Economic Reporter :
Reducing energy, infrastructure and administrative bottlenecks, and boosting investment through comprehensive business environment can help Bangladesh improve its credit rating from ‘BB-‘ says Standard & Poor’s (S&P).
However, the rater said it may downgrade the sovereign if fiscal slippages result in rising public debt and external donor support declines materially.
In its latest report released on May 19, the global rating agency S&P affirmed ‘BB-‘ long-term and ‘B’ short-term sovereign credit ratings on Bangladesh with a stable outlook in its latest report.
S&P may upgrade Bangladesh if the government significantly reduces energy, infrastructure and administrative bottlenecks, and boosts investment, leading to a durable increase in trend growth for real per capita GDP, said the report.
It also stressed expanding the revenue base and boosting collection efficiency that will materially improve Bangladesh’s fiscal performance.
In addition, the agency may raise the ratings if the country’s monetary flexibility strengthens as seen in well-controlled inflation over a sustained period and deeper capital markets with market-based tools.
“The government is not providing comprehensive environment for local and foreign investment in the country. As a result, there are challenges in attracting new investment from local as well as foreign investors,” said Centre for Policy Dialogue (CPD) Research Director Khondaker Golam Moazzem.
“We expect Bangladesh’s gross external financing needs to average 77pc of current account receipts plus usable reserves over 2017-2020,” according to S&P.
If Bangladesh can ensure investment friendly environment in the country, it will help increase the rate, Moazzem said, adding that the election time uncertainty might be another indicator to consider the rating.
In the report, S&P’s forecast change in general government debt will average 2.8pc of Gross Domestic Products (GDP) annually over the fiscal year 2017-2020.
Reducing energy, infrastructure and administrative bottlenecks, and boosting investment through comprehensive business environment can help Bangladesh improve its credit rating from ‘BB-‘ says Standard & Poor’s (S&P).
However, the rater said it may downgrade the sovereign if fiscal slippages result in rising public debt and external donor support declines materially.
In its latest report released on May 19, the global rating agency S&P affirmed ‘BB-‘ long-term and ‘B’ short-term sovereign credit ratings on Bangladesh with a stable outlook in its latest report.
S&P may upgrade Bangladesh if the government significantly reduces energy, infrastructure and administrative bottlenecks, and boosts investment, leading to a durable increase in trend growth for real per capita GDP, said the report.
It also stressed expanding the revenue base and boosting collection efficiency that will materially improve Bangladesh’s fiscal performance.
In addition, the agency may raise the ratings if the country’s monetary flexibility strengthens as seen in well-controlled inflation over a sustained period and deeper capital markets with market-based tools.
“The government is not providing comprehensive environment for local and foreign investment in the country. As a result, there are challenges in attracting new investment from local as well as foreign investors,” said Centre for Policy Dialogue (CPD) Research Director Khondaker Golam Moazzem.
“We expect Bangladesh’s gross external financing needs to average 77pc of current account receipts plus usable reserves over 2017-2020,” according to S&P.
If Bangladesh can ensure investment friendly environment in the country, it will help increase the rate, Moazzem said, adding that the election time uncertainty might be another indicator to consider the rating.
In the report, S&P’s forecast change in general government debt will average 2.8pc of Gross Domestic Products (GDP) annually over the fiscal year 2017-2020.
