Bosnia and Herzegovina's credit rating unchanged, outlook improved

(Patria) - International rating agency Standard and Poor's announced on March 8, 2019, that Bosnia and Herzegovina's credit rating remains “B“, but compared to the previous rating assessment, the outlook has changed from stable to positive. This is the first improvement in the outlook for BiH's long-term S&P rating since 2012. As stated in the press release, the economy has proven more resilient to political tensions than anticipated, and there is potential for improving the credit rating in the future.

- The confirmation of the credit rating and its positive outlook reflects analysts' expectations that BiH's economic prospects will improve compared to previous baseline projections if a government is formed in 2019 and the reform momentum continues. In this case, it is expected that the authorities will regulate the status of the program with the International Monetary Fund (IMF), which would accelerate reforms and enable access to financing sources for important infrastructure projects. The formation of stable governments, which would result in the continuation of initiated structural reforms, is a key factor for the continuation of the positive trend regarding the long-term rating in the next year.

With an improved credit rating to a level above the current one, BiH would still be in the high speculative risk zone, but one step away from the non-investment speculative level. Among the surrounding countries, Albania and Montenegro are one level above BiH's current long-term S&P rating, while North Macedonia and Serbia are in the group of non-investment speculative level countries.
As stated in the rating agency's report, the country's credit rating is limited by the complex institutional framework in BiH. If governments are not formed and the reform process does not strengthen again, the outlook could again be reduced from positive to stable, the Central Bank of BiH announced.