Moody’s told outdated story of Bangladesh

Moody's Ratings is narrating an outdated story of Bangladesh, not the updated one, said Bangladesh Bank Governor Ahsan H Mansur in a webinar yesterday.

The central bank governor was responding to a question about Moody's recently downgrading its rating for Bangladesh.

Last month, Moody's downgraded Bangladesh's long-term ratings to B2 from B1 and said the outlook has been changed to "negative" from "stable".

When the downgrade was announced, the depletion of forex reserves had been arrested, said Mansur at the webinar on the investment climate in Bangladesh.

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Moody’s goes negative on Bangladesh

Moreover, the central bank had suspended a US dollar selling spree, exchange rates had stabilised and balance of payments, especially the deficit current account balance, had narrowed, he said.

The webinar was hosted by Ashik Chowdhury, executive chairman of Bangladesh Investment Development Authority (Bida) and Bangladesh Economic Zones Authority (Beza).

Moody's announced the downgrade when the economic outlook was improving, said Mansur, adding, "That is our objection against the assessment of the rating agency."

While talking about the country's economy, the BB governor said high inflation was a concern and the monetary policy was tight.

As a result, the taka has now turned into an asset more attractive than before, he added.

The central bank governor hoped for inflation to come down in the upcoming months, as food prices had already declined in the market.

"We are seeing a turnaround," he said.

"We realised that hiking the interest rate was hitting businesspeople…did investment come when the maximum lending rate was at 9 percent...the answer is no," he added.

High interest rate is not the only obstacle behind the deterioration of foreign investment, he said, adding that many other, more important non-economic factors were liable here.

Bringing about good governance in the banking sector is the first priority, he said, adding that a single family controlled about seven banks and two financial institutions bypassing the banking rules and regulation.

"This happened because of political support," said Mansur.

The central bank has formed three task forces for improvements in the country's banking sector as well as for strengthening the central bank, he informed.

Now the central bank is continuing to relax rules and regulations to attract foreign investment, he added.