The international rating agency Standard and Poor’s (S&P) raised the credit rating of BH, from ‘B’ to ‘B+’, with a stable outlook.
S&P analysts state in the Report that the raise in the credit rating reflects their view of Bosnia and Herzegovina as an economy that has proven resilient, despite recent impacts, including the COVID-19 pandemic, several episodes of political volatility, and weaker external demand. BH’s real GDP has fully recovered from the pandemic, and based on economic indicators for the first half of 2023, S&P analysts have revised their real GDP growth projections upward, from 1% to 2%. The upgrading of the credit rating was also influenced by the favourable fiscal position of the consolidated general government, with a forecast on the general government low net debt of 22% of the GDP by the end of 2023.
According to analysts’ estimates, external debt servicing costs will remain at an average of 2.5% of government revenues until 2026, which is a low level when globally compared. The rating raise is also based on the expectations of the S&P agency that there will be an easing of domestic political confrontations.
The currency board arrangement, as stated in the Report, is an important economic anchor and no changes to this arrangement are expected in the future.
According to S&P analysts, a new raise of the credit rating may occur in the next year if a sustainable transition to reaching political decisions, based on consensus, is achieved, which, in the medium term, could accelerate reforms and economic growth. On the other hand, a degrading of the credit rating may occur in case of intensified political confrontations, especially if they lead to possible negative implications in terms of external debt servicing.
