Bosnia's central bank has cut its 2011 growth forecast to around 2 percent because political rivalry has blocked the formation of a central government and necessary reforms, Governor Kemal Kozaric told Reuters on Monday. He said the state was surviving on "life support" and could not afford new investment.
Bosnia, which is made up of the Muslim-Croat federation and the Serb Republic, is still without a central government nearly 11 months after the general election because of ethnic and political bickering. "Our forecast of a 2.8 percent growth of the gross domestic product in 2011 obviously will not be achieved because after the October election we have not seen governments formed at full capacities at all levels," Kozaric said in an interview.
"We now project growth of (slightly above) 2 percent thanks to demand on the international markets for our metal exports, which have posted a significant rise of around 26 percent while imports went down at 17 percent," Kozaric said. However, he said that disbursement of international loans, such as a 1.1 billion euro ($1.60 billion) standby arrangement with the International Monetary Fund (IMF), were on hold because of the regional governments' failure to agree on a state budget. The Serb Republic, which opposes having a strong central government for fear it might lose some of its autonomy, wants to cut this year's state budget while the Muslim-Croat federation wants to boost it.
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