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Country Information
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Economy
Bosnia and
Herzegovina ranked next to Macedonia as the poorest republic in the old
Yugoslav federation. Although agriculture is almost all in private hands,
farms are small and inefficient, and the republic traditionally is a net
importer of food. Industry has been greatly overstaffed, one reflection
of the socialist economic structure of Yugoslavia. TITO had pushed the
development of military industries in the republic with the result that
Bosnia hosted a number of Yugoslavia's defense plants. The interethnic
warfare in Bosnia caused production to plummet by 80% from 1992 to 1995
and unemployment to soar. With an uneasy peace in place, output
recovered in 1996-99 at high percentage rates from a low base; but
output growth slowed in 2000-02. Part of the lag in output was made up
in 2003-2004. National-level statistics are limited and do not capture
the large share of black market activity. The konvertibilna marka (convertible
mark or BAM)- the national currency introduced in 1998 - is now pegged
to the euro, and the Central Bank of Bosnia and Herzegovina has
dramatically increased its reserve holdings. Implementation of
privatization, however, has been slow, and local entities only
reluctantly support national-level institutions. Banking reform
accelerated in 2001 as all the Communist-era payments bureaus were shut
down. A sizeable current account deficit and high unemployment rate
remain the two most serious economic problems. The country receives
substantial amounts of reconstruction assistance and humanitarian aid
from the international community but will have to prepare for an era of
declining assistance
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