S&P Global affirms Bangladesh's credit rating stable, no change from last year

S&P Global has kept its long-term foreign and local currency sovereign credit ratings for Bangladesh at B+.

The outlook on the long-term ratings is stable. At the same time, they affirmed their 'B' short-term ratings.

S&P Global disclosed the ratings in a report published today (25 July).

According to the report, Bangladesh's external liquidity is stabilising, as indicated by the recent steady improvement in its official foreign exchange reserves.

Macroeconomic policies enacted over the past 18 months--such as transitioning to a more flexible exchange rate regime, allowing the taka to depreciate, and tightening monetary policy--are helping to rebuild foreign exchange liquidity. However, Bangladesh faces heightened trade risk from relatively high US tariffs, the report adds.

The credit rating agency said, "The stable outlook on Bangladesh reflects our view that its real growth rate per capita will remain very strong compared with those of peers and that downside and upside risks to its external balance sheet have become now broadly balanced. This is despite headwinds in the next 12-18 months stemming from external trade conditions."

The report also said,"We could raise our ratings on Bangladesh if it materially improves its external and fiscal metrics. That improvement would likely be indicated by current account receipts or foreign exchange reserves rising substantially beyond our forecasts, such that gross external financing needs remain lower than 100% of current account receipts plus usable reserves on a sustained basis.

"Fiscal improvement would be indicated by significantly lower net accumulation of government debt, with a declining trend, on a sustained basis."

The 'B+' ratings on Bangladesh reflect the country's modest per capita income and limited fiscal flexibility owing to a combination of low revenue-generation capacity and high interest burden.