2015年-世界发展银行全球_Bosnia_and_Herzegovina___Capital_Markets_Technical_Note_33页_1mb

Bosnia and Herzegovina Capital Markets Assessment Summary

I. Executive Summary

Bosnia and Herzegovina's capital markets are currently small but have the potential to grow and play a more significant role in the country's economic development. The capital market was instrumental in the early stages of the country's transition, particularly through the voucher privatization program, but the subsequent failure of Privatization Investment Funds (PIFs) has eroded investor trust. The two entity-level stock exchanges, SASE (Sarajevo Stock Exchange) and BLSE (Banja Luka Stock Exchange), were established to facilitate the privatization process and promote transparency. However, the market remains underdeveloped, with limited equity and non-government bond trading, and a weak government debt market.

The legal and regulatory framework for capital markets is generally sound, but implementation is hindered by insufficient resources and lack of coordination between the two entity-level regulators. Both entities have adopted EU directives, but the process of integrating these into national legislation is ongoing. The capital market infrastructure is strong, with transparency and disclosure requirements that are above average for transition economies.

To enhance market development, it is recommended that the two entities improve coordination and cooperation, establish a regulatory association similar to Canada's CSA, and create a task force to spearhead capital market reforms. Additionally, the government should consider engaging financial advisors to develop strategies for the privatization and recapitalization of public sector enterprises. The failed PIFs also need to be restructured or converted into open-ended funds to restore investor confidence.

II. Country Context

Bosnia and Herzegovina is a post-conflict country with a highly fragmented and decentralized political structure established by the 1995 Dayton Peace Agreement. This structure has impeded progress in various areas, including capital market development. The Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS) each have their own National Assemblies, ministries of finance, securities commissions, stock exchanges, and other institutions. Only a few institutions operate at the state level, such as the Central Bank of Bosnia and Herzegovina (CBBH) and the Deposit Insurance Agency.

The country's transition from a centrally planned economy to a market-based system was delayed by the Bosnian War (1992-95). It was only after the war and the establishment of a provisional administration that the privatization process began. A mass voucher privatization program was introduced, which led to the creation of the SASE and BLSE exchanges and a series of PIFs to help individuals manage their privatization proceeds.

Despite these early successes, the implementation of follow-on reforms has been slow due to political fragmentation. The country's delayed transition has affected its ability to respond to major macroeconomic developments, such as EU integration, WTO initiatives, and global financial crises. Structural challenges, including a weak private sector, high youth unemployment, brain drain, and an unreformed pension system, continue to hinder economic growth and capital market development.

III. Capital Markets Overview

Bosnia's capital markets are still in a nascent stage, with limited size and liquidity. The government securities market has recently begun to expand, but it remains small and underdeveloped. In 2013, the outstanding domestic government debt was 3.65% of GDP, significantly lower than neighboring countries like Croatia (24.9%) and Hungary (45.7%).

The equity market is also underdeveloped, with a combined market capitalization of US$5.0 billion, representing 28% of GDP. This is lower than Croatia (38%) and Poland (36%) but higher than Serbia (20%) and Slovenia (14%). The secondary market turnover is very low, and there have been few new capital raisings in the past 2-3 years.

The stock exchanges have been affected by the global financial crisis, with share prices and trading volumes remaining depressed since 2007/8. The lack of investor confidence, particularly among retail investors, and political uncertainty have contributed to this stagnation.

IV. Legal and Regulatory Framework

The legal and regulatory framework for capital markets operates at the entity level, with the Federation and RS each having their own securities commissions and legislation. The Federation's Securities Commission of the Federation of Bosnia and Herzegovina (FedSC) was established in 1998 under the Federation BiH Securities Market Act, while the RS's Securities Commission (RSSC) was established in 1999 under the Law on Securities of the Republika Srpska.

Both regulators have the authority to oversee all core aspects of the capital market, but their powers are largely defined in by-laws, rulebooks, and regulations. The process of appointing commissioners is subject to political delays, as they must be confirmed by the respective entity parliaments. In the Federation, a political deadlock has prevented the confirmation of new commissioners since 2009, leading to a lack of independence and effective supervision.

The legal framework is improving, but it lacks the resources necessary for effective implementation. Both regulators have limited staff, which hampers their ability to supervise the large number of listed firms or enforce regulations. Enhanced cooperation and coordination between the two entities are needed to improve the regulatory environment and support market development.

V. Key Recommendations