Delayed reforms, political unrest could hit Bangladesh’s economy hard: Moody’s

Moody's Investors Service has expressed concern that prolonged political unrest or a shift away from the interim government's commitment to structural reforms could negatively affect the country's creditworthiness.

"Prolonged political unrest that derails progress on structural reforms and growth, or a deviation in the interim government's commitment to structural reform would be credit negative," said Moody's Investors Service on Thursday.

The report, titled "Government of Bangladesh: Political stability and commitment to structural reform following unrest will determine impact on credit quality," highlighted the importance of political stability and ongoing reforms in assessing the country's creditworthiness.

Moody's warning indicates that political stability and commitment to structural reforms are crucial for maintaining economic stability and growth. Failure to achieve these could lead to higher borrowing costs, reduced investment, currency instability, and slower economic growth, all of which would be detrimental to the country's economy.

Earlier on Wednesday, another global Rating agency S & P said Bangladesh's political crisis has further exacerbated downside risks to economic growth, fiscal performance, and external metrics.

"The damage to credit metrics may be contained if the socio-political situation normalizes soon," the agency said in a statement. While credit buffers have diminished, S&P said it wouldn't expect immediate strong pressures on the credit ratings.

S&P last month lowered Bangladesh's credit ratings to B+ from BB- due to a sustained decline in foreign exchange reserves.

In May, Fitch Ratings lowered Bangladesh's Long-Term Foreign-Currency Issuer Default Rating to "B+" from "BB-", keeping the outlook stable.