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Can Bangladesh pay back 12 billion dollars loans within 4 months?

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Published: 03:40 AM, 11 August 2023

Can Bangladesh pay back 12 billion dollars loans within 4 months?​

AA News Desk

Can Bangladesh pay back 12 billion dollars loans within 4 months?


Bangladesh government and the country's private sector have to pay back foreign loans of around 12 billion dollars within next four months. Uncertainty has come up due to the downtrend in foreign exchange reserves and dollar shortage.

Moody's and S&P Global Ratings lowered the long-term rating outlook for Bangladesh to negative from stable, citing weakened liquidity position and risks of current domestic political conditions which may undermine the predictability of future policy responses.

However, the rating agency kept the country's sovereign credit rating unchanged at 'BB-' for long-term and 'B' for short-term, according to the latest assessment released on 25 July. A negative outlook reflects the risk that its external liquidity position could deteriorate further over the next 12 months and the country's credit rating may go lower if its external position worsens further.

"We may lower the ratings on Bangladesh if net external debt or liquidity metrics worsen further, such that narrow net external debt surpasses 100% of current account receipts, or gross external financing needs exceed 100% of current account receipts plus usable reserves, on a sustained basis," said the S&P assessment.

"Lower generation of current account receipts than we expect, a higher overall current account deficit than we forecast, or a failure to materially boost foreign exchange reserves would indicate downward pressure on the rating."

Dr Zahid Hussain, former lead economist of World Bank Dhaka Office, said the rating agency did not lower the credit rating, which is good for the country. However, the outlook negative means there is a risk of lowering the rating if the external position is not improved.

At present, the total external debt stands at $95 billion as of March and the usable foreign exchange reserve is nearly $20 billion. If the reserve amount is deducted from external debt, the narrow external debt is $75 billion, he said.

If the current account receipts are considered, it will also be nearly $75 billion including export, remittance and service income. As a result, narrow net external debt remains below 100% of current account receipts.

However, the real danger is the continuous drawdown of the reserve, he said and opined that it will be a matter of time to downgrade the country rating if exports face any external shock and current account inflows did not improve.

The rating agency said, "We may revise the outlook to stable if Bangladesh materially improves its external position, which would likely be indicated by a substantial increase in foreign exchange reserves combined with a modest current account deficit, and healthy growth in current account receipts."

However, the country's foreign exchange reserve continued to slide in the last one year amid higher outflow than inflow of foreign currency in the financial account.

The gross reserve stood at $23.44 billion as of 19 July which was above $39 billion as of the same date last year, according to Bangladesh Bank data.
The lower rating constrains borrowing ability of banks from foreign sources, said Selim RF Hussain, managing director of BRAC bank.

He said credit risk managers in foreign banks limit the credit limit, and sometimes withdraw the limit for banks based on the credit rating assessments of global rating agencies.
Bangladeshi banks have already been facing such difficulties after Moody's downgraded the credit rating of the country, he said.
However, S&P kept the credit rating unchanged which is good but the negative outlook will drive up the borrowing cost further for local banks, added Selim RF Hussain.

Global lenders are already aware of the external pressure on Bangladesh but when a rating agency lowers the rating, it becomes an official confirmation of the dollar crisis, said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.

He said rating impacts borrowing negotiations with foreign partners.

Though the dollar balance in foreign currency accounts abroad has been improving, it is not enough to mitigate banks' needs.

The government could not make payments for LNG and coal imports, which reflects that dollar availability did not come back to normalcy, he added.
Bangladesh Bank data shows that the dollar liquidity of banks improved to $3.7 billion in recent times, which had dipped to $2 billion last year.

Earlier in May, Moody's Investors Service downgraded Bangladesh's rating, but it keeps the country's long-term outlook stable, which indicates the rating agency does not anticipate any significant changes in the economy's creditworthiness or its ability to meet its financial obligations.
Moody's downgraded Bangladesh's rating for the first time, placing it at B1 from the Ba3 category.

The latest assessment came due to heightening external vulnerability and liquidity risks amid a deterioration in foreign exchange reserve, which indicates continued pressure on Bangladesh's external position, exacerbating import constraints, and, as a result, energy shortages.
Except for Pakistan and Sri Lank, Bangladesh is the only one among other South Asian nations which is getting a lower rating from global rating agencies amid severe foreign currency liquidity pressure.

Though Pakistan and Sri Lank are considered exceptional cases because of their domestic political issues. Of them, Sri Lanka has been witnessing its reserve situation improving from the bottom.India, with its credit ratings stable, is in a good reserve position even in this global crisis.

