This report covers the main macroeconomic releases for Bosnia from early December 2013 till early January 2014, as well as the financial and political events that took place in the country during this period. It also reviews corporate news for companies including Elektroprivreda BiH, US firm Howell Machine, and bankrupted Lithuanian lender Ukio Bankas.

Even though Bosnia's two entities—the Federation and the Serb Republic—managed to endorse their budgets by the IMF’s deadline of December 9, 2013, a disagreement in the country's tripartite presidency delayed the submission of the state-level budget draft to parliament. As a result, the IMF postponed until January 2014 the fifth review under Bosnia’s EUR 390mn standby loan deal and the country’s request for extension and enlargement of the agreement.

On the economic front, Bosnia's industrial production index increased 6.7% year on year in January-November thanks to higher manufacturing and electricity output, which offset a decline in the mining and quarrying sector. The ILO-definition unemployment rate stood at 27.5% as of end-September, down by 0.5 percentage points compared to the end-2012. Bosnia’s central bank gross foreign reserves increased 9.4% year on year to EUR 3.5bn at end-October, slowing down slightly from a 9.7% year on year rise the month before.

Key Points:

• In corporate news, Bosnian power utility Elektroprivreda BiH will receive a EUR 65mn loan for the construction of its Podvelezje wind farm. Bosnia's Federation government and US firm Howell Machine have agreed on partnership in the military industry. Bosnia's Serb Republic and bankrupted Lithuanian lender Ukio Bankas have formed a joint working group to resolve claims against the Birac alumina plant.

• The European Commission decided to cut Bosnia's 2013 pre-accession financing by EUR 45mn, as the country's leaders failed to agree on a solution to the Sejdic-Finci case.

• The foreign trade deficit narrowed 9.7% year on year to EUR 3.2bn in January-November due to rising manufacturing and utilities exports, while imports declined over the period.

• Commercial banks assets went up 4.1% year on year to EUR 11.8bn at end-October, quickening from 3.7% year on year growth a month earlier underpinned by a mild increase of lending activity. Loan growth, however, remained below the 2012 average of 4.9%.

• Bank deposits grew 6.4% to EUR 7.2bn at end-October, speeding up from 6.0% the month before, as other financial institutions and entities governments deposits swung into growth over the period.