Standard and Poor’s reaffirm BiH government ‘B’ with stable outlook credit rating

Standard and Poor’s reaffirm BiH government ‘B’ with stable outlook credit rating

International rating agency Standard and Poor’s (S&P) affirmed credit rating of Bosnia and Herzegovina, “B” with stable outlook, BiH Central Bank announced.

“In the report of this rating agency for Bosnia and Herzegovina, is mentioned that the global COVID -19 pandemic will weigh on the economy of Bosnia and Herzegovina. Analysts project that the real GDP will contract by 6% in 2020, while fiscal and balance of payments performance may deteriorate. Still, they project that BiH’s net general government debt will amount to 31% of GDP by the end of 2020, leaving room to the fiscal manoeuvre”, CBBH said.

Explaining the stable outlook of the credit rating, it is emphasized that stable outlook balances the risks associated with COVID-19’s effects on BH’ economy and fiscal and external metrics over the next 12 months against upside potential from implementing reforms and expectations of stronger economic growth beyond 2020.

According to analysts of S&P, credit rating of Bosnia and Herzegovina could be raised if domestic policy settings improved, with less confrontation and more consensus-based politics, oriented toward promoting economic growth and structural reforms. Also, credit rating could be raised if economic growth strengthened beyond 2020. On the other hand, credit rating could be lowered if the economic and budgetary cost of the pandemic are higher than currently projected and if the stability of domestic financial system weakens substantially in a hypothetical scenario of prolonged deterioration in asset quality, or persistent deposit conversion into foreign currency./ibna