Bosnia and Herzegovina's Credit Rating Confirmed

SARAJEVO, (Patria) - International rating agency Standard and Poor's (S&P) has confirmed Bosnia and Herzegovina's credit rating of "B" with a positive outlook.

In its explanation for the rating confirmation, analysts from this agency state that BiH's economy, despite long-term political divisions, has continued to grow.

The agency forecasts a GDP growth of 2.7% over the next four years, announced the Central Bank of BiH.

Fiscal performance is the main factor supporting the credit rating, as general government net debt is expected to remain below 30% of GDP and have a favorable maturity structure. The quality of banking regulation was also assessed positively.

The positive outlook is based on the expressed commitment of BiH authorities to continue with structural reforms and to reach an agreement on an arrangement with the International Monetary Fund (IMF) in the next 6 to 12 months. Reforms, according to analysts' expectations, could relate to reducing the burden of labor costs and improving the management of public enterprises.

According to analysts, the credit rating could be increased if internal relations stabilize and consensus is reached regarding the promotion of economic growth and structural reforms. The rating could also be increased if stronger economic growth occurs. On the other hand, analysts warn that a downgrade of the credit rating outlook could occur in case of escalating political tensions that would, among other things, hinder economic growth.

The current rating has been in effect since March 8, 2019, when this agency improved the outlook from stable to positive, which was the first improvement in the outlook for BiH's long-term S&P rating since 2012.