action Plan (MAP) since 2019.  

On Security and Defence, an agreement on security procedures for the exchange of classified 
information between the EU and Bosnia and Herzegovina has been in force since May 2006. 
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, have been taking place.  

The financing threshold for the 2019 defence budget, as prescribed in the budget framework 
document 2019-21, represents less than 1% of the GDP. 83% of the  defence budget is used 
for  salaries,  and  less  than  1%  goes  to  investments.  Equipment,  weapon  systems  and 
infrastructure have not been maintained or replaced due to lack of funding and a centralised 
and  dysfunctional  procurement  system.  This  also  critically  affects  the  Demining  Battalion 
which  is  an  important  player  in  humanitarian  demining  and  an  essential  partner  for  the 
successful implementation of the country’s mine action strategy 2018-2025. The mine action 
authorities (Demining Commission and BH Mine Action Centre) need to develop and adopt 
the bylaws and standard operating procedures required for the full implementation of the new 
land release method. 

Regarding  the  common  security  and  defence  policy  (CSDP),  Bosnia  and  Herzegovina 
established  a  framework  with  the  EU  for  the  country's  participation  in  both  civilian  and 
military  crisis  management  missions  and  operations.  Three  members  of  Bosnia  and 
Herzegovina armed forces are deployed in the EU Training Mission (EUTM) in the Central 
African Republic.  

On hybrid threats, the EU has offered the hybrid risk survey to Bosnia and Herzegovina to 
identify key vulnerabilities and address them through EU assistance; so far, the government 
has not expressed interest in participation. 

115 

 
 
 
 
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; the SA Council took place in 
July 2021. The country also participates in Economic and Financial Dialogue between the EU 
and the Western Balkans and Turkey, where joint recommendations are adopted at ministerial 
level.The SAA and its Interim Agreement, applied since 2008, have allowed progressive trade 
liberalisation  and  mutual  duty-free  access  for  most  goods.  Since  2000  Bosnia  and 
Herzegovina has also  been benefiting from  autonomous trade measures.  The country joined 
the  Central  European  Free  Trade  Agreement  (CEFTA)  in  2007.  The  negotiations  for  its 
accession to the World Trade Organisation are in the final stage. In 2020 the EU remained the 
main trading partner of Bosnia and Herzegovina, accounting for 65% of the country’s trade in 
goods (72% of exports and 61% of imports). This represents a fall of 10.2% in 2020, entirely 
due  to  the  pandemic,  and  is  broadly  in  line  with  trade  patterns  in  the  region.  Total  trade  in 
2020 was worth EUR 9.6 billion. The country’s trade deficit with the EU amounted to EUR 
1.5 billion in 2020. In comparison, Bosnia and Herzegovina’s trade with CEFTA represented 
13.6% of its total trade. 

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 
analytical 
the  areas  of 
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 fourth 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  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  while  retaining 
deterrence  capacity  to  support  a  safe  and  secure  environment.  The  UN  Security  Council 
extended EUFOR’s mandate until November 2021. A strategic review of EUFOR Althea was 
adopted by EU Council in July 2021.  

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. 
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;  the  EU  also  made  available  a  facilitated  loan  of  up  to  EUR  250 
million for macro financial assistance. While the recent focus has been on mobilising support 
in response to the COVID-19 pandemic, IPA has also continued to help the country to deliver 

116 

 
 
on  key  sectors  such  as  the  justice  reform,  migration  management,  employment,  agriculture, 
environment and private sector development.  

The  EU  has  supported  Bosnia  and  Herzegovina  in  migration  management  with  EUR  80.5 
million since 2018 in both IPA and humanitarian funds. The adoption of countrywide sector 
strategies  such  as  on  public  financial  management,  and  employment  is  still  pending  and 
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.  

The IPA III Regulation for the 2021-2027 financial period will continue to provide financial 
support  to  the  region  and  will  also  finance  the  Economic  Investment  Plan  (EIP)  for  the 
Western Balkans.9 The EIP was agreed by the Commission and the countries of the region in 
October  2020  and  aims  to  spur  the  long-term  economic  recovery  of  the  region,  support  a 
green  and  digital  transition,  and  foster  regional  integration  and  convergence  with  the 
European Union. 

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. 

