The USAID-funded Partnership for Advancing Reforms in the Economy worked to strengthen the financial services regulatory system, improve the financial administration of public resources, and foster an enabling environment for private sector growth.
Through the project, Chemonics used a flexible, demand-driven approach to address counterparts’ priorities and to adjust to changing circumstances in Bosnia and Herzegovina and the global environment. The counterparts included: Central bank, Ministries of Finance, banking supervision agencies, Bosnia and Herzegovina Deposit Insurance Agency, insurance agencies, pension funds, securities commissions and stock exchanges, supreme audit institutions, parliaments, selected public companies, professional associations. Counterparts recognized that financial sector legislation, regulations, and practices needed to be improved.
The project aligned financial practices with European Union and international standards, and consolidated banking service regulations across the state and entity levels. This enabled the country to maintain a stable and transparent financial system, despite challenges posed by the global economic crisis and political stalemate in Bosnia and Herzegovina.
The country’s financial services market is about the size of its gross domestic product, at 25 billion convertible marks. It is dominated by banking services, which encompass 82 percent of assets and are therefore a focus of assistance. The major banks are internationally owned, but their expansion is hindered by the regulatory framework, which limits growth of the private sector.
To target public and private sector priorities, the project provided technical assistance to introduce a Basel II banking supervision regulatory framework. Development of a sound and modern banking sector continues to play an important role in preserving the country’s economic stability and making it competitive for future investments.
- Advanced implementation of a country-tailored regulatory framework on the basis of a single reform agenda
- Engaged Bosnia and Herzegovina's Central Bank in all banking supervision reform interventions and coordinated activities with the European Central Bank; also supported the Central Bank in developing website educational content on financial services and consumer protection
- Assisted Parliamentary audit committees in more effectively utilizing audit reports and implementing the use of public hearings for institutions that breach regulations
- Developed written materials for improved systematic implementation of audit recommendations which include a model book of rules and guidelines, and a procedures and recommendations document
- Successfully facilitated the formation of the Association of Professional Risk Managers which will help mobilize financial professionals in the private and public sectors to engage in knowledge exchange, capacity building, and development of policy and regulatory recommendations
- Managed and administered two phases of a multi-bank development credit authority loan portfolio guarantee facility of $31 million and $56 million
To learn more, read the Final Report here.
Project Duration: 2008 - 2013