Moodys affirms Bosnias B3 ratings, changes outlook to stable.

By bne IntelliNews July 12, 2012
Moody's Investors Service said it has confirmed Bosnias B3 sovereign ratings and raised the outlook to stable from negative after concluding a review for a possible downgrade, which began on April 3. Back then Moody's downgraded Bosnias government bond rating to B3 from B2 and started the review for a possible further lowering because the country's deteriorating public-sector budget and external financing. In a July 10 statement, the rating agency said it is also affirming the B3 country ceilings for foreign and local currency debt and deposits. Moodys said in the statement that there are several main drivers for the rating confirmation, which include the new legislation put in place to strengthen the external debt payments process after a brief delay earlier this year on Bosnias debt service to several international lenders and one commercial bank. The IMF talks on a possible new funding deal should revive structural economic reforms programme and clear the way for the country to access financing from the IMF, EU and the World Bank. Bosnias economic prospects, however, deteriorated because of its dependence on exports to Europe and foreign direct investments. The country made a positive progress on some of the EU agenda components following the formation of its state-level government but still has a lot of work to do. Moodys said that a positive rating action might be executed if Bosnia submits its candidacy application to the EU, which is planned for November. This would mean that the authorities have implemented additional reforms in both the economic and political sphere. A compliance with a new IMF stand-by deal, especially if accompanied by World Bank lending and tied to fundamental structural reforms, would also be credit positive, rating agency said.
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