S&P downgrades Bangladesh credit rating

S&P Global has downgraded Bangladesh's credit rating due to persistent pressure on the country's external accounts and deadly protests. The US-based credit ratings agency lowered its long-term sovereign ratings for Bangladesh from BB- to B+.

The downgrade is primarily driven by the continued decline in foreign exchange reserves, despite import compression measures enacted by the central bank and a smaller current account deficit. "Gross external financing needs, by our measures, now exceed the sum of current account receipts and usable reserves," S&P noted.

However, the ratings agency maintained a stable outlook for Bangladesh.

This downgrade occurs amid ongoing deadly protests over job quota reforms, which have resulted in at least 163 deaths and significant destruction of government property. In response to the escalating situation, authorities imposed a curfew on July 20, allowing public and private offices to operate under relaxed curfew hours. Economic activities have yet to return to normal.

S&P highlighted that Bangladesh is "currently grappling with widespread student-led protests that have reportedly led to more than 200 deaths," citing local news sources. The agency also pointed out that Bangladesh's "highly concentrated political environment may undermine the predictability of future policy responses."