Moody's explained that that rating of speculative credit ability and high credit risk was assigned to BiH in 2012. Last year, Standard & Poor's affirmed the same rating for BiH.
BiH's central bank said that Moody's assessed that the economic situation in the country was marked by slow progress in implementing necessary structural reforms and that the income was significantly below the European Union average.
Moody's believes that the complex political situation in the country impacts the efficiency of authorities and the public sector. BiH has been assessed as being moderately indebted which contributes to its fiscal strength, which means that although it has limited access to foreign funding, it can still count on continual financial support from international financial institutions.
The stable outlook upholds assessments by Moody's analysts according to which progress in reforms will facilitate financial and technical support from the International Monetary Fund (IMF). However, risks to implementing those reforms, particularly from the challenging political environment, could hamper reforms.
The country's credit rating could be upgraded if its institutions implement structural reforms and political circumstances stabilise. It could be downgraded, however, if BiH does not come to an agreement with the IMF and if it fails to implement reforms on its path to European integration.