International credit rating agencies S&P Global Ratings and Moody’s affirmed the credit rating of Bosnia and Herzegovina, maintaining a stable outlook. The assessments highlight the resilience of the domestic economy, while also pointing to growing fiscal and political challenges in the coming period.
S&P Global Ratings confirmed Bosnia and Herzegovina’s credit rating at B+ with a stable outlook. According to S&P, the budget deficit is expected to rise starting this year, primarily due to pre-election spending. The average budget deficit is projected to reach around 2.1% of GDP by 2029, while public debt could increase to approximately 25% of GDP over the same period.
The stable outlook reflects a balance between solid economic growth and limited external imbalances, offset by rising fiscal pressures and constrained political effectiveness ahead of the general elections. The complex institutional framework and ongoing political stalemate remain significant risks for the adoption and implementation of economic policies. The currency board arrangement, which maintains a fixed exchange rate of the BAM against the euro, continues to provide an important anchor for domestic economic stability.
S&P also noted that limited progress is expected in key reforms related to EU accession and the Western Balkans Growth Plan, particularly ahead of the upcoming general elections.
Meanwhile, Moody’s affirmed Bosnia and Herzegovina’s long-term credit rating at B3 with a stable outlook. Moody’s assessment highlights that limited political cooperation within the country continues to slow the passage of key legislation and the implementation of reforms, negatively impacting the effectiveness of economic policies. Although political tensions have subsided compared to previous periods, they remain a significant constraint on improving the country’s credit profile.
Moody’s projects a moderate deterioration in fiscal performance due to rising social spending but notes that the relatively low level of public debt remains a key factor supporting the country’s credit rating. Total public sector indebtedness is expected to remain favorable compared to countries with similar ratings, despite mounting fiscal pressures.
The report also indicates that Bosnia and Herzegovina’s economic growth should remain moderate and largely resilient to political tensions, although structural constraints and the future impact of the EU carbon taxation mechanism present challenges for long-term economic competitiveness.
The stable outlooks from both agencies reflect the assessment that the existing political balance, currency board arrangement, and low public sector indebtedness will allow Bosnia and Herzegovina to maintain its current credit rating over the medium term.
