Bangladesh 'BB-/B' Ratings Affirmed; Outlook Stable
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RATINGS
Foreign and local currency: BB-/Stable/B
For further details see Ratings List.
OVERVIEW
- Bangladesh faces the vulnerabilities of a low-middle-income economy,
fiscal constraints, and heavy development needs, but benefits from low
external debt.
- We are affirming our 'BB-' long-term and 'B' short-term sovereign credit
ratings on Bangladesh.
- The stable outlook balances the country's healthy economic growth
prospects and an improving external profile against fiscal weaknesses and
development requirements.
RATING ACTION
On May 31, 2018, S&P Global Ratings affirmed its 'BB-' long-term and 'B'
short-term sovereign credit ratings on Bangladesh. The outlook remains stable.
The transfer and convertibility (T&C) assessment remains 'BB-'.
OUTLOOK
The stable outlook reflects our expectation that Bangladesh's consistent
economic growth trajectory and strong donor support will continue to raise
average income and broadly sustain the country's external profile over the
next 12 months. These factors are balanced against enduring governance and
fiscal weaknesses, and infrastructure deficits.
We may downgrade the sovereign if fiscal slippages result in rising public
debt and external donor support declines materially.
Conversely, we may raise the ratings if measures targeted at growing the
revenue base and boosting collection efficiency materially improve
Bangladesh's fiscal performance. We may also upgrade Bangladesh if the
government significantly reduces energy, infrastructure, and administrative
bottlenecks, resulting in higher investment and eventually a sustained
increase in trend growth for real per capita GDP.
RATIONALE
The ratings on Bangladesh reflect the country's low economic development and
limited fiscal flexibility owing to a combination of constrained
revenue-generation capacity, rising debt-servicing costs, and high spending to
improve its basic infrastructure and government services. The country's
volatile political setting combined with administrative and institutional
weaknesses represent additional rating constraints. We weigh these factors
against a relatively modest external debt burden, reflecting support from
substantial donor engagement, and large remittances from Bangladeshis outside
the country.
