Standard and Poor’s affirmed Credit Rating of Bosnia-Herzegovina

March 5, 2020 12:45 PM

 

The international rating agency Standard and Poor’s (S&P) affirmed the credit rating of Bosnia and Herzegovina, “B” with a positive outlook.

Explaining the ratings, analysts of the Agency said the economy of Bosnia and Herzegovina continued to grow despite its longstanding political fragmentation. The Agency forecasts real GDP growth of 2.7 % over the next four years. Fiscal performance is a major contributor to credit rating, as the general government net debt is expected to remain below 30 % of GDP and to have a favorable maturity structure. The quality of banking regulations was also positively evaluated.

Positive outlook reflects the potential for BH’s authorities to continue with structural reforms and to agree to a funded arrangement with the International Monetary Fund (IMF) over the next 6 -12 months. Reforms, according to analysts’ expectations, could include reducing the labor cost burden on business and enhancing governance of the country’s state-owned enterprise sector.

According to analysts, credit rating can be raised if domestic policy settings improved with more consensus based politics, oriented on promoting economic growth and structural reforms. The rating may also be increased if economic growth strengthened. On the other hand, analysts warn that the outlook of the credit rating could be revised in the event of escalation of political tensions that would, among other things, hampered economic growth.

The rating has been B with positive outlook since 8 March 2019, when this Agency upgraded the outlook for long-term rating of BH from stable to positive, which was the first upgrade of the outlook for long-term rating of BH by S&P since 2012.

 

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