Fitch Ratings has expressed concern over Bangladesh’s long-term debt repayment capacity, revising the outlook on the country’s Long-Term Issuer Default Rating (IDR) from “stable” to “negative” while affirming its current ‘B+’ rating.
In a report released from Hong Kong, the international credit rating agency said Bangladesh remains capable of meeting its external debt obligations, but increasing macroeconomic pressures, external sector vulnerabilities, banking sector weaknesses and institutional challenges could heighten future risks. Fitch noted that limited foreign exchange reserves, persistent inflation, weak financial sector governance and institutional shortcomings continue to place pressure on the economy. According to the agency, the ‘B+’ rating indicates that Bangladesh currently has the ability to repay debt, although it remains vulnerable to adverse external conditions. The revised “negative outlook” signals the possibility of a future downgrade if economic pressures intensify further.
The report also highlighted the ongoing Middle East conflict as a significant risk for Bangladesh, given the country’s heavy dependence on the region for remittance inflows and energy imports. In 2025, nearly half of Bangladesh’s remittances originated from Middle Eastern countries, while around 15% of crude oil and petroleum imports worth approximately $10 billion came from the region.
Fitch warned that prolonged geopolitical instability could affect remittance flows, energy prices and external transactions, creating additional stress on the economy. It said Bangladesh’s foreign exchange reserves stood at $29.5 billion at the end of March this year, equivalent to around four months of import coverage, though still below the average level of countries within the same rating category. While recent exchange rate reforms and support from development partners have helped stabilize reserves, Fitch cautioned that the reserve position could weaken again if the current account deficit widens or if uncertainty emerges regarding implementation of the International Monetary Fund (IMF) program.
The report further pointed to concerns surrounding banking sector governance, slow institutional reforms, revenue collection weaknesses and delays in constitutional and financial sector reform initiatives, noting that these structural challenges continue to weigh on Bangladesh’s economic outlook.
