S&P lowers Bangladesh’s outlook to negative from stable
S&P GLOBAL Ratings on Tuesday (Jul 25) lowered Bangladesh’s outlook to negative from stable, citing risks its external liquidity position could deteriorate in the next year, while foreign exchange reserves remain under pressure.
The ratings agency expects the economy to expand between 6-6.4 per cent over the next three years. Bangladesh’s GDP growth fell to 6.03 per cent in the financial year ended on June 2023.
The South Asian nation is struggling to pay for imported fuel because of a US dollar shortage and its US dollar reserves have shrunk by more than a third since Russia’s invasion of Ukraine to stand at US$29.85 billion as at Jul 19.
“We may lower the ratings on Bangladesh if net external debt or liquidity metrics worsen further, such that narrow net external debt surpasses 100 per cent of current account receipts, or gross external financing needs exceed 100 per cent of current account receipts plus usable reserves,” S&P said, affirming the country’s sovereign credit rating at BB-.
Bangladesh needs favourable trade and financial flows to stabilise its external settings in the next 12 months, the agency added. REUTERS
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