International credit rating agency Moody’s on Tuesday said that Bangladesh’s headline growth was not meaningfully impacted because of heightened political turbulence over the last year in the run-up to parliamentary elections in January. In the annual investors update report published on the day, Moody’s also said the disruptions caused by industrial accidents in the garments sector also did not affect the export growth.
Moody’s said healthy growth path, progress in implementing structural reforms under an
Extended Credit Facility programme with the International Monetary Fund reflected in the Ba3 sovereign bond rating.
It, however, said that the weak financial performance of the four state-owned commercial banks could result in the further crystallization of contingent liabilities that add to the fiscal burden.
‘Although ongoing reforms, if successfully implemented, would improve SOCB competitiveness and restore their financial viability over time,’ it said.
Sustained and strong economic growth supported by structural improvements, particularly in infrastructure would trigger Bangladesh’s rating upward, it said.
Broadening of the tax revenue base and reform of the labour market and industrial working conditions, which would ensure continued favourable export prospects, while also encouraging greater foreign investment, said the report.
‘On the other hand, the rating would come under downward pressure if political setbacks strain the country’s economic or fiscal profile, or the crystallization of contingent liabilities in the banking system is larger than Moody’s anticipates, thereby weighing on fiscal strength,’ it said.
-With New Age input