Economist Bojan Lučić said that the confirmation of the “B” long-term credit rating with stable outlooks for Republika Srpska confirms that Srpska is on the right path and that it has opened options for financing and extending previously arranged agreements with international institutions.
“This represents a great success and opens up possibilities for additional borrowing in the market under conditions that should not be worse than what we have had so far,” said Lučić to Srna.
Regarding the report of the international rating agency “Standard & Poor’s” which confirmed the “B” long-term credit rating for Srpska with stable outlooks, Lučić pointed out that this is good for Srpska, as it confirms that it has an official rating which increases transparency, one of the main characteristics that determines creditors.
“A credit rating is an assessment of a government’s ability and willingness to service its debt on time and in full. The rating measures the ability to repay state debt,” said Lučić, who is also the Executive Director for Investment Affairs at the Pension Reserve Fund of Srpska.
According to him, economic factors are considered in assessing risk, evaluating the ability to repay debt, as well as political factors in the country, i.e., assessing the willingness to repay debt.
“Any country that wants to independently borrow in the international capital market, i.e., issue bonds or borrow as a state from commercial banks in the world, needs to have a credit rating,” said Lučić.
He noted that, as in other parts of finance, the more favorable the rating, the better the chances of obtaining credit.
“This means that it will be possible to borrow more favorably in the market, i.e., at a lower interest rate, a larger amount of credit, or a longer repayment period,” said Lučić.
He reminded that the sovereign credit rating of BiH is produced and monitored by two international rating agencies – “Standard & Poor’s” and “Moody’s.”
Lučić adds that BiH’s rating is conditioned by numerous factors, most notably geopolitics and economics.
The international rating agency “Standard & Poor’s” announced that Republika Srpska has been confirmed a “B” long-term credit rating with stable outlooks, with the best assessment given to the state of debt in the medium term.
The agency’s report states that Republika Srpska compensates for the “weaknesses of the institutional framework” by managing its fiscal policies, due to which it is estimated that there will be a reduction in debt that is far below 60 percent of the gross domestic product in the coming period.
Furthermore, it is highlighted that from 2024-2026 there will be a GDP growth up to three percent, while at the same time a decrease in inflation is forecasted, as well as a reduction in deficit that will be below three percent, as announced by the Ministry of Finance of Republika Srpska.
Source: RTRS
