S&P re-evaluate Bosnia's rating

Standard & Poor's on Thursday revised its outlook on Bosnia's ratings from stable to negative due to deteriorating political environment in the Balkan country. "The outlook revision reflects our view of the likelihood of a downgrade if the deterioration in the political environment continues to affect the management of public-sector and external finances," the ratings agency said in a statement. Without a government nine months after a general election, the situation could "obstruct the adoption of a 2011 budget and the 2012-2014 fiscal framework agreement, upon which future budgets will be based," it added. "The negative outlook reflects the likelihood of a downgrade if the difficult political environment," S&P said. At the same time the B+ long-term and B short-term sovereign credit ratings were affirmed, with S&P adding that the transfer and convertibility (T&C) assessment for Bosnia-Hercegovina was BB. Since the 1992-1995 war, Bosnia consists of two semi-independent entities -- the Serbs' Republika Srpska and the Muslim-Croat Federation. Each has its own government and the two are linked by weak central institutions. Due to inter-ethnic wrangling, the former Yugoslav republic has failed to form a central government tasked with implementing EU-sought reforms, since last October's general elections. The International Crisis Group (ICG) think tank had warned that Bosnia was facing its worst political crisis since the end of the 1992-1995 inter-ethnic war.