This is a breakthrough moment for Bosnia and Herzegovina as the country receives the EU membership candidacy status but, still, there are difficulties ahead, according to Miljkovic & Partners Managing Partner Sead Miljkovic.
"After six years of filing an application for EU candidacy, and 14 years since the signing of the stabilization and association agreement, Bosnia and Herzegovina finally received the EU membership candidacy status in mid-December," Miljkovic says. "This is good news for investors, and we are happy as professionals and citizens that this process is moving forward. However, knowing that it will take additional years to fulfill the criteria for joining the EU, we are aware that there are still a lot of difficulties ahead, including reaching a political consensus on certain important aspects. We do not expect this process to be smooth."
"The other important development is the general elections for all levels except local authorities, held in October," Miljkovic notes. "For a while, we were waiting for the results to be published as the process was challenged by political stakeholders. In the past three or four weeks, there have been serious discussions between the stakeholders for the formation of the government at the state level, which is obviously very important for the country and the progress toward EU membership." According to him, so far, a consensus might have been reached among the major political players. "The coalition agreement regulating principles of governance until 2026 has been signed by eight different parties representing the civic block, two center-right parties – SNSD and HDZ – as well as their coalition partners that will be forming this stretched coalition," Miljkovic points out.
"For the legal sector, these are positive moves, as we might finally get a more functional government at the state and entity levels," Miljkovic says. "It is obviously something that impacts the economy to a great extent and hopefully will result in the generation of investments. This is a breakthrough moment compared to the past years for a number of reasons, but a major one is that we will finally have a government that is not on a technical mandate similar to the previous one, with the same people being in power for over eight years." According to him, this has led to a number of criminal charges and blockades of main processes, such as the adoption of legislation and implementation of major infrastructure projects.
Miljkovic highlights that for the market, there is a slight rise in insolvency and restructuring cases. "Recently, there was a large restructuring proceeding involving six banks, including international banks with a seat outside of Bosnia and Herzegovina," he notes. Miljkovic says that some changes are expected: "as a result of inflation and the energy crisis, we are about to see what the outcome will be. The Bosnian currency is linked to the euro, and the fall of the euro against other currencies has an impact on us as well. We expect some sort of slowdown."
On the bright side, Miljkovic points out that there is an increase in interest in renewable energy projects. "This is of strategic importance for the country: the current resources and generation facilities are quite outdated, which definitely asks for a shift in investment policy from traditional sources such as coal to greener energy," he notes.