Standard and Poor's (S&P) said it has affirmed the 'B/B' long- and short-term foreign and local currency sovereign credit ratings on Bosnia and Herzegovina, while revising the country's long-term outlook to positive from stable.

“The positive outlook reflects our view that a potentially less confrontational domestic political environment should hold over the next year while BiH's external imbalances remain contained and the government's debt burden stays low at 22% of GDP by year-end 2023, with most debt owed to official creditors at relatively low-interest rates and long maturities,” the credit rating agency said in a statement.

The global rating agency added that stability has improved in Bosnia and Herzegovina in recent months, with the comparatively timely formation of a state-level government after the October 2022 general election, and the country's economy is expected to continue to grow in 2023, although at a slower pace.

S&P estimates BiH's economy to grow 1% in 2023.

In December 2022, BiH also received EU candidate status, while the likelihood of Republika Srpska — one of the two main entities comprising the country — withdrawing from key state institutions appears to have reduced, S&P notes.