ECR: Bosnia and Herzegovina’s ECR score rises despite negative ratings outlook

Bosnia’s overall ECR score finished the day slightly higher at 31.65 after better than expected first quarter growth figures for the Eurozone had a positive influence on the ECR scores for the economies of Central and Eastern Europe. In a statement published yesterday, the ratings agency cited Bosnia’s ongoing political stalemate and related delays in economic and constitutional reform as the principal cause of it placing the country’s Ba3 foreign currency ceiling on negative outlook.
  But ECR economists did not reduce their score for the country in light of the rating agency’s action. Bosnia has already seen its overall ECR score fall by 5.9 points to 31.6 since January as the risk of renewed ethnic conflict has prompted economists to lower their country risk assessments. The country has been without a functioning government for 7 months since national elections in October. Bosniaks, Croats and Serbs have failed to produce a power-sharing agreement uniting the country’s semi-autonomous regions in the months following the victory of the mainly Bosniak Social Democrat party. Gabriel Sterne, an economist at Exotix, a frontier market brokerage, says: “Our view is that Bosnia’s political vulnerabilities are overplayed in some quarters. When you consider what Bosnia has been through in its recent history, the potential incentives for the country’s power brokers aren’t anything like strong enough for war.” Bosnia’s score of 31.6 makes it the lowest ranked European country in the survey after Kyrgyzstan. The country is currently ranked 129th in the global ECR survey. In the March survey results, the country’s Political Risk score of 31.85 was lower than those for Sudan, Venezuela and Nicaragua and only a point higher than Cote D’Ivoire.

A version of this article first appeared in Euromoney Country Risk. Euromoney Country Risk is an online service from Euromoney dedicated to sovereign and country risk.