S&P Global Ratings has confirmed Bosnia and Herzegovina's sovereign credit ratings at 'B+' for long-term debt and 'B' for short-term debt in both foreign and local currencies, maintaining a stable outlook on the long-term assessment.
The ratings agency cautions that intensified pre-election fiscal activity will push this year’s public deficit beyond 3% of GDP. Unless authorities implement fiscal consolidation, S&P expects the budget shortfall to average about 2.5% of GDP through 2029. The agency attributes the near-term deterioration to sharply rising pensions, expanded public-sector wages, and reductions in social contribution rates, which together are set to widen deficits both this year and next.
On the medium-term profile, S&P projects budget deficits will average almost 3% of GDP in 2026 and 2027. These higher deficits are expected to push net government debt up to 26% of GDP by 2029 from an estimated 21% in 2025. While S&P notes that this level of debt remains moderate by global standards, it also points to heightened refinancing risks when political volatility intensifies.
Measured on a general government basis and net of liquid assets, the debt ratio was approximately 21% of GDP at year-end 2025, S&P reports. That figure provides a baseline for the agency's projections, but the path of fiscal balances and borrowing needs will depend on policy choices in the months ahead.
Beyond fiscal metrics, S&P emphasizes the effect of Bosnia and Herzegovina's unusually complex institutional and governance framework on sovereign creditworthiness. The agency highlights frequent internal political obstruction and recurring confrontations as constraints. It points to tensions during the prior year between Republika Srpska and the Office of the High Representative, as well as between Republika Srpska and several state institutions, including repeated secessionist rhetoric from Republika Srpska, as illustrative of those political risks.
On economic growth, S&P lowered its recent GDP growth projection slightly to just above 2%. The downgrade reflects spillovers from the Middle East conflict, which the agency says have raised energy and transportation costs and softened external demand from key EU export markets such as Germany and Italy. S&P also projects GDP per capita for Bosnia and Herzegovina to be $11,100 in 2026, a level it characterizes as well below most European peers.
Overall, S&P's assessment balances moderate debt ratios against notable fiscal slippage and recurring political uncertainty. The ratings agency's guidance underscores the role of spending decisions and political stability in shaping refinancing risk and the sovereign's credit trajectory over the coming years.