We at the World Bank feel that the July 28 news story "Bosnia: Model for Mistakes" does not accurately describe what is actually going on in the country. In the three years since the end of the war, Bosnia has made major strides in solidifying peace and bringing about greater prosperity for its people. Much of this was achieved by successfully capitalizing on the large amount of assistance pledged by the international community to help rebuild the country.

Annual economic growth in Bosnia has averaged about 40 percent in real terms since 1995, and the GDP more than doubled -- from $1.9 billion in 1995 to $4.1 billion by the end of 1998. While unemployment still is estimated at 35 percent, this is about half the immediate postwar level. Annual inflation has fallen to single digits. However, even with very high economic growth rates, Bosnia remains the second-poorest country in the region.

Contrary to the article's portrayal, reconstruction efforts in Bosnia have achieved real results. For example:

Almost 100,000 private houses and public apartment units have been repaired, providing jobs and improved living conditions for some 400,000 people.

Transport, telecommunications and water services have been restored to their prewar levels.

Most primary schools have been rebuilt, and donors have financed school furniture, textbooks and salaries for teachers.

Progress has indeed been slower in building economic institutions and creating an attractive environment for the private sector. However, reforms have been initiated by the Bosnian authorities to improve fiscal management, increase the transparency of public spending and change the taxation system to make it more friendly to the private sector. Privatization has started, and the restructuring and strengthening of the ailing banking sector is underway.


Vice President

Europe and Central Asia Region

The World Bank