BSS, Dhaka :
Bangladesh will maintain its sovereign creditworthiness in the next two years when the economy will continue to show stability if the country does not see any prolong political violence, Standard & Poor’s (S&P) Ratings Services said in a report on Wednesday.
The international credit rating agency in the past four consecutive years affirmed Bangladesh ‘BB-‘ long-term and ‘B’ short-term sovereign credit ratings with a stable outlook. Bangladesh is rated the second highest in South Asia behind India and ahead of Sri Lanka and Pakistan.
Sovereign credit ratings give investors insight into the level of risk associated with investing in a particular country. The rating of Bangladesh with stable outlook reflects its growth prospects and ongoing donor support, which ensure low-cost and long-maturity external debt and low level of refinancing risk.
The S&P in its latest report said the political unrest before the national election raises risk but did not undermine the sovereign ratings. In the report titled “Election woes in Bangladesh and Thailand raise risk but don’t yet undermine sovereign ratings”, the rating agency reviewed the impact of election related political unrest in Bangladesh and Thailand.
The S&P said like in Thailand, “political uncertainties will stay elevated” in Bangladesh “for sometime and they could hurt investor confidence and weaken economic activity”, but the sovereign ratings of the government would remain unchanged over the next two years.
The S&P, however, cautioned about any prolonged and widespread violence that could intensify political instability and caused damage to economies, which have been resilient to past political turmoil.
Kim Eng Tan, an analyst of the S&P said the “resolution to political crisis” would not be straightforward as the “roots of the disagreements between political groups run deep”.
He, however, expected that relatively stable economic conditions, in the absence of widespread and sustained violence, to anchor sovereign creditworthiness in Bangladesh in the next 24 months.
Tan said Bangladesh possess strong external balances, relatively low debt and interest burdens, and low inflation that helped stabilize sovereign rating fundamentals amid occasional political volatilities.
