NEW FOOD PRICE INCREASES EXPECTED IN BOSNIA

SARAJEVO, Bosnia (January 23,2008) - The FBIH Entity’s trade minister Desnica Radivojevic announced that further prices increases are expected in Bosnia, especially in the food sector. Last week, the International Monetary Fund (IMF) asserted in their macroeconomic analysis for January how the growing prices of food could have a negative effect on Bosnia’s economic growth and the employment perspective.

As the amount of money required to cover food expenses increases, so the amount remaining for other goods and services decreases, they warn, and this eventually leads to reduced spending. This is especially a likely scenario for Bosnia, where spending is the main moving power. Another adverse effect is the reduced ability to pay loans.

If salaries started growing faster than productivity, negative impact will be felt on Bosnia’s competitiveness on the international market, the IMF said. Minister Radivojevic warned that further price rises could follow because of costlier energy. The Bosnian government will need to consider taking certain measures, he said.

The Bosnian Consumer Ombudsman Dragan Doko stated that the constant price increases over the past few months are reason enough for the Bosnian citizens to fear for their future living standard.

Doko thinks it is time to raise the issue of developing a national strategy for the protection of citizen’s economic interest.

He reminded that the December prices in Bosnia were by 4.9 per cent higher than the year before that, on average, with highest increases recorded in the food and non-alcoholic beverages group (10 per cent).

According to the Office of the Ombudsman, the way to protect the economic interest of the Biosnian citizens is by establishing a unified economic environment, encouraging competition preventing monopolies, and by a number of targeted measures (mark-up caps, buffer stock interventions, market control, etc.).