US comment won't affect Bangladesh’s external financing

External financing will not be affected for Bangladesh in spite of the US stating that the national election here was not free and fair, said global credit rating agency Fitch.

"The election was accompanied by some violence and the US has said that it was not free and fair," said the agency yesterday, four days after the 12th national elections.

"…but we do not expect this to hurt Bangladesh's efforts to source external financing," it added.

Bangladesh's external challenges remain pressing and a greater exchange rate flexibility could help with rebuilding official reserve buffers, said the agency in a report.

However, it could also add to inflationary pressures in the near term, it said.

Headline inflation, meaning the total inflation in the economy including commodities like food and energy, averaged 9.02 percent in fiscal year 2022-23, the highest in over a decade.

It was last recorded at 9.49 percent in November and shows no sign of cooling.

This was partly reflected in a deterioration of external buffers, with official reserves falling to $21.7 billion as of January 4, less than half its historic peak in 2021.

As per the latest data from the central bank, the forex reserves stood at $20.18 billion as on January 10.

"This has increased Bangladesh's vulnerability to shocks," Fitch said.

Fitch revised the outlook on Bangladesh to negative from stable in September 2023, while affirming the long-term foreign-currency issuer default rating at "BB-".

Fitch also expects broad policy continuity in Bangladesh following Awami League's victory in the general election, in a vote boycotted by the main opposition, Bangladesh Nationalist Party, although external challenges remain.

The Awami League continues to be in a strong position to implement its policy agenda, focused on lowering the poverty rate, developing infrastructure, improving healthcare, strengthening resilience to climate risks and achieving upper middle-income status by 2030, it said.