BiH doesn’t expect problems with the euro

BiH doesn’t expect problems with the euro

Banja Luka, June 30, 2015/ Independent Balkan News Agency

By Mladen Dragojlovic

BiH economy analysts are not worried about possible effects of crisis in Greece on the economy of the state, despite the fact that the national currency, convertible mark (BAM), is linked with the Euro in a fixed rate.

In fact, there is no concern about this issue in any aspect of daily life of BiH citizens. Earlier, when the BAM was linked with German Mark, the citizens had more belief in that currency than in BAM and every house had spare money in foreign currency. According to Central bank BiH analysis on the end of last year, similar situation is with Euro and citizens believe that it will be stable.

“I follow the crisis in Greece since my job is to be prepared for any effect it might have on the BiH money market. For now, there are no changes at all, citizens buy and sell Euro as usual. However, nobody knows what can happen tomorrow”, said Zeljko Mirkovic, a worker in the currency exchange office in Banja Luka.

He added that the market is so sensitive that, when a few years ago, there was a information that Euro will lose some of it value, according to Zeljko, it was a signal for chaos and citizens were standing in lines to exchange their currency.

“For now, citizens are not so concern and I believe that there will be a solution for the crisis in Greece”, Zeljko told IBNA.

Economy analyst from Sarajevo, Igor Gavran, also hopes that some solution will be found in the Eurozone.

“Due to the dominant role of the economic relations with the European Union in the overall international economic relations of Bosnia and Herzegovina, any significant change in its structure or economy will certainly have an impact on Bosnia and Herzegovina, but to which extent such impact can be potentially disruptive or even destructive cannot be foreseen at the moment. Since the economic relations between Bosnia and Herzegovina and Greece are very limited, there shouldn’t be direct consequences, but just ‘side-effects’ from the Euro-Zone destabilization”, Gavran told IBNA.

He added that, since the Convertible Mark is pegged to the Euro, any change in the value and exchange rate of the Euro will directly increase or decrease the value and rate of the BiH currency. Gavran said that, in the case of the worse scenario and serious destabilization of the Euro zone, some depreciation of the Euro is most likely to happen.

“Such a change would make exports from the Euro Zone (and Bosnia and Herzegovina) relatively “cheaper” in other areas, so more attractive for buyers from all other countries. It’s a proof that even the worse scenario doesn’t have to result only with negative effects. Abandoning the currency board system or pegging the KM to a different currency would be a very risky decision, which shouldn’t be expected in the near future, Gavran emphasized.

Professor at the Department of Economics and Finance at Sarajevo University, Fikret Hadzic, told the media that he doesn’t expect negative effects in this case. He explained that BiH will share the fate of the European Union or the euro, which is related to the BAM, but that it will have a particular impact on the BiH financial system. He pointed out that it is likely that there will be a decline in the value of shares on the stock exchanges and the strengthening of other currencies against the Euro, but that the existence of that currency will not be affected.