No time to lose: 2022 must be the year of social and economic recovery in Bosnia and Herzegovina
03 February 2022
Op- Ed by the United Nations Resident Coordinator in Bosnia and Herzegovina, Dr Ingrid Macdonald.
Bosnia and Herzegovina risks falling further behind the economic and social progress of its neighbours and the wider region, missing out on a once in a generation opportunity to benefit from a post-COVID19 recovery. The pandemic has slowed economic growth in the country, whilst exposing how those who are the most vulnerable and who have the least continue to be left behind. And whilst countries around the world are building back their economies, Bosnia and Herzegovina’s recovery is faltering; hindered by the ongoing political crisis.
Last month the World Bank downgraded the global economic forecast for 2022, predicting rapid economic deceleration, rising inequality and continued unpredictability. For Bosnia and Herzegovina, the implications are serious with forecasts predicting economic growth to half by 2023, whilst the population faces rapidly escalating fuel, heating and food prices. The people and families with the least will be the most impacted – widening the inequality gaps in the country. Women will continue to bear the burden, as they have been doing throughout the crisis. An estimated 60 per cent of jobs lost during the pandemic in the Federation of Bosnia and Herzegovina and 70 per cent in Republika Srpska belonged to women, who also carry most of the home-care burden. Yet funds have not been allocated for higher cash subsidies for families nor for women who lost their jobs. Without inclusive and gender sensitive reforms and targeted support packages, gaps will continue to widen and the re-entry of women into the work force will likely to be defined by even more job insecurity and economic hardship for families. Youth face a similar situation, with the International Labour Organisation projecting an entire “lost generation” due to their entry into the workforce being hindered by the pandemic.
The ongoing political crisis risks further undermining economic recovery efforts and access to vital services and social protection for citizens. For example, the state Indirect Tax Authority (ITA) is widely considered to be one of the most functional parts of the economy. Since it was introduced 15 years ago, the ITA has collected tens of billions of euros and it has become the largest revenue source for budgets benefiting multiple levels of government and social services. Dismantling such a system could generate sharp drops in tax revenue, increase tax evasion and disrupt foreign debt repayment. Ultimately, it will be the people across the country who will suffer most as the funds to support health, education and other important services dwindle.
Budget cuts and stalled policy may also jeopardize implementation of the new Nationally Determined Contributions under the Paris Climate Accords and promotion of just energy transition which is needed to support coal communities secure a healthier and more prosperous future. Cities across the country regularly experience hazardous air pollution undermining the health, welfare and economic prosperity of the population. Together with municipalities, cantons and international partners, the United Nations has supported practical solutions to support energy efficiency – but a broader multisector approach is required to capitalise on the opportunities arising from COP26, the European Union’s Green Agenda and the Economic Investment Plan for the Western Balkans.
The current economic model does not help either. The public sector and economy are consumption driven, with a weak private sector overburdened with high social security contributions that is struggling to achieve competitive export levels. Entrepreneurs often say that they feel that their efforts to strengthen and develop the private sector lacks support and recognition. Whilst the United Nations will encourage a fourth generation of SDG Business Pioneers this year, thus recognizing entrepreneurs adjusting their businesses to be more socially and environmentally responsible – action is required to support the private sector with ease-of-doing-business policies, as well as incentives to attract more foreign investment and competitive exports.
Given the increasing hardship already being felt by the general population, there is urgent need to prioritise reforms in 2022, such as broadening the social protection system, whilst ensuring a better quality of social services. These areas are core pillars of the new United Nations and Bosnia and Herzegovina Cooperation Agreement signed in May 2021. The partnership provides a basis for ‘Reimagining Education’ offering 21st century skills development suited to modern labour markets, closing the digital divide and supporting teachers with new skills. The WHO ‘Roadmap for Health in the Western Balkans’ offers opportunities to place health at the centre of the country’s economic growth agenda. There is also support for creating more efficient, fair, and inclusive social welfare systems and services, including multi-sectoral referrals to protect women and children from violence and enhancing efficiencies in budget spending and services which will benefit vulnerable groups.
The COVID-19 recovery represents a once in a generation opportunity to reimagine the education system, reform the overburdened health system, reposition towards 21st Century jobs, promote cleaner and greener energy efficiency and move towards more socially responsive public budgets so that no one is left behind. And whilst 2022 will undoubtedly be marked by continued political wrangling in the run up to the general election campaign, the representatives of the people have a responsibility to prioritise urgent social and economic recovery and reforms that benefit all citizens.
Fostering sustainable, inclusive and socially responsible economic growth is a core responsibility of the institutions of Bosnia and Herzegovina. With thousands and thousands of citizens leaving the country every year in search of better prospects abroad, and an estimated 47 percent of young people considering leaving the country, socio-economic recovery cannot simply be ‘left for later'. The leaders and institutions of Bosnia and Herzegovina have no time to lose.