9 Official Journal L 330, 20.9.2021 

117 

 
 
 
 
 
 
                                                           
STATISTICAL DATA (as of 09.09.2021) 
Bosnia and Herzegovina 

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

National accounts 
Gross domestic product (GDP) (million national currency) 
Gross domestic product (GDP) (million euro) 
GDP (euro per capita) 
GDP per capita (in purchasing power standards (PPS)) 
GDP per capita (in PPS), relative to the EU average (EU-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 (2015 = 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 (%) 
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 (%) 

Note 

Note 

Note 

118 

2008 
3 844 s 
51 209 w 

2015 
3 825 s 
51 209 w 

2016 
3 516 s 
51 209 w 

2017 
3 510 s 
51 209 w 

2018 
3 500 s 
51 209 w 

2019 
3 492 ps 
51 209 w 

2008 
25 519 
13 048 
3 394 s 
7 600 
29.5 s 
5.4 
: 
: 

: 
: 
: 

8.6 
21.2 
6.4 
63.8 s 
107.3 
28.8 
2.9 
26.8 
59.3 
: 

2008 
95.5 
: 
: 

2015 
28 589 
14 617 
3 821 s 
8 800 
30.6 s 
3.1 
: 
: 

: 
: 
: 

7.3 
21.9 
4.7 
65.9 s 
102.2 
21.1 
0.8 
35.5 
53.8 
: 

2016 
29 905 
15 290 
4 349 s 
9 000 
31.0 s 
3.1 
: 
: 

: 
: 
: 

7.5 
22.6 
4.7 
65.1 s 
99.1 
20.7 
2.3 
36.3 
53.0 
: 

2017 
31 376 
16 042 
4 571 s 
9 200 
30.8 s 
3.2 
: 
: 

: 
: 
: 

6.6 
23.3 
4.8 
65.3 s 
96.7 
21.9 
3.0 
40.9 
57.1 
: 

2015 
100.0 
65 800 e 
: 

2016 
104.4 
67 205 e 
: 

2017 
107.7 
68 761 b 
: 

2018 
33 444 
17 100 
4 885 s 
9 800 
31.7 s 
3.7 
: 
: 

: 
: 
: 

6.9 
23.9 
4.8 
64.4 s 
94.3 
22.8 
2.0 
42.5 
57.3 
: 

2018 
109.4 
68 085 
: 

2019 
35 296 
18 046 
5 168 ps 
10 300 
32.3 s 
2.8 
: 
: 

: 
: 
: 

6.6 
23.1 
5.0 
65.3 s 
93.0 
23.0 
2.2 
40.5 
55.2 
: 

2019 
103.5 
67 981 pw 
: 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Death rate: number of enterprise deaths in the reference period (t) divided by the number of 
enterprises active in t (%) 
People employed in SMEs as a share of all persons employed (within the non-financial 
business economy) (%) 
Value added by SMEs (in the non-financial business economy) (EUR million) 
Total value added (in the non-financial business economy) (EUR million) 

Inflation rate and house prices 
Consumer price index (CPI), change relative to the previous year (%) 
**Annual change in the deflated house price index (2015 = 100) 

Balance of payments 

Balance of payments: current account total (million euro) 
Balance of payments current account: trade balance (million euro) 
Balance of payments current account: net services (million euro) 
Balance of payments current account: net balance for primary income (million euro) 
Balance of payments current account: net balance for secondary income (million euro) 
Net balance for primary and secondary income: of which government transfers (million euro) 
**3 year backward moving average of the current account balance relative to GDP (%) 
**Five year change in share of world exports of goods and services (%) 
Net balance (inward - outward) of foreign direct investment (FDI) (million euro) 
Foreign direct investment (FDI) abroad (million euro) 
of which FDI of the reporting economy in the EU-27 countries (million euro) 
Foreign direct investment (FDI) in the reporting economy (million euro) 
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 (%) 

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

Financial indicators 
Gross external debt of the whole economy, relative to GDP (%) 
Gross external debt of the whole economy, relative to total exports (%) 

Note 
1) 

Note 
2) 
2) 
2) 
2) 
2) 

3) 
2) 3) 
4) 
2) 3) 
3) 4) 
2) 

Note 

5) 

Note 

119 

: 

: 

: 
: 

2008 
3.9 w 
: 

2008 
- 1 797.4 w 
- 5 213.7 w 
977.5 w 
482.1 w 
1 956.7 w 
: 
: 
: 
672.6 w 
26.9 w 
: 
699.4 w 
375.8 w 
-  43.2 w 
: 