>>BBC​

https://dailyasianage.com/news/310542/can-bangladesh-pay-back-12-billion-dollars-loans-within-4-months#:~:text=Bangladesh%20government%20and%20the%20country's,exchange%20reserves%20and%20dollar%20shortage.
 
In most cases, these old loans are replaced by new long term loans with low interests. In short, BD will be stable in foreseeable future.
 
In most cases, these old loans are replaced by new long term loans with low interests. In short, BD will be stable in foreseeable future.

Interest rates depends on global macroeconomic conditions, if these loans were from pre-covid era, chances are they cannot get lower interest than their current loans.

Also, has their credit worthiness improved in that loan duration?
 
No. Who is responsible for this? Your aunty.

I don't know if you are aware of credit worthiness of national entities, for starters one can look at the credit worthiness of a country issued by Moody or Standard & Poor. And then you can start with looking at the correlation of credit worthiness with the loan interest rates.

If you can cut down on your ad hominem, and use internet towards improving your intelligence, you'll do yourself a great favor.
 
Published: 03:40 AM, 11 August 2023

Can Bangladesh pay back 12 billion dollars loans within 4 months?​

AA News Desk

Can Bangladesh pay back 12 billion dollars loans within 4 months?


Bangladesh government and the country's private sector have to pay back foreign loans of around 12 billion dollars within next four months. Uncertainty has come up due to the downtrend in foreign exchange reserves and dollar shortage.

Moody's and S&P Global Ratings lowered the long-term rating outlook for Bangladesh to negative from stable, citing weakened liquidity position and risks of current domestic political conditions which may undermine the predictability of future policy responses.

However, the rating agency kept the country's sovereign credit rating unchanged at 'BB-' for long-term and 'B' for short-term, according to the latest assessment released on 25 July. A negative outlook reflects the risk that its external liquidity position could deteriorate further over the next 12 months and the country's credit rating may go lower if its external position worsens further.

"We may lower the ratings on Bangladesh if net external debt or liquidity metrics worsen further, such that narrow net external debt surpasses 100% of current account receipts, or gross external financing needs exceed 100% of current account receipts plus usable reserves, on a sustained basis," said the S&P assessment.

"Lower generation of current account receipts than we expect, a higher overall current account deficit than we forecast, or a failure to materially boost foreign exchange reserves would indicate downward pressure on the rating."

Dr Zahid Hussain, former lead economist of World Bank Dhaka Office, said the rating agency did not lower the credit rating, which is good for the country. However, the outlook negative means there is a risk of lowering the rating if the external position is not improved.

At present, the total external debt stands at $95 billion as of March and the usable foreign exchange reserve is nearly $20 billion. If the reserve amount is deducted from external debt, the narrow external debt is $75 billion, he said.

If the current account receipts are considered, it will also be nearly $75 billion including export, remittance and service income. As a result, narrow net external debt remains below 100% of current account receipts.

However, the real danger is the continuous drawdown of the reserve, he said and opined that it will be a matter of time to downgrade the country rating if exports face any external shock and current account inflows did not improve.

The rating agency said, "We may revise the outlook to stable if Bangladesh materially improves its external position, which would likely be indicated by a substantial increase in foreign exchange reserves combined with a modest current account deficit, and healthy growth in current account receipts."

However, the country's foreign exchange reserve continued to slide in the last one year amid higher outflow than inflow of foreign currency in the financial account.

The gross reserve stood at $23.44 billion as of 19 July which was above $39 billion as of the same date last year, according to Bangladesh Bank data.
The lower rating constrains borrowing ability of banks from foreign sources, said Selim RF Hussain, managing director of BRAC bank.

He said credit risk managers in foreign banks limit the credit limit, and sometimes withdraw the limit for banks based on the credit rating assessments of global rating agencies.
Bangladeshi banks have already been facing such difficulties after Moody's downgraded the credit rating of the country, he said.
However, S&P kept the credit rating unchanged which is good but the negative outlook will drive up the borrowing cost further for local banks, added Selim RF Hussain.

Global lenders are already aware of the external pressure on Bangladesh but when a rating agency lowers the rating, it becomes an official confirmation of the dollar crisis, said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.

He said rating impacts borrowing negotiations with foreign partners.

Though the dollar balance in foreign currency accounts abroad has been improving, it is not enough to mitigate banks' needs.

The government could not make payments for LNG and coal imports, which reflects that dollar availability did not come back to normalcy, he added.
Bangladesh Bank data shows that the dollar liquidity of banks improved to $3.7 billion in recent times, which had dipped to $2 billion last year.

Earlier in May, Moody's Investors Service downgraded Bangladesh's rating, but it keeps the country's long-term outlook stable, which indicates the rating agency does not anticipate any significant changes in the economy's creditworthiness or its ability to meet its financial obligations.
Moody's downgraded Bangladesh's rating for the first time, placing it at B1 from the Ba3 category.

