Photo: Collected
International credit rating agency Fitch Ratings has downgraded Bangladesh's long-term foreign-currency issuer default rating to 'B+' from 'BB-'.
The outlook is stable owing to the lingering weakening of the country's external buffers, the report released on Monday (May 27).
Fitch said the downgrade reflects the sustained weakening of the external buffers, which could prove challenging to sufficiently reverse despite recent policy reforms, leaving the country more vulnerable to external shocks.
"Policy actions since early 2022 have been insufficient to stem the fall in foreign exchange reserves and resolve domestic dollar tightness."
The recent shift to a crawling peg aims to increase exchange-rate flexibility. Whether this will fully address lingering forex market distortions and support significant reserve build-up remains unclear.
The stable outlook reflects the mitigation of external refinancing risks by a favorable external creditor composition -- the International Monetary Fund (IMF) program reforms aim to improve macroeconomic stability and address banking sector weaknesses, moderate government debt and favorable medium-term growth prospects.
Messenger/Sumon
