Affordable Access

Access to the full text

Balance of Payments Deficit and Currency Board Arrangement Sustainability in Bosnia and Herzegovina

Authors
  • Kurteš, Siniša1
  • Amidžić, Srđan1
  • Rajčević, Perica
  • 1 Faculty of Economics, Bosnia and Herzegovina , (Bosnia & Herzegovina)
Type
Published Article
Journal
Zagreb International Review of Economics and Business
Publisher
Sciendo
Publication Date
Dec 01, 2020
Volume
23
Issue
s1
Pages
43–56
Identifiers
DOI: 10.2478/zireb-2020-0022
Source
De Gruyter
Keywords
License
Green

Abstract

Constant current account deficit in Bosnia and Herzegovina results from a large foreign trade imbalance, which in turn is a consequence of uncompetitiveness of the economy in the global market. The current account deficit is mainly financed by foreign remittances, foreign aid, and least of all by foreign investment. Lately, the outflow of the active, working population has been decreasing the labor force (especially the qualified and highly educated employees), as well as the domestic demand, which will exert further pressure on the balance of payments account. On the other hand, monetary policy is operating under the principles of currency board, i.e. applying a firm exchange rate, so the question arises whether and to what extent it is sustainable, under the conditions of a high current account deficit. The purpose of this paper is precisely to examine the relation between the deficit of balance of payments and the sustainability of the currency board arrangement in Bosnia and Herzegovina, under such conditions.

Report this publication

Statistics

Seen <100 times