The economy has grown at a steady pace of 5% per year since 2000, a trend that is expected to be maintained in the future. This sustained annual increase of GDP, combined with rapidly rising production levels and export volumes, provides a clear indicator that the economy is in full expansion.

The stability of the konvertibilna marka – Bosnia and Herzegovina’s currency – further contributes to a favourable business climate in the country. The KM is pegged to the Euro with a fixed exchange rate (1 KM = 0, 51 EUR).

A combination of the Central Bank of BiH’s Currency Board and fiscal discipline has kept the underlying inflation rate the lowest in the region. In 2005, inflation was 2.9%; high by BiH standards but only slightly higher than the one prevailing in Euro-zone (2.2%). The introduction of VAT at the start of 2006 passed successfully with inflationary pressures maintained well under control.

Bosnia and Herzegovina is accelerating the privatisation process for companies of strategic importance in order to increase economic growth and enhance the volume of foreign investment. Additionally, BiH has new powerful, modern bankruptcy laws that provide a flexible, predictable system for maximizing the economic value of companies in financial distress, thus creating potentially valuable opportunities for foreign investors.