Citizens of BiH increasingly turning to credit advisors to repay loans

Nine municipalities in Bosnia and Herzegovina will soon open offices for free counseling on how citizens can most easily repay loans they have taken from banks, writes the BiH news agency Patria (NAP).

Free credit counseling will be provided to citizens by the municipalities of Srebrenica, Gradačac, Brod, Stari grad Sarajevo, Kiseljak, Kreševo, Posušje, Nevesinje, and Milići. These offices were previously opened by the municipalities of Visoko, Tuzla, Teslić, Kakanj, Bijeljina, and 15 other municipalities in BiH.

According to the latest warnings from domestic and foreign organizations, citizens of BiH owe banks around seven billion KM, and this number continues to grow. However, the devastating fact is that only five percent of BiH citizens take out loans to start a business. A small number of citizens also take out loans to buy an apartment, accounting for just over 20 percent.
Citizens in BiH mostly borrow money for survival and to repay old debts.

However, it is not only citizens of our country who are in trouble due to over-indebtedness. Banks operating in BiH are increasingly facing problems due to the difficulty of collecting these loans. The number of non-performing loans, which five years ago was around five percent, has now risen to more than 16 percent.

In order to alleviate the situation for over-indebted citizens and banks, at least to some extent, the International Finance Corporation (IFC), a member of the World Bank Group, launched the Free Credit Counseling Program for over-indebted citizens of BiH back in 2013.

Counselors, municipal employees who have undergone special training, talk to citizens daily and try to find the least painful solution for debt repayment together with them. Most often, this involves reprogramming old loans, which entails lower monthly installments and longer repayment periods.

The IFC is implementing this project in cooperation with the Government of Switzerland, the European Fund for Southeast Europe (EFSE), and the Association for Responsible Personal Finance Management "U Plus". So far, about 2,000 citizens of Bosnia and Herzegovina have used the services.

The IFC states that the rate of resolving the problems of over-indebted citizens in the municipalities where the Program is implemented has exceeded 65% in the last six-month period, writes Patria.