The global rating agency Moody’s has rated Bangladesh’s outlook as stable for the sixth consecutive year.
Moody’s Investors Service has projected Bangladesh’s outlook as stable again for the current year saying that the country’s growth volatility is lower than for almost all other countries rated by the global credit rating agency.
“Bangladesh is rated Ba3 with a stable outlook,” the Moody’s said in its latest analysis, released yesterday.
The Moody’s said that Bangladesh’s Ba3 foreign currency government bond rating reflects its track record of macroeconomic stability, a modest debt burden, and limited external vulnerabilities with an ample foreign reserve buffer.
“But a fractious political environment, narrow tax revenue base, and a very low level of per capita income constrain the rating.”
The agency forecast that growth expanded by 6.1% in the fiscal year ended 30 June 2014, and is expected to rise at a similar pace this year.
At these levels, gross domestic product (GDP) growth is significantly above the 3.5% median for peers in the Ba-rating category, it said.
And – despite natural disasters, political tensions, and a global slowdown – growth volatility is lower than for almost all other countries rated by Moody’s.
However, it found that potential growth is constrained by infrastructure deficiencies. “Although fiscal deficits are manageable, public finances are constrained by weak revenue collections. Authorities have recently embarked on wide-ranging revenue reforms based on automated systems.”
“Such reforms, if successful, would result in a considerable widening of the tax base,” the Moody’s noted. Tensions between Bangladesh’s ruling party and the main opposition escalated early this year, on the anniversary of national elections held in January 2014.
