EU on Economy: BiH Government's Plan is Full of Holes, the Situation is Much Worse!

BiH's economic recovery is weak, and the risks of falling into a new crisis are large and numerous, according to the assessment of the economic situation in our country prepared by the European Commission, exclusively learned by the BiH news agency Patria (NAP).

Namely, the economy and finance ministers of the European Union will discuss the situation in candidate and potential candidate countries for membership, including BiH, at a meeting on May 6 this year.

Therefore, the European Commission has conducted its analysis of the economic situation in BiH and presented precise criticisms and grim forecasts. This new discussion by European ministers is part of Brussels' efforts to establish a new strategic framework for action in BiH, which would focus on the economy.

The document is based on an analysis of the economic program for the period from 2014 to 2016 adopted by the Council of Ministers of BiH. According to the opinions of European experts, this program is in line with expectations, but it is full of holes, and largely overly optimistic and inconsistent.

- Forecasts of growth of 3.5 percent in 2016 are overly optimistic, and unforeseen risks have been ignored. This estimate is based on the growth of domestic consumption and investments. However, this would require dedicated work on reviving the privatization process and much stronger government activities to improve business conditions, which are the most difficult in the region - the EU report states, among other things.

In addition, Brussels warns that the deficit will certainly grow this year compared to the projected 1 percent, and at the same time, although the authorities understand the need for changes, there are still no real actions that would direct public spending towards economic growth.

- Announcements of investments that should cover the deficit and the decline in domestic demand are overly optimistic. The biggest risk is the further deterioration of the political situation and the October elections, which could slow down the implementation of structural reforms. Existing problems in trade with Croatia are still a risk for agricultural exports - the report states.

European experts, as reported by Patria, expect that labor market conditions will continue to be difficult, and that the banking sector will remain under pressure. Brussels warns that there are no real reform plans after 2014, that the authorities are silent about changes to high taxes on workers, changes to social benefits, and public administration reforms, NAP reports.