Standard & Poor's affirms Bosnia's credit rating 'B' with stable outlook

NEWS 29.08.2020 12:12
Source: N1

International rating agency Standard and Poor's affirmed credit rating of Bosnia and Herzegovina, “B” with a stable outlook, Bosnia's Central Bank confirmed on Saturday.

According to Standard and Poor's, the global Covid-19 pandemic will weigh on the economy of Bosnia and Herzegovina and analysts project that the real GDP will contract by 6% in 2020, while the fiscal balance of payments performance may deteriorate.

Still, the analysts project that Bosnia's net general government debt will amount to 31% of GDP by the end of 2020, leaving room for the fiscal manoeuvre, said the report.

Explaining stable outlook of the credit rating, analysts emphasise that it balances the risks associated with Covid-19's effects on Bosnia's 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, the 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, said the agency.