Moody's Investor Service confirmed the credit rating of BiH - B3 with a stable outlook

The BiH economy, as stated in the report of Moody’s agency, has shown a relative resistance to the pandemic, with the growth of real GDP of 7.1% in 2021, which was achieved due to the recovery of domestic demand and strong growth of exports, particularly basic metals and mineral products, exceeding the pre-pandemic levels. Analysts state that economy is less exposed to the impact of the Russian-Ukrainian conflict, taking into account the limited trade and financial relations of Bosnia and Herzegovina with Russia and Ukraine. Although gas is imported from Russia, it accounts for a very small share of energy sources. Moody’s expects a significant slowdown of economic activities during the year, and estimates GDP growth at around 2.5% in 2022 and 2023.

After the recorded deficit of 4.7% of GDP in 2020, a considerable improvement was recorded in the fiscal policy area in 2021, which gives space to the authorities for measures to respond to growing inflationary pressure, as stated in the Moody’s report. Moody’s also expects general government debt, which amounted to 36.7% of GDP in 2021, to gradually decrease during 2022 and 2023, to amount to 32% of GDP by the end of 2023.

Political risks reflected in the lack of cooperation at the state level during the previous year, which brought about political crisis, have been decreased recently.

Moody’s believes that the Central Bank of Bosnia and Herzegovina is efficient in implementing currency board arrangements.

According to analysts, credit rating could be increased if reforms that would strengthen the governance of the country and solve of structural challenges lasting for many years, and lead to visible progress on the path to the European Union, are implemented. Close cooperation with the International Monetary Fund and the European Union would contribute to this, stated the CBBH. 

(FENA) S. R.

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