Bangladesh may face rating downgrade due to sea level rise: Moody’s

Staff Correspondent | Published: 00:00, Jan 17,2020

 
 

A file photo shows children walking over the top of a sandbag embankment that was breached by high waters in Khulna on 4 May, 2019, as cyclone Fani reached Bangladesh. The credit rating of Bangladesh and some other countries might face a downward rating due to the global sea level rise, said a study report released by Moody’s Investors Service, a global credit rating agency, on Thursday.— AFP photo

The credit rating of Bangladesh and some other countries might face a downward rating due to the global sea level rise, said a study report released by Moody’s Investors Service, a global credit rating agency, on Thursday.

The report said that the sea level rise and related shocks might pose material credit risk to Vietnam, Egypt, Suriname, the Bahamas and other small island sovereigns including Maldives and Fiji, Bangladesh, Indonesia and Thailand.

‘The pace of increase in the frequency and severity of natural disasters related to sea level rise and the effectiveness of adaptation measures will determine the extent of the credit constraints that these sovereigns face,’ the report said.

Moody’s has assigned Bangladesh Ba3 rating with stable outlook for last few years.

A relatively gradual increase in the frequency and severity of sea level-related disasters would give governments some time to adapt but if the manifestations of sea level rise intensify abruptly, without effective adaptation, these sovereigns might face some downward rating pressure.

Moody’s, however, said Bangladesh was less exposed than Vietnam, Egypt and Suriname but the country might also face challenges addressing these risks, and as such could experience some related credit pressure.

Sea levels would most likely continue to rise for decades and higher sea levels contribute to increasingly frequent and severe natural disasters such as storm surges, floods or cyclones, the report said.

‘Sea level rise and its associated effects have the potential to damage assets, including infrastructure, buildings and vehicles. The consequences would

materialise on a sovereign’s fiscal strength, and likely also impair economic strength,’ the study report observed.

Some high income economies, such as Japan and the Netherlands are also exposed but countermeasures by the local authorities and their credit strengths mean they are unlikely to suffer a material credit impact, the study said.

Citing a recent study conducted by Climate Central, Moody’s said by 2100, land home to 200 million people could sit permanently below the high-tide line, up from 110 million currently and the largest exposed populations in absolute terms are in Asia, in China, Bangladesh, India, Vietnam, Indonesia and Thailand.

Moody’s explained that the economic and social repercussions of lost income, damage to assets, loss of life, health issues and forced migration from the sudden events related to sea level rise were immediate.

Vulnerability to extreme events related to sea level rise can also undermine investment and heighten susceptibility to event risk, by hindering the ability of governments to borrow to rebuild, increasing financial risks, raising

external pressures, and amplifying political risk as populations come under stress and institutional capacities are tested, the report read.

More about:

Want stories like this in your inbox?

Sign up to exclusive daily email

Advertisement

 

Advertisement

images