Representatives of the Moody's Agency Visited BH as a Part of the Credit Rating Process

Analysts of the International Agency Moody's Investor Service, which is will provide the first BH's sovereign credit rating, visited BH from January 26 until January 30.

This visit is a part of the credit rating process, which came after analysts from the Moody's conducted the quantitative and qualitative analysis of the data which were provided to them at the end of October 2003.

During their visit, the Moody's analysts had meetings with officials of the state, entity officials, officials from the international community, economists, journalists, bankers and others in order to get a broad picture of the condition and perspectives of our country.

Among other things, analysts were interested in political reforms and political situation in BH, reconstruction, development of the real sector during 2003, mid-term projections and long term growth, development of external sector, labor market, issue of refugees and veterans of war, public finances, as well as monetary policy, foreign exchange and financial development.

The Council of Ministers of BH decided at the beginning of 2003 that BH should obtain its first sovereign credit rating and the Central Bank of BH (CBBH) was entrusted with the role of agent.

The credit rating of one country represents the estimate of the capability and willingness of the government of one country to service its debt fully and on time.

There are multiple benefits from having the credit rating of the country. Each country which wants to incur debt at the international capital market, in other words, to issue securities or to incur debt as a state at the commercial banks in the world has to have its credit rating. If the rating is better, then the country is a better debtor. This means that it will be able to get more favorable loans at the market, which means lower interest rate, higher amount of credit, or the longer repayment deadline.

The credit rating is important for the potential foreign investors that use the credit rating as the basis for the special evaluation of the economy of the country in which they intend to invest. It is also important data for the government of that country in order to properly assess the condition and undertake necessary steps for its improvement.

In the case of BH, having a credit rating is a necessity. Currently, in the world there are several financial magazines that publish informal credit ratings and those magazines rate BH extremely low.

According to the Governor of the CBBH Peter Nicholl, the obtaining of a formal credit rating for BH will offset the publishing of unconfirmed and damaging information on BH.

Together with Albania, Belarus, Macedonia and Serbia and Montenegro, BH is one of few countries in Europe which still do not have its credit rating.

It is expected that the Moody's will establish the credit rating of BH in April this year.