S&P confirms BiH credit rating

S&P confirms BiH credit rating

Standard and Poor’s international rating agency (S&P) confirmed the credit rating of Bosnia and Herzegovina at “B” with a positive outlook, as announced by the BiH Central Bank (CBBH).

“The Agency analysts explaining the ratings say that 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 constitutes 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”, the press release notes.

CBBH added that the positive outlook reflects the BiH authorities’ potential to continue with structural reforms and to agree to a funded agreement with the International Monetary Fund (IMF) over the next 6 -12 months. Reforms, according to the analysts’ forecasts, could include reductions at labor burden for businesses and enhanced governance of the country’s state-owned enterprise sector.

“The analysts believe the credit rating could be further ameliorated provided that domestic policy legislation improves through more consensus-based politics, focused on promoting economic growth and structural reforms. Furthermore, the rating could go up in the event that economic growth is boosted. On the other hand, analysts warn that the outlook of the credit rating could be revised downwards in the event that political tensions escalate which could, among other things, hamper economic growth”, CBBH stresses.

The press release concluded that the rating has remained at B with a positive outlook since March 8, 2019, when the Agency had upgraded BiH’s outlook for long-term rating from stable to positive, which constituted the first long-term rating upgrade for BiH by S&P since 2012. /ibna