Dhaka: The Organisation for Economic Co-operation and Development (OECD) has upgraded the country risk classification of Bangladesh by one notch, according to a Bangladesh Bank (BB) statement.

The news followed the disclosure by the World Bank on Tuesday that Bangladesh had become a lower-middle income country, with a stable per capita income.

Adding to this significant advancement, the central bank said that the director of the Swiss Export Credit Agency (SERV), Herbert Wight at a meeting, held in Zurich, Switzerland late last week, informed BB governor Atiur Rahman about the upgradation.

The country risk classification of the Paris-based OECD refers to a country’s ability to transfer currency for foreign payments. This ability is determined by three main factors: political, economic and financial factors. The risk classification is used to define the minimum premium for credit risk in each country.

Wight said that classification committee of the OECD at a meeting on 17 June last decided to upgrade the risk for Bangladesh.

The major reason for up-gradation from country category 6 to 5 is the resilience of Bangladesh economy accompanied by high and stable economic growth for well over a decade despite political upheaval and weak external demand, said BB.

On the OECD’s scale, Bangladesh surpassed its neighboring countries like Pakistan (rated 7), Sri Lanka (7), Nepal (7) and Myanmar (67) when it was only behind India (3). Like Bangladesh, Bhutan also advanced from 6 to 5, but Nepal and Myanmar slipped by one notch to 7 from 6. Among the SAARC member states, risk classification remained static at 7 for Pakistan and Afghanistan

and at 6 for Sri Lanka.

Rahman expressed his satisfaction over the enhancement in OECD

classification, which should lead to significant lowering of costs for Bangladeshi entrepreneurs and banks in securing guarantees and L/C (letter of credit) confirmations.

He said European countries could take advantage of this up-gradation, which reflects that a long spell of macroeconomic stability made Bangladesh a new frontier market, shifting away from a highly development aid dependent nation.

The governor expressed the hope that the upgraded classification of Bangladesh would also attract substantially wider engagement of the advanced economy in lending to investment projects in Bangladesh, including in infrastructure, textiles and apparel, pharmaceuticals and leather sectors.

He assured that Bangladesh would maintain conducive policy environment towards higher economic growth and macro-financial stability.