Inspect and Verify

The BiH economy may be growing faster than the five percent per annum that
has been recorded over the last four years — but we can’t be sure, because the
current system for statistics gathering is disorganized and inadequate. Because
of this, economic planning often has to be done by guesswork. Also because of
this, investors receive a negative impression of BiH – which drives away the
investment that is needed to create new jobs.

A key requirement for further European integration, the BiH Statistics Agency
was established last year, after years of delay. The posts of Director and
Deputy Directors were advertised, but for ten months political disagreements
prevented the appointments being made. On 16 September the Council of Ministers
made the appointments, but the new team has not yet been able to make the Agency
fully operational – the BiH Financial Audit Office report on the agency found
poor budget planning, poor execution and management; insufficient staffing, and
improper procurement procedures.

The most glaring aspect of this lamentable state of affairs is that it was
entirely avoidable. Running an efficient state statistics agency – crucial for
the prosperity of BiH – is a relatively undemanding administrative proposition.
The shocking waste of time in establishing the BiH Statistics Agency indicates a
continued inability on the part of the BiH political establishment to understand
that urgent economic measures – such as reducing unemployment – can’t be put on
hold for the sake of obscure party political calculations.

As the Principal Deputy High Representative, Donald Hays, points out in his
introduction to the OHR’s third quarter Economic Newsletter, “Nuts and bolts
exercises such as statistics gathering may be unglamorous – but they absolutely
have to be tackled. Continued neglect of these reforms could compromise BiH’s
economic recovery. That would represent political blundering and social
irresponsibility of truly monumental proportions.” Reform is not just about
ticking the legislative boxes; reforms must be implemented. The European
Commission in the BiH Feasibility study clearly states [I quote] “Full
implementation of this law would be essential for a SAA”.

Another area where an appropriate sense of urgency has been conspicuous by
its absence among politicians concerns BiH’s inefficient inspection system.
Inspections are crucial to maintaining standards right across the spectrum of
commercial activity – but in BiH there are too many inspectors and too many
overlapping inspections. As Ambassador Hays points out, “Reforming the
inspectorate system doesn’t involve vast administrative change; it simply
requires the application of a reasonable amount of political will to draft and
enact acceptable legislation that will help eliminate corruption and
inefficiency from a function that sits at the very heart of economic life.”

Modernizing BiH’s Business Environment

Ambassador Hays was in

Banja Luka

at the end of last week
for talks on, among other things, the best way of securing the enactment of the
BiH Law on Obligations. The discussions were extremely positive, with all of the
parties indicating that they support this law, which will give BiH a modern,
European-standard commercial code. Prime Minister Mikerevic has agreed to work
with Prime Ministers Hadzipasic and Terzic on the steps that must be taken so as
to get the law enacted by the end of the year.