S&P Global Ratings has maintained Bosnia and Herzegovina’s sovereign credit rating at B+ for long-term and B for short-term debt in local and foreign currency, with a stable outlook. At the same time, it warned that increased public spending ahead of the General Elections could further deepen the budget deficit and increase the country’s fiscal risks.
According to the agency’s estimates, this year’s pre-election spending, including an increase in pensions, public sector wages and a reduction in social contribution rates, could increase the budget deficit to more than three percent of gross domestic product. Without the implementation of fiscal consolidation measures, the average deficit could amount to around 2.5 percent of GDP by 2029.
Economist Željko Rička believes that public money is being used in the pre-election period to achieve political goals.
“Parties are using public money, so it is not their money, but this is, in a way, we can say that this is an abuse of the economic system in order to preserve their political position,” said Rička. He added that increased investments in infrastructure and other projects are part of creating a positive atmosphere ahead of the elections to win over voters.
Economist Amila Pilav Velić stressed that the S&P report should be viewed much more broadly than just the credit rating.
“Companies in BiH need to read the S&P report and see where the key ways to increase their competitiveness in the next three to five years are. They cannot rely on institutional stability or political accountability, but need to invest in their own productivity, artificial intelligence, energy efficiency, digital technologies and resilience,” she said.
Economist Davud Bećirović also commented on the state of the economy, warning that the nominal growth of pensions does not follow the real growth of the cost of living.
“This is not fair to pensioners. Much more aggressive work must be done to ensure that the adjustment of pensions follows the real cost of living,” said Bećirović.
The report also warns of a slowdown in industrial production, challenges in the energy sector and the slow implementation of reforms. An additional risk is the European Carbon Border Adjustment Mechanism (CBAM), which could make it more difficult for some Bosnian companies to export to the European Union market due to additional fees for products with high carbon emissions.
Citizens interviewed by the BHT1 team have divided opinions on the state of the domestic economy. While some believe the situation is satisfactory, others warn of a decline in industrial production, low wages and a deteriorating standard of living.
