EU4PSD Project in Bosnia and Herzegovina

As Bosnia and Herzegovina advances on its path toward EU accession, progress remains constrained by persistent structural challenges that continue to weigh on its economic performance. Addressing these challenges is essential not only to meet accession criteria, but also to support sustainable, inclusive growth and accelerate socio-economic convergence with the EU.

Despite periods of relatively strong growth, Bosnia and Herzegovina has made limited progress in closing the gap with EU income levels. While growth has exceeded that of the EU in recent years, it has consistently lagged behind the Western Balkans average since 2003—a trend expected to persist through 2027. As a result, GDP per capita (PPP) reached only 36% of the EU average in 2024. This reflects, in part, a growth model that remains heavily consumption-driven and insufficient to sustain long-term convergence, underscoring the need to shift towards a more dynamic, private sector-led growth model.

Structural bottlenecks in the business environment continue to hinder this transition. Regulatory complexity and opacity increase compliance costs and deter investment, with net FDI inflows averaging just 3.2% of GDP between 2020 and 2023—the lowest in the Western Balkans.¹ Market competition is further weakened by governance challenges and the continued dominance of underperforming state-owned enterprises, many of which receive preferential treatment despite around 60% failing to cover their costs even with government support. Corruption remains a significant concern, with 60% of businesses perceiving anti-corruption efforts as ineffective.² At the same time, access to finance continues to constrain firm growth, with around 30% of loan applications rejected, limiting firms’ ability to invest, including in digital and green transitions.³

The OECD’s activities under the EU4PSD project seek to support the implementation and monitoring of Bosnia and Herzegovina’s Reform Agenda, with a focus on improving the business environment and enhancing business competitiveness. The three main actions will be: (i) delivering tailored policy analysis and advice through an analytical work; (ii) providing technical support to policy-makers in priority areas of the Reform Agenda; and (iii) strengthening the capacity to monitor the scope and pace of reform implementation.

The Assessing Bosnia and Herzegovina’s Reform Agenda for Private Sector Development was released on 26 September 2025 and presented during a launch event held at the OECD premises. The report provides an initial assessment of Bosnia and Herzegovina’s progress in implementing private sector development reforms outlined in the draft Reform Agenda and establishes a basis for future monitoring across five substantive areas: (i) SOEs, (ii) business registration and licensing, (iii) transparency and accountability, (iv) access to finance and (v) vocational education and training. It aims to support policy makers in Bosnia and Herzegovina by identifying key policy bottlenecks and providing concrete, practical recommendations – drawing on OECD good practices and standards – to guide the design of the Reform Agenda, inform future economic policy planning and accelerate reform implementation.

• Promotional one-pager (EN)
• Promotional one-pager (BS)
• Launch Meeting Agenda
• Report's Presentation
• Launch Meeting Photos

For more information, please contact:

Umur Gökçe, Economic Advisor

Stephanie Lizzo, Junior Policy Analyst