64840
           BOSNIA AND HERZEGOVINA: COUNTRY PARTNERSHIP STRATEGY

                                                     CHAIR’S SUMMING UP

                                               Meeting of the Executive Directors
                                                               October 4, 2011


        The Executive Directors discussed the joint IBRD/IDA/IFC Country Partnership Strategy (CPS)
for Bosnia and Herzegovina for the period FY2012-FY2015 (R2011-0220[IDA/R2011-0289; IFC/R2011-
0278]), and welcomed the extensive consultations with civil society and other stakeholders in its
preparation.

         Directors noted the country’s significant achievements since the end of the war in 1995, and the
particular difficulties of its political and economic transition. They commended the authorities for their
efforts, in maintaining macroeconomic stability and restoring growth in light of the recent global
economic crisis. Directors welcomed the consensus among the State and Entity governments to pursue
EU membership accession as the primary means to address the country’s main development challenges.
However, several Directors noted with concern the current political stalemate and the prolonged electoral
transition, as well as the lack of agreement between Entities and State on a fiscal framework for the
coming years. They urged the authorities to resolve their differences as these threaten the reform process
and undermine coordination. The need to renew the country’s efforts toward strengthening governance
and institutions was particularly underscored.

         Directors broadly supported the CPS and noted the challenge of preparing a CPS during an
extended period of fluid political developments. They noted the strategy’s focus on selectivity,
flexibility, results and partnership. Directors also welcomed its consistency with the EU accession
agenda, and the flexibility in determining support for the latter years. The need for constant monitoring
of the strategy’s implementation was stressed.

         With respect to the private sector, Directors stressed the importance of improving the country’s
competitiveness and enhancing the investment climate. To this end, they welcomed the significant role
envisaged for IFC, including through direct financing and advisory services. Several Directors also
stressed the importance of enhanced attention to addressing infrastructure and energy requirements,
crucial in supporting private sector development.

        Directors welcomed the Government’s commitment to reform the country’s system of social
benefits, but noted that the country still faces lingering challenges, and urged the Authorities to accelerate
progress in implementing the approved reforms. They noted that this is particularly urgent given the
current global and regional economic challenges and their potential impact on poverty and
unemployment. In particular, Directors underscored the need to address the high level of youth
unemployment and to pay due attention to gender related issues.

       Finally, Directors emphasized the importance of donor coordination especially with the European
Union. They look forward to an early CPS Progress Report.




                                                            
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  This summary is not an approved record.