EU4PSD Project in Bosnia and Herzegovina

A challenging business environment and a fragmented economic space continue to hinder Bosnia and Herzegovina’s economic growth and convergence with the European Union. Complex and opaque regulations increase compliance costs for businesses and discourage investment, with net FDI inflows averaging just 3.2% of GDP between 2020 and 2023, the lowest in the Western Balkans¹. Market competition is distorted by weak governance and the dominance of poorly performing state-owned enterprises (SOEs), many of which receive preferential treatment despite 60% failing to cover their costs, even with government support. Corruption also remains a pressing concern, with 60% of businesses reporting that anti-corruption efforts are ineffective². Meanwhile, access to finance is a persistent barrier, with 30% of loan applications still being rejected—posing particular challenges for firms aiming to engage in digital and green transitions³.

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.

For more information, please contact:

Umur Gökçe, Economic Advisor, umur.gokce@oecd.org

Stephanie Lizzo, Junior Policy Analyst, stephanie.lizzo@oecd.org