Published On: Thu, May 11th, 2017

Moodys rating of Pakistan of B3 reflects stability

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Moodys rating of PakistanCredit rating agency Moody’s annual credit analysis of Pakistan after assessing and determining the strong economic growth and reduced fiscal deficits has been positive. Moodys rating of Pakistan stands at B3 that exhibits stability.

“Strong growth performance, fiscal deficit reduction and improved inflation dynamics underpin the Government of Pakistan’s B3 rating with a stable outlook,” Moody’s Investors Service stated.

Highlighting the negative aspects the report mentioned that the general government debt burden was relatively high, physical and social infrastructure were weak with high political risks and a delicate external payments position. It further added that the government’s very thin revenue base weighed on their debt affordability. The slowing down of the exports and remittance inflows and increase in capital goods imports resulted in pressure on external accounts.

Moody’s noted that prospects for growth have improved following Pakistan’s successful completion of its three-year Extended Fund Facility (EFF) programme with the International Monetary Fund (IMF) in September 2016 and the launch of the China-Pakistan Economic Corridor (CPEC) project in 2015.

Moody’s also noted that the implementation of the CPEC project has the potential to transform the Pakistani economy by relieving infrastructure bottlenecks, and stimulating both foreign and domestic investment.

However, headwinds to further fiscal consolidation and renewed pressure on the external account present downside risks to the rating, said the ratings agency.

“Since 2013, implementation of economic reforms and increased foreign investment flows have contributed to macroeconomic stability and higher GDP growth. However, government debt remains elevated and pressure on the external account continues. ” said William Foster, a Vice President and Senior Credit Officer at Moody’s.

According to Moodys rating of Pakistan the stable outlook represents balanced upside and downside risks to the sovereign credit profile. Support from multilateral and bilateral lenders has also bolstered Pakistan’s foreign currency reserves and fostered progress on economic reforms.

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- An enthusiast working in Dubai as an Assistant Operations Manager. Writing about Pakistan and the latest happenings, trends around the globe is my passion. A dreamer, learner and a major foodie.