Bosnia and Herzegovina (B&H) is committed to and applying the principles of multiparty democracy, pluralism, and market economics in accordance with the conditions specified in Article 1 of the Agreement establishing the Bank. At the same time, the functioning of the state in general, and of its democratically elected institutions in particular, is affected by the specifics of the country’s constitutional set up. The 1995 Dayton Accords, which ended the war in B&H and paved the way to the country’s stability, created a uniquely complex institutional structure and a fragmented policy-making apparatus. As a result, many of weaknesses common to other Western Balkan countries have been multiplied in B&H, which makes doing business there particularly challenging. Without comprehensive constitutional reform further progress towards a more efficient state, implementation of a meaningful reform agenda and EU approximation will be difficult to achieve.