On 08 March 2019, the international rating agency Standard and Poor’s (S&P) announced that the credit rating of Bosnia and Herzegovina remains „B“, however, compared to the previous rating assessment, the outlook has been changed from stable to positive. This has been the first upgrade of the outlook for a long-term rating of BH by S&P since 2012.
As mentioned in the announcement, the economy has appeared to be more resistant to political tensions than assumed, and there is a potential for the rating upgrade in the future.
The confirmation of the credit rating and its positive outlook reflect the expectations of analysts that economic perspective of BH would improve compared to the previous base projections if the government is formed in 2019 and the reform momentum is continued. In such case, the authorities are expected to regulate the status of the arrangement with the International Monetary Fund (IMF), which would accelerate the reforms and make possible the access to funding for important infrastructure projects. The formation of stable governments, which would result in a continuation of the started structural reforms, is a key factor for continuing positive developments in respect of long-term rating in the following year.
By the upgrade of the credit rating to the level above the current one, BH would remain in the high speculative risk area, but close to the uninvestable, speculative level. Regarding the countries in the region, Albania and Montenegro are one level above the current BH long-term rating by S&P, while North Macedonia and Serbia are in the group of countries at uninvestable, speculative level.
As stated in the rating agency report, the country’ credit rating is restricted by the complex institutional setting in BH. If governments are not formed, and the reform process is not strengthened again, the outlook could again deteriorate from positive to stable.