Analysis 25 Jan 16

Bankrupt Bosnia Looks to IMF for Salvation

Timid recent improvements in Bosnia's economic performance may be too little and too late, as the country faces near-disaster without a new IMF program.

Drazen Simic
BIRN
Sarajevo

Sarajevo | Photo by: Wikimedia Commons/lasserbua

Dependent mostly on exports to EU countries, burdened by excessive public spending, hindered by a poor business environment and haunted by political instability, Bosnia's economy has never fully recovered since the 2008 global economic crisis.

For years, the economy has lingered in limbo, increasingly depending on international and local lending as life-support systems, enabling the payment of salaries, pensions, social benefits and other local and international obligations.

One expert after another has predicted the imminent collapse of this unsustainable system, which spends far more than it earns. Still, Bosnia and its economy have almost miraculously carried on, limping from one loan to another.

The gradual stabilization of the EU economy in 2015 eventually led to slow growth in Bosnia's industrial output and exports, and by the end of 2015 its economic activity and performance showed the first timid signs of improvement since 2009.

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