Dhaka, Bangladesh (BBN) - The global credit rating agency Moody’s has projected the country’s outlook as stable again for the current year with strong growth performance and modest debt burden.
Bangladesh is rated Ba3 with a stable outlook, according to the Moody’s analysis, released on Wednesday.
“Bangladesh's Ba3 government bond rating is supported by the country's stable and strong growth performance and modest debt burden,” the US-based Moody’s Investors Service said in its analysis report.
However, its very low per capita income, persistent fiscal deficits and a factious political environment pose credit constraints, it noted.
Moody's report pointed out that for the fiscal year ended 30 June 2015 (FY2015), Bangladesh's GDP (gross domestic product) growth edged higher to 6.5 per cent and the government projects a 7.1 per cent expansion in FY2016, supported by industrial activity and backed by a track record of macroeconomic stability.
However, weak infrastructure constrains potential growth.
Exports have remained in positive territory, despite subdued levels of global trade. But, the undiversified nature of the export basket—skewed towards textiles—presents risks because Bangladesh could lose its export share to other emerging competitors over time, according to the report.
As a net oil importer, Bangladesh is a beneficiary of lower oil prices.
However, continued contraction in remittances—due to slowing growth in the Gulf Cooperation Council economies, the primary source of remittances—is likely to dent the external benefits of lower oil prices.
“The government's weak revenue base also represents a credit constraint, resulting in persistent fiscal deficits. Such deficits would be higher were it not for Bangladesh's low development spending, which in turn limits the provision of public services,” it observed.
Fiscal risks are mitigated by government debt ratios that remain modest, with debt primarily from concessional sources.
Moody's assessment of Bangladesh's vulnerability to event risks as "Moderate" is driven by political risks.
Citibank N.A. worked as an adviser for the Moody’s ratings. The Moody’s last revealed rating on Bangladesh was on April 29, 2015. Then also the country was rated ‘Ba3’ with a stable outlook.
BBN/SSR/AD