The latest assessment came due to heightening external vulnerability and liquidity risks amid a deterioration in foreign exchange reserve, which indicates continued pressure on Bangladesh's external position, exacerbating import constraints, and, as a result, energy shortages.
Except for Pakistan and Sri Lank, Bangladesh is the only one among other South Asian nations which is getting a lower rating from global rating agencies amid severe foreign currency liquidity pressure.

Though Pakistan and Sri Lank are considered exceptional cases because of their domestic political issues. Of them, Sri Lanka has been witnessing its reserve situation improving from the bottom.India, with its credit ratings stable, is in a good reserve position even in this global crisis.

>>BBC​

https://dailyasianage.com/news/310542/can-bangladesh-pay-back-12-billion-dollars-loans-within-4-months#:~:text=Bangladesh%20government%20and%20the%20country's,exchange%20reserves%20and%20dollar%20shortage.

Another scare story to titillate the BNP/Jamat hoards.

Bangladesh was also supposed to have run out of dollar reserves by last January.

Go read all the posts from the BNP shills.

In the next four months Bangladesh will also earn about 15 billion dollars. Which means by next quarterly cycle the net reserve may be slightly up. Especially given the plummeting oil prices.
 
Another scare story to titillate the BNP/Jamat hoards.

Bangladesh was also supposed to have run out of dollar reserves by last January.

Go read all the posts from the BNP shills.

In the next four months Bangladesh will also earn about 15 billion dollars. Which means by next quarterly cycle the net reserve may be slightly up. Especially given the plummeting oil prices.

So in the next four month Bangladesh will not have to pay anything for import? This 12 billion usd is not for paying import fees but to pay past due and interest.
 
So in the next four month Bangladesh will not have to pay anything for import? This 12 billion usd is not for paying import fees but to pay past due and interest.

That will be in the next quarter!!

The January scare story was predicated on the same stupid hypothesis!!

Bangladesh isn’t really renowned for world famous oxbridge educated economists, is it!!!

Third rate academics pontificating on YouTube and papers that only political shills read.

World famous Mr Younus didn’t get his Nobel prize for economics, did he?

He got the same award as little Malala Yousafzai 🤣🤣🤣
 
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এই সরকারের পাপের ফল, পরবর্তী সরকার ভোগ করবে, আর তখন ভুক্তভোগী মহাজ্ঞানী বীর বাঙ্গালী বলবে যে, আহা হাসিনা কত ভাল ছিল!

এই কথাটা লিখে রাখেন সবাই!
 
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The situation is serious but far from critical.

here is link to see the month to month state of reserves. Adoption of BPM6 methodology where medium/long term liabilities are excluded are also shown.

The gradual trend in deteriorating reserves since Jan 2022 was halted in June 2023. I think we have turned a corner and trend will slowly start to reverse.

Our exports are up in US and across western markets. Additionally Taka/Rupee trade will take out pressures worth $15b. There is also inbuilt lag in the data. The eid related remittance boost has not come through in the figures. August data will show an increase in reserves. I am cautiously optimistic.
 
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The situation is serious but far from critical.

here is link to see the month to month state of reserves. Adoption of BPM6 methodology where medium/long term liabilities are excluded are also shown.

The gradual trend in deteriorating reserves since Jan 2022 was halted in June 2023. I think we have turned a corner and trend will slowly start to reverse.

Our exports are up in US and across western markets. Additionally Taka/Rupee trade will take out pressures worth $15b. There is also inbuilt lag in the data. The eid related remittance boost has not come through in the figures. August data will show an increase in reserves. I am cautiously optimistic.
Lol. Have you not seen what happened in July later?
 
Lol. Have you not seen what happened in July later?
Cute....Why would not I ?

The increase was as a result of increase in remittances of earlier eid. The overall balance fell back, but last year eid bump was not enough to arrest the negative slide.

BD reserve slide was as a result of external supply side shocks. The issues have passed and reserves will start climbing again and they have never been in danger zone at any point.
 
এই সরকারের পাপের ফল, পরবর্তী সরকার ভোগ করবে, আর তখন ভুক্তভোগী মহাজ্ঞানী বীর বাঙ্গালী বলবে যে, আহা হাসিনা কত ভাল ছিল!

এই কথাটা লিখে রাখেন সবাই!

Getting your pathetic excuse in already 🤣🤣🤣

When the Islamists ruin the economy again - you will blame Hasina.

Which is why Hasina needs to stay in power and ensure economy doesn’t collapse like before.
 