2008 
-  2.1 w 
18.7 w 
42.8 w 
44.9 w 

2008 
64.1 sw 
238.9 w 

: 

: 

: 

: 

71.5 sw 

72.0 sw 

69.5 bsw 

69.1 psw 

: 

: 

4 701 sw 
7 169 e 

5 043 sw 
7 594 e 

4 845 bsw 
7 681 b 

5 269 sw 
8 393 

5 752 psw 
9 004 pw 

2015 
-  1.0 w 
: 

2015 
-  745.3 
- 3 668.9 
997.3 
99.7 
1 826.6 
62.9 
-  5.9 
0.0 
260.1 w 
85.2 w 
55.7 w 
345.3 w 
206.4 w 
-  54.9 w 
8.3 s 

2015 
0.7 w 
41.9 w 
43.2 w 
42.6 w 

2015 
72.2 sw 
203.3 w 

2016 
-  1.6 w 
: 

2016 
-  727.9 
- 3 624.6 
1 082.7 
20.7 
1 793.3 
20.8 
-  5.7 
10.6 
281.3 w 
2.6 w 
37.0 w 
283.9 w 
229.2 w 
-  51.1 w 
8.2 s 

2016 
1.2 w 
40.5 w 
42.7 w 
41.5 w 

2016 
71.2 sw 
195.8 w 

2017 
0.8 w 
: 

2017 
-  777.3 
- 3 792.2 
1 191.0 
-  134.6 
1 958.5 
35.9 
-  4.9 
31.6 
366.8 w 
88.4 w 
59.4 w 
455.2 w 
292.7 w 
-  46.4 w 
8.4 s 

2017 
2.6 w 
36.1 w 
43.0 w 
40.4 w 

2017 
67.5 sw 
163.2 w 

2018 
1.4 w 
: 

2018 
-  571.7 
- 3 845.5 
1 325.4 
-  101.8 
2 050.2 
15.1 
-  4.3 
30.6 
507.1 w 
-  5.6 w 
-  35.7 w 
501.5 w 
257.7 w 
-  42.4 w 
8.5 s 

2018 
1.6 w 
40.8 w 
43.1 w 
: 

2018 
68.0 sw 
154.7 w 

2019 
0.6 w 
: 

2019 
-  555.6 
- 4 072.6 
1 416.2 
-  10.9 
2 111.7 
-  4.9 
-  3.8 
25.2 
354.5 w 
-  8.6 w 
-  46.6 w 
345.9 w 
153.5 w 
-  37.7 w 
8.4 s 

2019 
: 
: 
: 
: 

2019 
: 
156.9 w 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money supply: M1 (banknotes, coins, overnight deposits, million euro) 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro) 
Money supply: M3 (M2 plus marketable instruments, million euro) 
Total credit by monetary financial institutions to residents (consolidated) (million euro) 
**Annual change in financial sector liabilities (%) 

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

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

Interest rates: day-to-day money rate, per annum (%) 
Lending interest rate (one year), per annum (%) 
Deposit interest rate (one year), per annum (%) 

Euro exchange rates: average of period (1 euro = … national currency) 
Trade-weighted effective exchange rate index, 42 countries (2010 = 100) 
**3 year change (T/T-3) in the trade-weighted effective exchange rate index, 42 countries 
(2010 = 100) 
Value of reserve assets (including gold) (million euro) 

External trade in goods 
Value of imports: all goods, all partners (million euro) 
Value of exports: all goods, all partners (million euro) 
Trade balance: all goods, all partners (million euro) 
Terms of trade (export price index / import price index * 100) (number) 
Share of exports to EU-27 countries in value of total exports (%) 
Share of imports from EU-27 countries in value of total imports (%) 

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

6) 7) 
6) 8)  

9) 
10) 
11) 
12) 
13) 
10) 
13) 
10) 
13) 

14)  
15) 
16) 

17) 
17) 

2 909.9 w 
6 360.1 w 
: 
7 227.7 w 
3.9 w 

4 182.8 w 
9 534.2 w 
: 
8 623.9 w 
4.6 w 

4 755.5 w 
10 326.9 w 
: 
8 794.8 w 
5.5 w 

5 405.6 w 
11 307.9 w 
: 
9 419.3 w 
8.3 w 

6 209.7 w 
12 368.7 w 
: 
9 964.7 w 
8.8 w 

6 775.2 w 
13 463.7 w 
: 
: 
: 

