The rating agency Standard & Poor’s gave Bangladesh its first BB sovereign credit rating. More specifically the S&P assigned Bangladesh its first BB- for long term international credit and a B for short term credit. This means that S&P thinks the outlook for long term international credit to Bangladesh is fairly stable, second in South Asia to only India. The consequence of this rating: agents in both the public and private sectors in Bangladesh will be able to borrow more efficiently at lower interest rates from international lenders.
Reuters India quotes the analyst charged with making the determination on Bangladesh’s creditworthiness.
“We believe that Bangladesh’s economy is largely free of macroeconomic imbalances in spite of its low income level, relatively narrow economic profile, and significant fiscal constraints,” said S&P sovereign credit analyst Agost Benard.”
“The current account is balanced, the flow of remittances is strong, the growth of the economy is stable over the last several years, farm output is better and foreign exchange reserves are also healthy,” he said while releasing the credit rating report.”
There are two reasons for this strong showing. In recent years and through the world-wide recession Bangladesh’s garments manufacturing and export sector has remained stable while remittance inflows have actually risen. Secondly over the past decade, governments lead by both major parties and the caretaker governments that have come and gone with less than laudable results have worked hard to stabilize the macro-indices of growth. The resulting strong GDP growth over the last ten years have borne fruit; the Governor of the Bank of Bangladesh has gone on record to claim that he expects higher rates of foreign direct investment (FDI) into Bangladesh’s economy. He must also hope therefore that the returns to FDI are as high as will allow the recent BB- rating to increase to a BBB.
This news is welcome confirmation that together the two main parties in Bangladesh can deliver important and innovative policy moves and accomplishments. Short term electoral goals should not prove to be a sustained barrier to these broadly necessary, mutually beneficial and cooperative accommodations.
