In February 2016, Bosnia and Herzegovina officially submitted their application to join the EU. The EU accepted the membership application in September of this year. The commission will now prepare an assessment of the country’s readiness to join the EU, a key step to earn the ‘candidate status’. This process could take a year.

Impact on country risk

The acceptance of the EU membership application is positive news for the country which lacks clear vision on its future. The preliminary results of local elections in the Republika Srpska and the Bosniak-Croat Federation and of the contentious referendum on the 9 January holiday (banned by the constitutional court because it discriminates against non-Serbs) in Republika Srpska highlight the mounting nationalism and damaged ethnic relation. Milorad Dodik, from the Alliance of Independent Social-Democrats – which won a large majority of the vote in Republika Srpska – pledged to organise a referendum on independence in 2018. In this tense context, EU membership could serve as an anchor for political reforms. This is likely to be a challenging process given the complexity of the constitution set-up and the decision-making process, and the lack of a basic consensus among the three entities regarding government organisation, obstructing all political and economic progress. The adoption of a three-year loan programme by the IMF could further help the country to pursue structural economic reforms.  At the moment, Credendo Group’s country risk classifications remain unchanged.

Analyst: Pascaline della Faille, p.dellafaille@credendogroup.com