Pakistan’s credit outlook stable, says Moody’s
DUBAI: Moody’s Investors Service – one of the three global credit rating agencies – has changed Pakistan’s credit rating outlook to stable from negative, signalling further improvement in foreign currency inflows into the country.
The announcement pushed Pakistan’s stock market above 40,000 points in intraday trade after a gap of 10 months. The Pakistan Stock Exchange’s (PSX) benchmark KSE 100 Index was up 838 points to 40,126pointsat3:19pminintra-daytradeonmonday.
Moody’s also affirmed the government of Pakistan’slocalandforeigncurrencylong-termissuerand senior unsecured debt ratings at B3.
“The change in outlook to stable is driven by Moody’sexpectationsthatthebalanceofpayments dynamics will continue to improve, supported by policy adjustments and currency flexibility,” read a Moody’s report released on Monday.
“Suchdevelopmentsreduceexternalvulnerability risks, although foreign exchange reserve buffers remain low and will take time to rebuild.” Pakistanmayfaceseriousfinancingissues:moody’s Moody’s said the recent currency depreciation has pushed up Pakistan’s debt level and weakened Islamabad’sfiscalstrength.however,thecreditagency said that “the ongoing fiscal reforms, including through the country’s International Monetary Fund (IMF) programme, will mitigate risks related to debt sustainability and government liquidity.”
“Theratingaffirmationreflectspakistan’srelatively largeeconomyandrobustlong-termgrowthpotential, coupled with ongoing institutional enhancements that raise policy credibility and effectiveness, albeit from a low starting point,” read the report.