Apr 02, 2020

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From: Vuković & Partners

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Category: Banking and Finance, Newsroom, News

Bosnia and Herzegovina: Measures for the economy

BOSNIA AND HERZEGOVINA: MEASURES FOR THE ECONOMY

Like many Balkan countries, Bosnia and Herzegovina also faces numerous challenges with the emergence of the COVID19 pandemic, both in terms of health and human life as well as economic protection.

The Council of Ministers of Bosnia and Herzegovina, at its 5th extraordinary session, held on March 17th, 2020, adopted “Decision on the Proclamation of the State of Natural or Other Disasters on the Territory of Bosnia and Herzegovina”. This Decision will activate the Coordination Body of Bosnia and Herzegovina, in accordance with the Framework Law for the Protection and Rescue of People and Material Property from Natural or Other Disasters in Bosnia and Herzegovina, to prevent the occurrence and minimize the effects of virus corona. Like other countries, staing indoors and social distancing is the main rule to follow. „Odluku o proglašenju nastanka stanja prirodne ili druge nesreće na teritoriji Bosne i Hercegovine“. Ovom Odlukom će se Koordinacijsko telo Bosne i Hercegovine, u skladu sa Okvirnim zakonom za zaštitu i spašavanje ljudi i materijalnih dobara od prirodnih ili drugih nesreća u Bosni i Hercegovini, aktivirati na planu sprečavanja pojave i minimizovanju efekata korona virusa. Kao i u drugim zemljama, ostajanje u svojim kućama i socijalno distanciranje su glavna pravila kojih se treba pridržavati.

In order to combat the virus and make people abide by the rules, Bosnia and Herzegovina decided to follow the example of Montenegro. Certain authorities in FBiH decided to publish the names or those who are breaching the mandatory 14-day self-isolation, quickly followed by the Republic of Srpska, while Municipality of Konjic and Canton 10 in FBiH decided to publish not only the names of those who are breaching imposed measures but also published a list containing names, as well as the address of those infected and those who are obliged to be in self-isolation. However, Personal Data Protection Agency of Bosnia and Herzegovina issued a Resolution on 24 March 2020 prohibiting the publication of personal data of those infected by COVID-19, as well as those subjected to self-isolation to all authorities in Bosnia and Herzegovina due to the fact that such publication represents a breach of Law on protection of personal data in Bosnia and Herzegovina.

The consequences on the economy are inevitable. The Central Bank of Bosnia and Herzegovina, however, assures that there is no reason to worry, that there are currently 5.5 billion KM deposited by commercial banks and their depositors in the accounts of the Central Bank. Of these, 2.7 billion KM is a required reserve, while 2.8 billion KM represents a surplus above the required reserve. "This clearly indicates that the country's banking system is liquid and there is no need for a further reduction in the reserve requirement rate." The Central Bank of Bosnia and Herzegovina also has sufficient cash amounts of convertible mark and euro banknotes so that it can meet the needs of commercial banks in order to supply citizens and economy. The FBiH Banking Agency has made the "Decision on temporary measures of banks and non-depository financial institutions to mitigate the negative economic consequences caused by the COVID-19 viral disease", by which banks and non-depository financial institutions may approve special measures for their clients, such as: moratorium, which may last at least until the anouncement of the termination of the state of emergency caused by the occurrence of the virus; introduction of grace period on repayment of the principal of the credit obligations for a maximum period of 6 months; approval of an additional amount of exposure for the purposes of overcoming its current liquidity difficulties, and other measures to facilitate settlement of credit obligations of clients and maintenance of clients’ businesses.