Bosnia and Herzegovina faces economic risks from EU carbon border tax

The International Monetary Fund (IMF) has warned that Bosnia and Herzegovina's economy faces significant risks due to the European Union's Carbon Border Adjustment Mechanism (CBAM). Approximately 10.7 percent of the country's total exports—equivalent to about 3.2 percent of its GDP—are currently exposed to the mechanism, which targets carbon-intensive goods such as electricity, cement, steel, and aluminum.

Specific sectors face varying levels of risk. While aluminum has a relatively favorable emission intensity, steel emissions are roughly 30 percent above the EU average. Electricity production is particularly vulnerable, as emissions per unit are nearly three times higher than the EU average due to heavy reliance on coal. Additionally, nearly 90 percent of cement exports are destined for the EU, making it difficult to find alternative markets if costs rise.

Complementing these economic warnings, recent energy data from the Federation of Bosnia and Herzegovina shows a decline in domestic production. In July 2026, gross electricity production fell to 508 GWh, down from 533 GWh in July 2025. Coal production also saw a decrease, with hard coal production dropping to 211,783 tons compared to 300,931 tons the previous year. Conversely, oil product imports increased to 140,850 tons in July 2026.