Bosnia and Herzegovina

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Development Challenge The USAID Program Other Program Elements Other Donors Program Data Sheets Summary Tables USAID Search: Bosnia and Herzegovina Previous Years' Activities 2002, 2001, 2000, 1999, 1998, 1997 Last updated: 27     (text taken from the FY 2003 Congressional Budget Justification) THE DEVELOPMENT CHALLENGE: The U.S. Government's overarching goal in Bosnia and Herzegovina (BiH or Bosnia) is to build an effective, functioning multi-ethnic state that will allow the United States to "normalize" its relations with BiH, turn over primary responsibility for modernization to the Europeans and conclude the U.S. military mission to BiH. While a great deal of progress has been made since the civil war ended in 1995, challenges remain. The BiH economy remains weak. Although progressing, the pace of privatization is slow, private foreign investment growth is sluggish, the trade deficit is high, administrative barriers to doing business are excessive, and public finances are weak with the government unable to meet basic obligations. Unemployment is estimated to be 40% in Bosnia-Herzegovina. The service sector accounts for 58% of the gross domestic product (GDP). Democratic values and freedoms need to be strengthened. Key challenges are developing an effective independent judicial system, doing away with corruption, and enhancing civil society. Ethnic minorities are returning to their homes throughout BiH in unprecedented numbers. However, basic services, such as power and water, and access to basic financial services are still not adequate to ensure the sustainability of returns. Underlying all of the above is the need for the development and support of central government (state-level) institutions. BiH is a small market, best served as a single economic space. Nonetheless, the differences in rules and regulations between BiH's two administrative entities, the Federation of Bosnia-Herzegovina (the Federation) and the Republika Srpska (RS), present serious problems for the potential investor. In addition, state level institutions, such as a state treasury, a single BIH national institute for standards and a permanent secretariat in the Presidency, are prerequisites to the European Union (EU) accession so critical to Bosnia's future. THE USAID PROGRAM: FY 2002 Estimate: $65 million FY 2003 Request: $50 million The Program Data Sheets provided below cover the three strategic objectives for which USAID is requesting funds. These three objectives concentrate on accelerated development of the private sector, greater participation in democracy and the provision of basic services and other support to minority returnees and improving environmental management in BiH. FY 2002 funds will be used to fund the ongoing programs of economic reform, democratic reform and support for minority returns. The specific activities to be funded by FY 2002 and FY 2003 appropriations in those same areas are described in more detail in the following Program Data Sheets. ONGOING PROGRAMS FOR WHICH NO FY 2002 OR FY 2003 FUNDING IS REQUESTED: The USAID program in BiH includes the following objectives for which USAID is not requesting new funds, but is continuing to expend funds already appropriated. Number: Title: Last Notified: Planned Completion: 168-031 Recovery from Crisis FY2002 CBJ, p. 317 FY 2004 OTHER PROGRAM ELEMENTS: Additional support for minority returns will be provided with funding from the local currency account (Account 3) of the Business Development Program. This funding is critical in light of sharply declining bilateral funds. Account 3 Funds will also be provided for state-level deposit insurance and for support of anti-corruption activities. OTHER DONORS: USAID's economic reform program works closely with the International Monetary Fund (IMF), the European Bank for Reconstruction and Development (EBRD), and World Bank (WB) to ensure a common donor approach to promoting critical reforms. To strengthen democratic values and freedoms, USAID works primarily with the Office of the High Representative (OHR), the European Union, the Council of Europe, and other bilateral and private organizations, in efforts to support independent media, political party development, judicial reform, and civil society building. To encourage and sustain minority returns, the Community Reintegration and Stabilization Program (CRSP) is closely coordinated with the infrastructure rehabilitation efforts of the World Bank, the EU, and other multilateral or bilateral organizations. The CRSP program also works very closely with the EU, OHR and World Bank in promoting institutional sector reform in the water and energy sectors. In both sectors, donor unity plays a major role in encouraging reforms to make the sectors eligible for much-needed loans and eventual utility privatization. External debt is $3.4 billion. The World Bank, International Monetary Fund (IMF) and EBRD are among the largest creditors to BiH. Donor coordination on the ground is good. The International Community charged the OHR and the Organization for Security and Cooperation in Europe with developing a plan for streamlining assistance to BiH. The plan presented at the Peace Implementation Council Meeting in December 2001 is being revised and will be reviewed. Program Data Sheets 168-0130  Accelerated Development of the Private Sector 168-0210  A More Participatory, Inclusive Democratic Society 168-0311  Sustainable Minority Returns in Support of Creation of a Multi-ethnic Society Country Background Information Resources     CIA Factbook National Geographic Country Maps State Dept. Country Information

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