Moody's revises Bangladesh's outlook to ‘stable’ on easing political and external pressures

Moody's has changed its outlook on Bangladesh from negative to stable, citing a reduction in political and external strains, according to Business Recorder. The agency said on Tuesday that the economy continues to show underlying strength despite costlier imports, unstable gas supplies and difficulties facing the garment industry. Moody's pointed to the period after the election and the government's firm public backing as having lowered the risks to reform efforts.

Moody's credited rebuilt foreign currency reserves, a more flexible exchange rate and record remittance inflows with strengthening the country's external standing. Prime Minister Tarique Rahman's administration, in office since February, is carrying out reforms while looking for new loans from lenders such as the IMF. Persistent inflation, slower growth and pressure on reserves are still holding the economy back.

Moody's kept the long-term rating at B2, weighing growth potential against ongoing fiscal and banking weaknesses. Separately, the World Bank cleared $1.1 billion of urgent funding in June to protect food availability and shield vulnerable households. Bangladesh is negotiating a successor arrangement for its $5.5 billion IMF deal, having decided to leave the earlier programme. The outlook change also contrasts with S&P's July move to lower the outlook to negative over banking and energy concerns.