Governor Selimović Held a Speech at the Meeting with the IMF

Governor of the Central Bank of Bosnia and Herzegovina, Jasmina Selimović,Ph.D. during her visit to Washington gave an introductory speech at a meeting of the International Monetary Fund (IMF). On the basis of the IMF invitation to give a speech and present her views on the economic prospects of the region, the Governor in her speech commented on the regional economic forecasts with a special focus on the specific features of Bosnia and Herzegovina and the region, and conveyed a key message from the Regional Economic Outlook Report (REO), which states that high uncertainty hinders the recovery and growth potential in the region.

Photo: IMF

Speaking of the resilience of the economies of Bosnia and Herzegovina and Europe with regard to global challenges, such as geopolitical tensions and inflation, the Governor pointed out that adjusting monetary policy to these challenges is crucial.

"Bosnia and Herzegovina has a positive GDP gap, and it is below 1%, indicating that investments so far have not significantly stimulated potential growth. This is caused by the factors such as low productivity and investments that have not directly increased production capacities," the Governor said.

She also pointed out that inflation pressures in Bosnia and Herzegovina, as well as in the region, mainly result from structural factors, such as rising labour costs, negative demographic trends and the expected increase of electric energy prices due to energy transition. These specific features require caution when formulating economic and monetary policies, because too restrictive monetary policy in this environment could additionally slow down the country's potential growth.

The Governor also stressed the significance of climate change, emphasizing that the recent floods have severely limited the local production capacities and supply chains, reducing further the economic potential. She particularly pointed out the need for fiscal adjustments, including the tax base broadening and a more balanced tax policy, to ensure stability in the future.

Finally, Governor Selimović underlined the significance of regional cooperation, especially in the area of energy security and energy sources diversification, and called for stronger cooperation with international financial institutions with the aim to ensure a stable and prosperous future for Bosnia and Herzegovina and the region.

The common practice at the IMF Annual Meetings, which are held each year in October, includes the organisation of such meetings attended by governors and finance ministers from Central, Eastern and Southeastern Europe. The aim of the meeting is to exchange opinions and dialogue on the economic prospects of the region, but also the IMF projections.