DHAKA: Bad debt has been dogging the banking sectors in Bangladesh with the total amount of capital deficit in state-owned banks of Sonali, Rupali, Janata and BASIC standing at more than Tk 76.26 billion.
The government had injected Tk 102.72 billion into state banks as recapitalisation facility from FY2006 to FY2017, Finance Minister AMA Muhith said in parliament last month.
In its just-released annual credit analysis titled ‘Bangladesh-Ba3 Stable’, Moody’s said it expects economic growth to stay steady at 6.7 percent in FY2018, maintaining the average in the last five years.
“Strong export growth will largely be offset by rising capital goods imports, leaving domestic demand supported by higher remittances as the main growth driver,” Moody’s said.
Describing Bangladesh’s growth trend as ‘much stronger than similarly rated sovereigns’, Moody’s, however, said the precondition was that the upcoming elections later this year will not cause any major disruptions to the economy.
Bangladesh’s credit profile is supported by strong growth, macroeconomic stability, modest government debt burden and access to concessional funding, according to the agency.
It, however, underscored credit challenges stemming from a narrow revenue base and “very low institutional capacity that constraints competitiveness”.
Driven by the garment industry, Bangladesh will see a robust economic activity, according to Moody’s, but it pointed out that it expects to widen the fiscal deficit in FY 2018.