11.6 w 

-  2.2 w 

1.2 w 

3.2 w 

3.4 w 

106 bw 

87 w 

85 w 

83 w 

87 w 

: 
6.98 w 
0.35 w 

1.956 
97 w 
0.4 sw 

: 
5.71 w 
0.09 w 

1.956 
102 w 
0.9 sw 

: 
5.20 w 
0.09 w 

1.956 
103 w 
1.0 sw 

: 
4.38 w 
0.07 w 

1.956 
103 w 
0.5 sw 

: 
3.79 w 
0.05 w 

1.956 
105 w 
3.3 sw 

: 

: 

: 
3.29 w 
0.06 w 

1.956 
105 w 
2.5 sw 

2) 

3 218.8 w 

4 400.3 w 

4 873.2 w 

5 427.0 w 

5 944.1 w 

6 441.1 w 

Note 

18) 

Note 

2008 
8 330 
3 432 
- 4 899 
: 
71.3 s 
64.4 s 

2008 
0.0 

6.9 
: 
: 

2015 
8 105 
4 595 
- 3 510 
100.0 sw 
70.9 s 
59.9 s 

2016 
8 263 
4 815 
- 3 448 
101.6 sw 
71.0 s 
61.1 s 

2017 
9 298 
5 653 
- 3 646 
101.3 sw 
70.4 s 
60.0 s 

2018 
9 855 
6 085 
- 3 770 
102.7 sw 
72.2 s 
59.7 s 

2019 
9 969 
5 876 
- 4 093 
102.3 sw 
72.3 s 
61.1 s 

2015 
: 

2016 
-  1.8 

2017 
-  2.0 

2018 
-  2.4 p 

2019 
: 

: 
: 
: 

: 
: 
: 

: 
: 
: 

: 
: 
: 

: 
: 
: 

Labour market 

Note 

2008 

2015 

2016 

2017 

2018 

2019 

120 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic activity rate for persons aged 20–64: proportion of the population aged 20–64 that 
is economically active (%) 
*Employment rate for persons aged 20–64: proportion of the population aged 20–64 that are 
in employment (%) 
Male employment rate for persons aged 20–64 (%) 
Female employment rate for persons aged 20–64 (%) 
Employment rate for persons aged 55–64: proportion of the population aged 55–64 that are 
in employment (%) 
Employment by main sectors 
Agriculture, forestry and fisheries (%) 
Industry (%) 
Construction (%) 
Services (%) 
People employed in the public sector as a share of total employment, persons aged 20–64 
(%) 
People employed in the private sector as a share of total employment, persons aged 20–64 
(%) 
Unemployment rate: proportion of the labour force that is unemployed (%) 
Male unemployment rate (%) 
Female unemployment rate (%) 
Youth unemployment rate: proportion of the labour force aged 15–24 that is unemployed (%) 
Long-term unemployment rate: proportion of the labour force that has been unemployed for 
12 months or more (%) 
Unemployment rate for persons (aged 25–64) having completed at most lower secondary 
education (ISCED levels 0-2) (%) 
Unemployment rate for persons (aged 25–64) having completed tertiary education (ISCED 
levels 5-8) (%) 

19) 
20) 
19) 
20) 

