SARAJEVO, Aug. 4 (Xinhua) -- S&P Global Ratings affirmed Bosnia and Herzegovina's (BiH) sovereign credit rating at "B+" with a stable outlook, while warning that higher pre-election spending will widen the country's budget deficit, the country's central bank said.
Increased spending on pensions and public-sector wages is expected to push budget deficits at all levels of government above 3 percent of gross domestic product this year, the Central Bank of Bosnia and Herzegovina said in a statement on Monday.
Public debt could rise gradually unless the authorities introduce further fiscal consolidation measures, though it remains moderate by international standards, the central bank said, citing S&P analysts.
S&P lowered its economic growth forecast for BiH to just over 2 percent, reflecting higher energy and transport costs and weaker demand in key European Union (EU) export markets.
Domestic consumption remains resilient, supported by increases in pensions, wages and social benefits that have raised household disposable income, according to the central bank.
The rating agency also pointed to risks facing industrial production, particularly in the energy and manufacturing sectors. The EU's Carbon Border Adjustment Mechanism could place further pressure on some of the country's exports.
BiH's current account deficit is forecast to reach 3.8 percent of GDP in 2026, slightly above last year's level. Growth in services exports and strong remittance inflows are expected to partly offset weaker demand for goods exports and higher energy import costs.
