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Bosnia-Herzegovina Rating Cut by S&P on Political Disputes

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Nov. 30 (Bloomberg) -- Bosnia and Herzegovina’s long-term foreign-currency sovereign-credit ratings were cut to B from B+ by Standard & Poor’s Ratings Services, which cited political disputes that are preventing the formation of a government.

S&P also put the Balkan country’s debt score, which is one level above Belarus, on “CreditWatch” with negative implications, meaning another downgrade is more likely than an upgrade, citing risks to approving a 2012 budget, economic growth and European Union membership.

“The political environment and lack of a financing resolution have materially detracted from Bosnia and Herzegovina’s institutional management and medium-term growth prospects, and have further weakened prospects for EU accession,” S&P said today in a statement from London.

Domestic politics and Europe’s debt crisis, which affects some of Bosnia’s key trading partners, will keep 2012 economic growth at near zero, while the fiscal deficit will narrow to 3 percent of gross domestic product from 3.2 percent this year, S&P said.

To contact the reporters on this story: Vivek Shankar at vshankar3@bloomberg.net Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net;

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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