58.2 w 

59.2 w 

58.8 w 

58.4 w 

58.4 w 

59.0 w 

44.8 w 

43.2 w 

44.2 w 

46.6 w 

47.7 w 

49.7 w 

58.7 w 
31.5 w 
26.7 w 

: 
: 
: 
: 
16.4 w 

53.9 w 
32.4 w 
28.2 w 

17.9 w 
22.0 w 
7.5 w 
52.6 w 
20.0 w 

56.4 w 
32.0 w 
29.7 w 

18.0 w 
22.7 w 
8.6 w 
50.8 w 
17.8 w 

58.1 w 
35.1 w 
32.5 w 

18.9 w 
22.2 w 
7.3 w 
51.6 w 
18.4 w 

59.5 w 
35.8 w 
32.6 w 

15.7 w 
23.5 w 
8.7 w 
52.1 w 
18.4 w 

61.6 w 
38.0 w 
36.2 w 

18.0 w 
23.8 w 
7.9 w 
50.3 w 
17.2 w 

83.6 w 

80.0 w 

82.2 w 

81.6 w 

81.6 w 

82.8 w 

23.5 w 
21.5 w 
26.8 w 
47.5 w 
20.3 w 

27.9 w 
25.9 w 
30.9 w 
62.3 w 
22.8 w 

25.5 w 
22.6 w 
30.2 w 
54.3 w 
21.7 w 

20.7 w 
19.0 w 
23.3 w 
45.8 w 
17.0 w 

18.5 w 
17.3 w 
20.5 w 
38.8 w 
15.2 w 

15.9 w 
13.8 w 
19.0 w 
33.8 w 
12.1 w 

24.7 w 

27.7 w 

26.2 w 

19.5 w 

19.1 w 

: 

9.5 w 

16.4 w 

18.9 w 

14.6 w 

13.9 w 

10.9 w 

Social cohesion 
Average nominal monthly wages and salaries (national currency) 
Index of real wages and salaries (index of nominal wages and salaries divided by the 
inflation index) (2016 = 100) 
GINI coefficient 
Poverty gap 
*Early leavers from education and training: proportion of the population aged 18–24 with at 
most lower secondary education who are not in further education or training (%) 

Note 
21) 

22) 

2008 
752 w 
: 

: 
: 
9.0 w 

2015 
830 w 
: 

31 w 
: 
5.2 w 

2016 
838 w 
: 

: 
: 
4.9 w 

2017 
851 w 
: 

: 
: 
5.1 w 

2018 
879 w 
: 

: 
: 
5.4 w 

2019 
: 
: 

: 
: 
3.8 w 

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

Note 
23) 

2008 
178.7 sw 

2015 
216.7 sw 

2016 
245.0 sw 

2017 
252.0 sw 

2018 
263.1 sw 

2019 
269.5 psw 

121 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of mobile phone subscriptions relative to population size (number per thousand 
population) 
Mobile broadband penetration (per 100 inhabitants) 
Fixed broadband penetration (per 100 inhabitants) 

Infrastructure 
Density of railway network (lines in operation per thousand km²) 

Length of motorways (kilometres) 

Innovation and research 
Public expenditure on education relative to GDP (%) 
*Gross domestic expenditure on R&D relative to GDP (%) 
Government budget appropriations or outlays on R&D (GBAORD), as a percentage of GDP 
(%) 
Percentage of households who have internet access at home (%) 

Environment 
*Index of greenhouse gas emissions,  CO2 equivalent (1990 = 100) 
Energy intensity of the economy (kg of oil equivalent per 1 000 euro GDP at 2015 constant 
prices) 
Electricity generated from renewable sources relative to gross electricity consumption (%) 
Road share of inland freight transport (based on tonne-km) (%) 

Energy 
Primary production of all energy products (thousand TOE) 
Primary production of crude oil (thousand TOE) 
Primary production of solid fuels (thousand TOE) 
Primary production of gas (thousand TOE) 
Net imports of all energy products (thousand TOE) 
Gross inland energy consumption (thousand TOE) 
Gross electricity generation (GWh) 

Agriculture 
Agricultural production volume index of goods and services (at producer prices) (2010 = 100) 
Utilised agricultural area (thousand hectares) 
Livestock numbers: live bovine animals (thousand heads, end of period) 
Livestock numbers: live swine (thousand heads, end of period) 
Livestock numbers: live sheep and live goats (thousand heads, end of period) 

769.9 ew 

887.0 w 

981.1 w 

981.7 w 

989.9 w 

1 075.5 w 

: 
: 

2008 
19.9 sw 

28 w 

2008 
: 
: 
: 

: 

2008 
59.5 w 
: 

35.8 
: 

2008 
: 
: 
: 
: 
: 
: 
: 

36.2 w 
18 w 

2015 
20.1 sw 

128 w 

2015 
: 
0.22 sw 
0.05 

40.4 w 
19 w 

2016 
19.9 sw 

163 w 

2016 
4.3 sw 
0.24 sw 
0.04 

43.4 w 
19 w 

2017 
19.9 sw 

172 w 

2017 
: 
0.20 sw 
0.04 

52.7 w 
20 w 

2018 
19.9 sw 

198 w 

2018 
: 
0.19 sw 
0.06 

: 

61.5 bw 

66.0 w 

69.0 

2015 
: 
423.0 

41.0 
: 

