Moody's revises Bangladesh outlook to stable from negative

Moody's Ratings, one of the leading global ratings agencies, has revised its outlook on Bangladesh to stable from negative.

It kept the long-term rating at B2.

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“The change in outlook to stable from negative reflects our assessment that the acute political and external pressures that drove the negative outlook have eased, leaving risks more balanced at the B2 rating level, even as material structural vulnerabilities persist,” said Moody's.

The ratings agency said the post-election transition and strong governing mandate have reduced the risk that political uncertainty would derail reforms, while Bangladesh's external position has improved on rebuilt foreign exchange reserves, a more flexible exchange rate regime and record remittances, which have cushioned higher energy import costs.

“Continued engagement with the IMF and other international financial institutions remains an important anchor for external financing and reform, despite friction over the pace of reforms and ongoing discussions over the terms of a successor IMF programme.”

In June, S&P Global revised its long-term outlook on Bangladesh to negative from stable amid persistent weakness in the banking sector, with additional risks stemming from volatile global energy markets and trade conditions.

A month earlier, in May, another global ratings agency, Fitch Ratings, revised its outlook on Bangladesh's long-term rating to negative from stable, citing macroeconomic vulnerabilities arising from the country's significant exposure to the conflict in the Middle East.