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Bosnia & Herzegovina

BiH lent new loans to MSME recovery

BiH Finance Minister Vjekoslav Bevanda and World Bank (WB) Country Manager for Bosnia Emanuel Salinas signed a € 56m loan agreement in Sarajevo on Monday. The WB has approved a loan to support small and medium-sized enterprises affected by the coronavirus pandemic.

As announced, credit earmarked for a project to support the recovery of micro, small and medium-sized enterprises (MSMEs) and mitigate the effects of the coronavirus pandemic.

“60% of the loan or € 33.6 million is intended for the Federation of BiH entity and 40% or € 22.4 million for the Republika Srpska entity. The terms of the loan are favorable, with a maturity of 15 years including a 5-year grace period, ”explained Minister Bevanda.

Development banks in both entities will provide support through special credit lines for companies affected by the crisis last year.

The entire BiH economy is facing severe consequences on the eve of the pandemic, with the country registering a GDP surplus.

According to the Bureau of Statistics, in the first half of 2020 GDP shrank by 3.7% per year. Indicators for the whole of 2020 are not yet available, however the trends in the second half of the year turned even more unfavorable with the projected GDP decline even steeper.

At the same time, BiH has recorded a 17.5% drop in exports and a similar drop in imports.

Private consumption has fallen by 4%, however public spending has risen by 0.5%, which can be attributed to higher costs of financing the health sector and the need to support the economy and save it during the first wave of the crisis. .

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