Published: 03:40 AM, 11 August 2023

Can Bangladesh pay back 12 billion dollars loans within 4 months?​

AA News Desk

Can Bangladesh pay back 12 billion dollars loans within 4 months?


Bangladesh government and the country's private sector have to pay back foreign loans of around 12 billion dollars within next four months. Uncertainty has come up due to the downtrend in foreign exchange reserves and dollar shortage.

Moody's and S&P Global Ratings lowered the long-term rating outlook for Bangladesh to negative from stable, citing weakened liquidity position and risks of current domestic political conditions which may undermine the predictability of future policy responses.

However, the rating agency kept the country's sovereign credit rating unchanged at 'BB-' for long-term and 'B' for short-term, according to the latest assessment released on 25 July. A negative outlook reflects the risk that its external liquidity position could deteriorate further over the next 12 months and the country's credit rating may go lower if its external position worsens further.

"We may lower the ratings on Bangladesh if net external debt or liquidity metrics worsen further, such that narrow net external debt surpasses 100% of current account receipts, or gross external financing needs exceed 100% of current account receipts plus usable reserves, on a sustained basis," said the S&P assessment.

"Lower generation of current account receipts than we expect, a higher overall current account deficit than we forecast, or a failure to materially boost foreign exchange reserves would indicate downward pressure on the rating."

Dr Zahid Hussain, former lead economist of World Bank Dhaka Office, said the rating agency did not lower the credit rating, which is good for the country. However, the outlook negative means there is a risk of lowering the rating if the external position is not improved.

At present, the total external debt stands at $95 billion as of March and the usable foreign exchange reserve is nearly $20 billion. If the reserve amount is deducted from external debt, the narrow external debt is $75 billion, he said.

If the current account receipts are considered, it will also be nearly $75 billion including export, remittance and service income. As a result, narrow net external debt remains below 100% of current account receipts.

However, the real danger is the continuous drawdown of the reserve, he said and opined that it will be a matter of time to downgrade the country rating if exports face any external shock and current account inflows did not improve.

The rating agency said, "We may revise the outlook to stable if Bangladesh materially improves its external position, which would likely be indicated by a substantial increase in foreign exchange reserves combined with a modest current account deficit, and healthy growth in current account receipts."

However, the country's foreign exchange reserve continued to slide in the last one year amid higher outflow than inflow of foreign currency in the financial account.

The gross reserve stood at $23.44 billion as of 19 July which was above $39 billion as of the same date last year, according to Bangladesh Bank data.
The lower rating constrains borrowing ability of banks from foreign sources, said Selim RF Hussain, managing director of BRAC bank.

He said credit risk managers in foreign banks limit the credit limit, and sometimes withdraw the limit for banks based on the credit rating assessments of global rating agencies.
Bangladeshi banks have already been facing such difficulties after Moody's downgraded the credit rating of the country, he said.
However, S&P kept the credit rating unchanged which is good but the negative outlook will drive up the borrowing cost further for local banks, added Selim RF Hussain.

Global lenders are already aware of the external pressure on Bangladesh but when a rating agency lowers the rating, it becomes an official confirmation of the dollar crisis, said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.

He said rating impacts borrowing negotiations with foreign partners.

Though the dollar balance in foreign currency accounts abroad has been improving, it is not enough to mitigate banks' needs.

The government could not make payments for LNG and coal imports, which reflects that dollar availability did not come back to normalcy, he added.
Bangladesh Bank data shows that the dollar liquidity of banks improved to $3.7 billion in recent times, which had dipped to $2 billion last year.

Earlier in May, Moody's Investors Service downgraded Bangladesh's rating, but it keeps the country's long-term outlook stable, which indicates the rating agency does not anticipate any significant changes in the economy's creditworthiness or its ability to meet its financial obligations.
Moody's downgraded Bangladesh's rating for the first time, placing it at B1 from the Ba3 category.

The latest assessment came due to heightening external vulnerability and liquidity risks amid a deterioration in foreign exchange reserve, which indicates continued pressure on Bangladesh's external position, exacerbating import constraints, and, as a result, energy shortages.
Except for Pakistan and Sri Lank, Bangladesh is the only one among other South Asian nations which is getting a lower rating from global rating agencies amid severe foreign currency liquidity pressure.

Though Pakistan and Sri Lank are considered exceptional cases because of their domestic political issues. Of them, Sri Lanka has been witnessing its reserve situation improving from the bottom.India, with its credit ratings stable, is in a good reserve position even in this global crisis.

>>BBC​

https://dailyasianage.com/news/310542/can-bangladesh-pay-back-12-billion-dollars-loans-within-4-months#:~:text=Bangladesh%20government%20and%20the%20country's,exchange%20reserves%20and%20dollar%20shortage.
Hasina ji can do it .
 

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