Moody’s Investor Service – one of in the world the top three credit rating agencies are on The outlook for Pakistan was downgraded from stable to negative on Thursday.
However, he confirmed long-term local and foreign currency liabilities at ‘B3’.term issuer and senior unsecured debt ratings.
decision Outlook changed to negative on Pakistan’s heightened external vulnerabilities risk and uncertainty around the sovereign ability to secure additional external funding to meet their needs, the rating agency said in a statement. in your report.
According to Moody’s, Pakistan’s external vulnerability risk was strengthened rising inflation, “which exerts downward pressure on in current account, currency and – already thin – gold and foreign exchange reserves, especially in context of heightened political and social risk”.
Weak institutions and the strength of Pakistan’s governance add uncertainty around future direction of macroeconomic policy, including whether the country complete in current The IMF Extended Financing Program (EFF) and maintain a strong policy path which supports further funding.
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” decision The affirmation of the B3 rating reflects Moody’s expectation that, despite the downside risks mentioned above, Pakistan will complete its seventh review under the IMF EFF program second half of this year calendar and will keep you engaged with IMF, leading to additional funding from other bilateral and multilateral partners.
In this case, according to Moody’s, Pakistan will be able to close the funding gap. for in next pair of years. B3 rating also includes Moody’s estimate of scale of Pakistan economy and reliable growth potential that will provide economy with some ability to absorb shock.
These strengths of credit are balanced against Pakistan’s fragile position on external payments, weak governance and very weak fiscal sustainability, including very weak debt availability.
The two-notch gap between the foreign currency ceiling and the domestic currency ceiling reflects the non-full convertibility of capital transactions and the relatively weak policy efficiency, which indicates material transfer and convertibility risks despite moderate external debt, read the report.
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