Standard&Poor's – credit ratings affirmed, outlook improved

International agency Standard&Poor's affirmed the credit ratings of Bosnia and Herzegovina, which is B, and defined outlook as stable, removing the credit ratings from CreditWatch with negative implications.

On November 30, 2011, Standard&Poor's lowered credit ratings of BH from B+ to B, with placing the ratings on CreditWatch due to potential negative implications. In its new report, as of March 28, 2012, Standard&Poor's affirmed credit ratings of BH, but now, outlook has been removed from CreditWatch due to negative expectations and imroved to stable.

The affirmation of the ratings on BH and its stable outlook reflect the opinion of Standard&Poor's analysts of a more stable political and fiscal outlook or expectations following the formation of a central government, the adoption of the 2011 Budget and the adoption of a global fiscal framework.

Short-term challenges, such as the 2012 Budget and political uncertainty, remain if the government fails to resolve some sensitive issues. As long-term challenges the analysts mention the implementation of the reform agenda, EU candidacy, NATO membership and the reduction of public-sector spending. 

The stable outlook reflects the analysts' expectations that the political environment will stabilize now when a state government is in place, enabling more effective management of public finances.

The analysts warn that the ratings could be lowered if it appears that the adoption of the 2012 Budget will face substantial (long-term) delays and if they see delays in timely servicing of the foreign currency debt, as happened in January this year.

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