There can be no high economic growth rates, productivity growth or reduction of unemployment without high rates of savings and investments. The financial system, based on a monopoly position of banks in the FBiH, only in the last three years has been succeeding to generate a positive rate of domestic savings. The financial system is not yet able to fully respond to needs of undeveloped economy like economy in FBiH. Therefore, it is necessary to introduce new financial institutions (savings banks, saving-credit cooperatives, etc.), mechanisms (project finances, etc.) and instruments (commercial bonds, etc.) in order to mobilize savings and initiate a whole spectrum of investment projects. There is no doubt that it is needed to further develop the banking system, but it is also necessary to expose banks to competition.

Countries in transition, particularly open economies like economy of BiH, may not incentivize the growth of economy with fiscal stimulus. According to OECD’s estimations, growth of public expenditures for one € in FBiH discourages the private sector and causes reduction of GDP for 0,19 € in a short-term period, and in a long-term period it brings growth of GDP for 0,38 €. Since foreign trade significantly participates in GDP, in that way economies of the countries from which we have high imports is stimulated. Therefore, the increase of public investments is the right way to incentivize the economic growth in the FBiH. The estimations of OECD indicate that 1€ of public investments in developing countries brings in the first quarter GDP growth for 0,6 €, and in a long -term it brings GDP growth for 1€.

Related measures:

- Diversify and enhance the financial system,

- Increase impact in spending of public funds as well as the scope and efficiency of public investments.