Bangladesh economy receives 'stable' S&P rating

DHAKA: Bangladesh got its first sovereign credit rating on Tuesday, with Standard & Poor’s saying Dhaka’s economic outlook was stable but constrained by high levels of debt and poor revenue collection.
 
The move means import and export costs will be significantly lower, while the country will be able to attract more foreign direct investment, central bank governor Atiur Rahman said.


“We consider Bangladesh free from major macroeconomic imbalances despite severe fiscal constraints, a low-income economy and heavy development needs,” the ratings agency said in a statement after awarding Bangladesh a BB-.

S&P said the rating was boosted by the country’s “strong and stable” economic growth – last year it expanded 5.9 per cent despite global downturn – improved foreign exchange reserves and debt ratios.

Key problems were identified as “high public and external debt, limited fiscal flexibility due to low revenue-generation capacity and significant physical and human capital development needs,” S&P said.

Finance minister A.M.A Muhith welcomed the decision, Bangladesh’s first sovereign rating since independence in 1971.

The country is now on par with 11 other countries including Cambodia, Georgia, Serbia and Ghana, and well above other south Asian nations including Sri Lanka and Pakistan, he said.

“It’s a very important statement on our economy. We agree with their ratings. We are now almost at par with Indonesia, Vietnam and the Philippines,” he said.

He said the government was committed to improving the country’s low tax to GDP ratio, which currently hovers at around eight per cent, and scaling up investment in the energy sector to boost industrial growth. —AFP

Source Dawn News