MOODY'S – BH Maintained the Credit Rating

12/26/2011

Moody's Investors Service maintained the same credit ratings of Bosnia and Herzegovina, B2 with negative outlook.

The analysts of Moody's estimate that the ongoing lack of a government at the state level, since the elections were held in October 2010, will delay the progress on political reform and on structural economic reform and continue to cut off access to external financial support.

The economic recovery has decelerated in BH, with growth in 2011 likely to have been 2% or less and a further slowdown anticipated in 2012, consistent with the pattern in the region and Europe generally.

The ongoing political impasse is also having a negative impact on confidence and could be a lingering deterrent for investments, both domestic and foreign, the analysts of this agency believe.

Strengthening institutions through implementation of structural reforms, streamlining of the policymaking process, an improvement in enter-entity relations and a relative improvement in government financial strength would put upward pressure on the ratings.

An ongoing failure to form a government at the state level that would prevent BH from implementing either the constitutional reforms needed to deepen its integration with the European Union or the economic reforms demanded by creditors could result in a downgrade. 

 

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