S&P Downgrades Bangladesh Credit Rating Outlook to 'Negative'

S&P Global downgraded Bangladesh's sovereign credit rating outlook from 'stable' to 'negative' due to a liquidity crisis.

On the 25th (local time), S&P Global stated that Bangladesh faces the risk of deteriorating liquidity ratios around next year due to declining foreign exchange reserves and liquidity pressures.

The GDP growth forecast for Bangladesh over the next three years was presented at 6.0?6.4%. As of the end of the second quarter, Bangladesh's GDP growth rate was recorded at 6.0%.

Since the Ukraine war, Bangladesh has struggled to pay for energy imports amid soaring energy prices and a sharp decline in dollar foreign exchange reserves.

Since Russia's invasion of Ukraine in February 2021, dollar holdings have decreased by more than one-third, plummeting to $29.85 billion (approximately 38 trillion KRW) as of the 19th. S&P Global did not disclose the currency composition of Bangladesh's foreign exchange reserves but estimated that most are dollar-denominated assets.

Foreign media evaluated that this credit rating reflects the worsening availability of foreign exchange, making Bangladesh's negative external financial situation even more vulnerable.

S&P Global stated, "If liquidity indicators worsen further, the rating for Bangladesh could be lowered again," while maintaining Bangladesh's credit rating at 'BB-'.

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