Bosnia and Herzegovina (BiH) is facing considerable challenges just as it has rebounded from the Covid-19 pandemic. Spillovers from the war in Ukraine are fueling inflation and weighing on domestic spending and external demand, while domestic political tensions are hampering economic policies and reforms.
Albania is preparing a Medium-Term Revenue Strategy (MTRS) to finance its development spending of an estimated 2.2–3.0 percent of GDP over five years. Revenue mobilization will be supported by comprehensive tax policy and administration reforms. International and regional comparisons suggest that there is room for additional revenues as well as improvement in the composition of tax revenues. This report presents options for tax policy reform to raise at least an additional 1.34 percent of GDP in revenues over five years and to improve the quality and efficiency of the tax system, that will enable the mobilization of further domestic revenues.
International Monetary Fund. Monetary and Capital Markets Department
This Technical Assistance (TA) report on Bosnia and Herzegovina highlights that the negative spread in a context of structural lower returns on foreign exchange reserves and sizable capital inflows has led to a gradual and steady erosion of the currency board coverage ratio. The Central Bank of Bosnia and Herzegovina (CBBH) requested Technical Assistance to review its reserve requirement framework. The mission recommends aligning the remuneration of reserve requirements on foreign exchange liabilities to the CBBH’s opportunity cost. The mission also recommends prescribing the fulfilment in foreign currency of the reserve requirements for foreign currency liabilities. It also suggested altering the remuneration scheme of domestic reserve requirements. In order to be neutral from an intermediation perspective, the reserve requirement remuneration should be aligned to the market-neutral uncovered interest rate parity rate, whereas the remuneration of excess reserves may take place significantly below the market-neutral rate but at or above the foreign currency remuneration rate. The CBBH may benefit from a constructive dialogue with the Area Department or TA to set the new rates of remuneration of domestic reserve requirement and excess reserves.
The global economic and financial crisis found the economy of Bosnia and Herzegovina in a vulnerable position. The government put together a comprehensive program supported by the International Monetary Fund. The stabilization program has helped mitigate the impact of the global financial crisis on the economy. With the economy now emerging out of the recession, policy continuity is important. Medium-term fiscal consolidation should be accompanied by reforms in current spending while making room for capital expenditure. The response in the financial sector has been appropriate.
The current account deficit by the Central Bank of Bosnia and Herzegovina in recent years has fluctuated to about 20 percent of GDP. But official current account statistics suffer from several shortcomings. Possible sources of the savings required to achieve a fiscal position consistent with long-term fiscal sustainability is discussed. A theoretical model of the trade balance has been developed and used as the basis for estimating a quarterly regression model of Bosnia and Herzegovina’s trade balance. Effective fiscal coordination is essential in Bosnia and Herzegovina.
This Selected Issues paper and Statistical Appendix paper examines the issue of dollarization in Albania against the background of rapidly evolving banking, policy and prudential systems, and of growing importance of monetary policy as a tool for demand management. The period covered is 1998—the immediate aftermath of the pyramid scheme collapse—to the present, which is a period of impressive, though gradual, transformation rather than of abrupt structural changes. The paper also analyzes the poverty situation in Albania, and discusses the poverty alleviation mechanisms that have worked.
International Monetary Fund. Secretary's Department
This annual publication is a record of the IMF's Annual Meeting and contains the opening and closing addresses of the Chairman of the Board of Governors, presentation of the Annual Report by the Managing Director, statements of Governors, committee reports, resolutions, and a list of delegates. Usually published in March.