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Bosnia-Herzegovina Infrastructure Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: September 2009 Product Code: R302-8233 Description There have been no major developments in Bosnia’s infrastructure over the last quarter. Multilateralinstitutions such as the European Bank for Reconstruction and Development (EBRD) and EuropeanInvestment Bank (EIB) continue to play a pivotal role in financing infrastructure projects in Bosnia,especially since the departure of infrastructure and energy majors from the country over 2009. Approvalfor loans from the EBRD is currently being sought for major projects in the transport sector(SarajevoAirport, Sarajevo Bypass, Pan-European Corridors), and we expect those projects to dominate the sectorin the remainder of 2009 and 2010.Preliminary data for 2008 show stronger growth that we had estimated for the industry. We wereestimating industry value at BAM1.18bn (US$865mn), but preliminary figures show that industry valuereached BAM1.34bn (US$978mn). Accordingly, real industry growth was 23.4%. This makes the 2009fall we are forecasting in industry value appear all the more abrupt, even though our forecast for the valuehas in fact changed marginally upwards from BAM1.12bn (US$760mn) to BAM1.14 (US$780mn). InBMI’s Q409 Bosnia Infrastructure Report we forecast the industry value real growth will fall intonegative territory for 2009 - in line with the contraction of wider economic activity - to -16.6% . Bosnia’s score in the regional Business Environment ratings has fallen even further this quarter. We nolonger see an upside to the country’s score from the entry of more foreign players in the market; on thecontrary, the withdrawal of CEZ and the postponement of Strabag’s highway project lower ourexpectations. The overall score is symptomatic of this very low industry value - below US$1bn. But moreimportantly, it is symptomatic of structural deficiencies in the overall investment climate and institutionalinfrastructure. These deficiencies are much more worrisome hurdles for the development of Bosnia’sinfrastructure than the low industry value and sector growth scores, and will therefore be much moredetrimental for Bosnia’s business environment score over the long term. In BMI’s Project Finance Ratings for Central and Eastern Europe, Bosnia ranks in 16th place out of 16countries. Bosnia’s score has seen the most significant decline (along with the Baltics) this quarter,reflective of the deteriorating expectations for financial and exchange rate stability that in turn jeopardisethe long-term value of revenues of a project. The initial phases of design and construction contain highlevels of risk for sponsors and investors, and Bosnia presents a remarkably low score for thecommissioning and operating phase of a project. This indicates long-term risks, including price risk dueto weak regulatory oversight and demand risk arising from high vulnerability to external financial andeconomic shocks. Table of Contents
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