Bosnia and Herzegovina - Services

As in the former Yugoslavia, banks in the Federation and the Serb Republic are still too numerous, small, and undercapitalized. The political units have reached an agreement to allow Federation banks to operate in the Serb Republic as local ones. However, this arrangement may only add to the already over-banked sector. Although bank consolidation is needed for the gradual emergence of a sound banking system that will fuel investment and consumer spending and reinvigorate the economy, the government is more actively concerned with bank privatization.

Tourism has suffered from destruction and the general feeling of political instability. However, it has been recorded that domestic tourist visits have increased to the tiny Herzegovinian stretch of the Adriatic coast, and the number of lakeside resorts and foreign tourists has also increased. Before the war, Bosnia tourism was not as significant for the economy as in Croatia and Slovenia. However, it was given impetus as Sarajevo hosted the 1984 Winter Olympics and became internationally well known for its mountain resorts and colorful multicultural atmosphere. However, many tourist attractions were destroyed in the shelling of the city during the war.

Retail was well developed and to a large extent privatized before the war. It has since contracted because of the declining demand. The black market is still an important player in the economy. In contrast to Slovenia and Macedonia, foreign investment is limited.

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