Bosnia and Herzegovina's credit rating remains the same

SARAJEVO, (Patria) - International rating agency Standard and Poor (S&P) confirmed Bosnia and Herzegovina's credit rating, which is "B" with stable outlooks. In the report of this rating agency for Bosnia and Herzegovina, it is stated that the global COVID-19 pandemic will affect the economy of Bosnia and Herzegovina. Analysts predict that real GDP will decrease by 6% in 2020, and that there may be a deterioration of the fiscal and balance of payments, the Central Bank of BiH announced. 

Nevertheless, it is predicted that Bosnia and Herzegovina's net general government debt will amount to 31% of GDP by the end of 2020, which leaves room for maneuver on the fiscal side. Explaining the stable outlooks of the credit rating, analysts emphasize that the stable outlooks balance the risks associated with the effects of COVID-19 on the Bosnian-Herzegovinian economy and on fiscal and external values during the next twelve months with the upward potential coming from the implementation of structural reforms and from expectations of stronger economic growth after 2020. According to S&P analysts, Bosnia and Herzegovina's credit rating can be increased if there is an improvement in domestic policy, with less confrontation and more consensus, which would be more oriented towards promoting economic growth and structural reforms.

Also, the credit rating can be increased in the event of stronger economic growth after 2020. On the other hand, a decrease in the credit rating may occur if the economic and budgetary costs of the pandemic are higher than currently predicted and if, in a hypothetical scenario, the stability of the domestic financial system significantly weakens in the event of a prolonged deterioration of asset quality and a permanent conversion of deposits into foreign currency.