Moody’s upgrades Bangladesh credit outlook to stable

Moody’s Ratings has upgraded Bangladesh’s credit outlook to stable from negative owing to improved political stability and rebuilt foreign exchange reserves.

However, it noted that “material structural vulnerabilities persist,” which earlier prompted Fitch Ratings and S&P Global to cut the outlook to negative from stable.

In its latest prediction, Moody’s maintained the long-term rating of “B2”.

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“The change in outlook to stable from negative reflects our assessment that the acute political and external pressures that drove the negative outlook have eased, leaving risks more balanced at the B2 rating level, even as material structural vulnerabilities persist,” said Moody's.

It noted that the 12 February elections and the newly-elected BNP government’s strong mandate have reduced the risk of political uncertainties that plagued the economy since the ouster of the long-time authoritarian regime of Awami League in August 2024.

The reduced political risks have strengthened confidence that economic and financial reform initiatives would not face disruptions, Moody’s said.

The external sector of Bangladesh has also remained strong with record high remittance inflow and a more liberal foreign exchange rate mechanism.

The strong forex reserves have eased earlier concerns that the global energy market disruptions and trade shake-ups, spurred by the Iran war and US tariff hikes, would put significant stress on the economy, Moody’s said.

Continued talks with the IMF and other external financial institutions have also helped prop up lenders’ and investors’ confidence in the economy, Moody’s said.