S&P lowers Bangladesh's outlook to negative from stable
Business
Expects South Asian country’s economy to expand between 6pc to 6.4pc over next three years
BENGALURU (Reuters/Web Desk) – S&P Global Ratings on Tuesday 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 6.03pc in the financial year ended June 2023.
The South Asian nation is struggling to pay for imported fuel because of a dollar shortage and its dollar reserves have shrunk by more than a third since Russia's invasion of Ukraine to stand at $29.85 billion as of July 19.
"We may lower the ratings on Bangladesh if net external debt or liquidity metrics worsen further, such that narrow net external debt surpasses 100pc of current account receipts, or gross external financing needs exceed 100pc 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 stabilize its external settings in the next 12 months, the agency added.
Earlier in May, Reuters had reported that Bangladesh was struggling to pay for imported fuel because of a dollar shortage, with the state petroleum company owing more than $300 million as it faces an "alarming decrease in fuel reserves".
Read more: Bangladesh struggles to pay for fuel imports as dollar crisis worsens
All import and marketing of fuel in the country of nearly 170 million people is controlled by Bangladesh Petroleum Corp (BPC), which has asked the government to permit domestic commercial banks to settle dues with India in rupees.
However, Prime Minister Sheikh Hasina had expressed her confidence back then that the country would be able to meet its commitments to the International Monetary Fund (IMF).
Read more: Bangladesh PM confident country able to repay IMF loans
"The IMF only assists countries that can repay the loans they are taking. Bangladesh is in a position that yes, we took the loan as long as we need it, and yes I am very much sure that definitely we are able to use the loan for our progress and side by side we are able to pay it back," Hasina said at the Qatar Economic Forum, organised by Bloomberg.
