Speech by the Governor of BiH Central Bank, Kemal Kozaric, at the Forum for Prosperity and Jobs follow up seminar in Banja Luka

Dear ambassador Lilloe, dear Mr. Daviddi,
Dear participants, guests, ladies and gentlemen,

I have a pleasure to be here with you today in Banja Luka. Today’s gathering represents a continuation of event which started in Sarajevo back in May this year. This time, I am here with you in a slightly changed role as the Central Bank of Bosnia and Herzegovina has also accepted to be a co-organizer of this event.

Our institution is fully aware that the unemployment in Bosnia and Herzegovina is extremely important issue for all levels of the government. Therefore we sincerely hope that October elections will provide stable coalitions on all levels, which, in their programs will have, as a priority, economic reforms and creating of new jobs.  

Also, this event clearly shows the new face of representatives of the European Commission, since the shift of focus from political to economic issues is more than evident, which is welcome in the situation we are currently in.

We assumed the role of organizer recognizing the importance of the topic and also having in mind that this is the time when we suffer damages from recent natural disaster that has pushed our already fragile economy down even further.

I will repeat that our current data on unemployment stands at 27, 5% but these data are likely to worsen when we get the more precise data on businesses and jobs which vanished in the flooding. We have to act quickly and speed up reforms in all sectors, besides trying to provide assistance to those in need.

The unemployment figures become even worse if we look at the youth unemployment, reached 60%, which means that every third young person actually holds a job. This has led to general feeling of hopelessness and desire to leave the country and find their happiness elsewhere. Future policies must include incentives for youth employment.

We have to use opportunity of tomorrow’s donors’ conference which will be held in Brussels and attract assistance in order to recover businesses and help people get their jobs. We now need concrete actions.  

Because of everything I said, I am glad that Sarajevo event is getting today’s follow up which is more technical in nature, since we have to be able to turn conclusions into more concrete proposals if we want to move forward . Those proposals, in the end, should result in policies and measures that will identify stakeholders and strict timetable. Only this way we can ensure that words will turn into actions and policies.

Going back to conclusions from the previous event, policies can roughly be grouped in two main categories: managing of our business environment and managing of the human capital in the country.

Dear Ladies and Gentlemen,

The business environment is the topic that has been analyzed many times. Registration process in the country takes 35 days and requires 11 procedures in BH Federation, while Republika Srpska has made significant progress recently.

1. There are no reasons to keep unnecessary procedures and everything needs to be done to cut down registration process into reasonable time, such as two or three days.

2. We need to reduce taxes and social payments burden on employers. Depending on which entity you are looking at, it stands currently 52 and 69 percent. This reduction would significantly influence reduction of grey economy which is currently estimated as one third of entire business activity in the country.

3. We need to look and find the way to reduce government expenditure, while trying to find the way to make it more efficient.

4. We need to make stable connection between educational system and market needs. This will significantly help reduction of youth unemployment.

5. We have to make, along with reforms of business environment, the analysis of all elements which influence the economic trends in our country, including the analysis of our foreign trade and demands of our main trading partners.

In order make all of this possible, we need stable governments on all levels, with clear economic programs and economy as number one priority with focus on creation of jobs.

To put this into simple words, we need political stability at all levels and clear EU candidacy status for the country as soon as possible.

I hope in today’s sessions we will identify:
• processes and  actions needed to be taken to solve identified problems
• legal framework necessary to be improved,
• more precise  timetable and
• local institutions responsible to implement these actions as well as international community institutions ready to assist.

Today’s event is made of three sessions. They are entitled
• “Investment and doing business”,
• “Taxes, Benefits and Government Expenditure”, and
• “Labor Markets and Enterprise Expansion”.

These sessions have been defined carefully in the attempt to cover all aspects which influence business climate and employment.

Finally, I want to thank all participants and speakers for helping us in the process of identifying necessary reforms and steps to be taken. I would also like to thank the European Commission Mission in Bosnia and Herzegovina and Norwegian Embassy for taking very active role in organization of this event. All of you who have accepted our invitation are invited to take active participation on each session.

In the end, I wish our session participants fruitful discussion and our guests’ pleasant stay in Banja Luka and Bosnia and Herzegovina.