S&P warns: Bangladesh economy slipping | Economy

Standard & Poor’s Ratings said the political crisis in Bangladesh has increased downside risks to the country’s economic growth, fiscal performance and external indicators.

In a statement issued on Wednesday, the agency noted that “the damage to credit indicators could be limited if social and political conditions return to normal soon” following the escape and resignation of Prime Minister Sheikh Hasina.

With cash reserves declining, Standard & Poor’s said it does not expect strong pressure on credit ratings at this time.

Credit rating downgrade

According to Bloomberg, the agency lowered Bangladesh’s credit rating to “BB-” last July due to the continued decline in foreign exchange reserves.

At the end of June, Bangladesh’s reserves stood at $21.78 billion, enough to cover three months of imports, according to Bloomberg.

Bloomberg notes that if the unrest continues, exports could be much lower than expected, which would have a long-term impact on Bangladesh’s external balance sheet and further erode the central bank’s reserves, Standard & Poor’s said Thursday.

Sheikh Hasina resigned and left the country after about 250 people were killed in protests that began over a quota system for government jobs and morphed into a movement demanding her resignation.

The World Bank disbursed the highest amount of loans as a foreign lender to Bangladesh at around $2.85 billion for various projects in the last fiscal year, the Economic Relations Department of the Bangladeshi Ministry of Finance was quoted as saying by Financial Express.

The department said in a recent report that the Asian Development Bank disbursed the second-highest loan value, totaling $2.13 billion, while Japan had the third-highest loan value, $1.91 billion, this year.