S&P cuts Bosnia and Herzegovina to negative

Standard & Poor's said it revised the outlook on the ratings on Bosnia and Herzegovina to negative from stable.

The agency also said it affirmed the B+ long-term and B short-term sovereign credit ratings. The transfer & convertibility assessment for Bosnia and Herzegovina is BB.

The outlook revision reflects the likelihood of a downgrade if the deterioration in the political environment continues to affect the management of public sector and external finances, S&P said.

Nine months after the general election, a government has not been formed and this could continue to obstruct the adoption of a 2011 budget and the 2012 to 2014 fiscal framework agreement, upon which future budgets will be based, the agency said.

The ratings are constrained by Bosnia and Herzegovina's complex political and institutional structure and weak central government institutions, S&P said, along with the external vulnerabilities stemming from persistent current account deficits and funding challenges.

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