Bosnia and Herzegovina has made substantial progress in economic reconstruction since the end of the war and economic expansion has remained robust. Driven in large part by a jump in international metal prices, earlier reforms, new metal-processing capacity and significant remittance inflows, economic expansion has remained robust over the last few years. Real GDP growth, which averaged five percent a year since 2000 and is likely to rise to about six percent in 2007, helping return the level of GDP to near its pre-war level. A lot more remains to be done, however, to create conditions for sustained growth and to reduce risks to hard-won fiscal stability.

The dialogue with the Government on the Policy Notes and the Entity Governments’ investment programs were used as vehicles for expressions of interest in future World Bank support. The Bank was requested to put an increased focus on investment projects. Priority sectors highlighted for investments were: infrastructure (especially transport and energy); agriculture; development of small and medium size enterprises; and, corporate restructuring of enterprises. Other priority areas emphasized include strengthening of the single economic space in BH, increasing employment, development of local government, restructuring the economy, improving the management of loss-making companies and harmonization with European legislation.

This Country Partnership Strategy aims to focus on areas of demonstrable Government commitment and capacity to deliver on development strategies and reforms. Identifying areas of intervention that have unconditional ownership by all the Governments and which also have significant development impact has been, and will continue to be, the key challenge. The Bank’s portfolio will mostly comprise of investment lending and, provided there is political commitment in a particular area, very focused on Development Policy Lendings (DPLs).

Despite strong economic performance and a reasonably healthy portfolio, the level of risk in the BH program is substantial. The greatest internal risk to implementation of the Bosnia and Herzegovina program is political obstruction of economic reforms and a deterioration in the quality of the political dialogue. Meanwhile, local and regional political tensions risk distracting policy makers from the economic reform program.

• Summary of World Bank Strategy (Table: 'Results Matrix')
  
  

• Bank Strategy Completion Report for 2005-2007
  
  
• CAS Progress Reports (2001, 2002)
  
  
• Previous Strategies
  
  

• Work Programs of Other Donors

• About Country Assistance Strategies
  
  
• The Scope of the World Bank’s Operations