2015 
4 367 
0 
3 165 
0 
2 083 s 
6 183 
16 438 

2016 
: 
448.8 

40.8 
76.6 w 

2016 
4 742 
0 
3 520 
0 
2 133 s 
6 767 
17 767 

2017 
: 
434.2 

39.6 
78.9 w 

2017 
4 624 
0 
3 612 
0 
2 299 s 
6 754 
16 438 

2018 
: 
463.4 

41.5 
78.7 w 

2018 
5 672 
0 
3 659 
0 
1 814 s 
7 478 
19 160 

44.7 w 
21 w 

2019 
19.9 sw 

208 w 

2019 
: 
0.19 
0.09 

72.0 

2019 
: 
435.7 

45.5 
77.4 w 

2019 
5 405 
0 
3 403 
0 
1 979 s 
7 230 
17 493 

2008 
: 
1 742.8 e 
459.0 ew 
502.0 ew 
1 100.9 esw 

2015 
: 
1 732.8 e 
455.0 e 
564.0 e 
1 093.0 es 

2016 
: 
1 778.8 e 
455.0 e 
545.0 e 
1 091.0 es 

2017 
: 
1 762.0 e 
445.0 e 
548.0 e 
1 090.0 es 

2018 
: 
1 779.6 e 
438.0 
542.0 e 
1 085.0 es 

2019 
: 
1 806.3 e 
430.0 e 
543.0 e 
1 085.0 es 

Note 

Note 

Note 

24) 

Note 

Note 

122 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Raw milk available on farms (thousand tonnes) 
Harvested crop production: cereals (including rice) (thousand tonnes) 
Harvested crop production: sugar beet (thousand tonnes) 
Harvested crop production: vegetables (thousand tonnes) 

: 
1 428.3 e 
0.0 n 
274.7 e 

719.5 ew 
1 150.9 e 
0.0 n 
280.4 e 

723.6 ew 
1 677.5 e 
0.0 
361.4 e 

704.1 ew 
1 176.9 e 
0.0 
291.5 e 

699.9 ew 
1 764.1 e 
0.0 
298.7 e 

663.4 ew 
1 685.6 e 
0.0 
298.8 e 

Source: Eurostat and the statistical authorities in Bosnia and Herzegovina 

: = not available 
  b = break in series 
  e = estimated value 
  n =  not significant value 
  p = provisional 

s = Eurostat estimate 

  w = data supplied by and under the responsibility of the national statistical authority and published on an "as is" basis and without any assurance as regards 

their quality and adherence to EU statistical methodology 
* = Europe 2020 indicator 
** = Macroeconomic Imbalance Procedure (MIP) indicator 

  Footnotes: 

1)  Consumer price inflation 
2)  Based on IMF balance of payments manual, sixth edition. 
3)  Based on IMF balance of payments manual, Asset - Liability Approach 
4)  Based on IMF balance of payments manual, sixth edition and OECD Benchmark Definition of Foreign Direct Investment - 4th edition 
5)  End of year (31 December). 
6)  Based on IMF Monetary and Financial Statistics Manual, 2000. 
7)  M1 money supply comprises cash outside banks and transferable deposit in domestic currency of all domestic sectors (except central government deposits). 
8)  M2 money supply is comprised of money supplies, M1 money and QM quasi money. QM money supplies covers other deposits in domestic currency, 

transferable and other deposits in foreign currency of all domestic sectors (except the deposits of the central government). 

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

10)  Data for monetary financial institutions. 
11)  The Central Bank of Bosnia and Herzegovina started with other financial corporation statistics from 2006. 
12) 

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. 

13)  GDP data for 2017 have been used. 
14)  Short-term lending rates in national currency to non-financial corporations (weighted average). 
15)  Demand deposit rates in national currency of households (weighted average). 
16)  Data for December 2018. 
17)  Revision: NEER base period 2010=100 
18)  Paasche export and import unit value indices 
19)  The public sector includes NACE Rev. 1.1 Sections L, M and N while the private sector includes other NACE Sections. 
20)  The public sector includes NACE Rev. 2 Sections O, P and Q while the private sector includes other NACE Sections. 

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21)  Net earnings. 
22)  Total household consumption expenditure (rather than income) is used for the calculation. 
23) 
24)  Data not collected on inland waterways. Road share of inland freight transport based on road and rail transport. 

Including petrol, diesel, electric and other types of passenger cars. 

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