Moody’s Ranks Pakistan’s Rating Outlook To Negative
Moody's Investors Service on Wednesday rated Pakistan from stable to negative and affirmed the B3 local and foreign currency long-term issuer and senior unsecured debt ratings.
The rating was changed due to heightened external vulnerability risk. According to a report, there is a decrease in the foreign exchange reserves and absence of significant capital inflows. The report further says that this will not be replenished over the next 12- 18 months.
The low reserve adequacy resulted in continued access to external financing at moderate costs which further raised government liquidity risks.
The decision unravels Pakistan's robust growth potential, supported by ongoing improvements in energy supply and physical infrastructure.
Pakistan witnesses low revenue generation capacity because of its fragile external payments position and weak government debt affordability.
Moody has also affirmed the B3 foreign currency senior unsecured ratings for the second Pakistan International Sukuk Co Ltd and the third Pakistan International Sukuk Co Ltd.
Pakistan's external account may remain under significant pressure, Moody states. There will be further fall in the foreign exchange reserves of imports. Also, there will be a reduction in the external debt payment due.
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