Home General US greets Pakistan credit outlook’s revision by the Moody’s Investor Service

US greets Pakistan credit outlook’s revision by the Moody’s Investor Service

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Moody’s

WASHINGTON: Acting Assistant Secretary of State for the Bureau of South and Central Asian Affairs Alice Wells on Wednesday appreciated “bold economic reforms” formulated and implemented by the Pakistan’s foreign ministry to “boost growth, attract private capital, and expand exports” while welcoming welcomed Moody’s revision in Pakistan’s credit outlook from negative to stable.
In a tweet shared by the State Department, Asia Wells stated: “Pleased to see that [Moody’s Service] has revised Pakistan’s credit outlook to stable thanks to [Pakistan’s Finance Ministry] reform efforts and IMF program. With bold economic reforms, Pakistan can boost growth, attract private capital, and expand exports.”
New York-based credit rating agency Moody’s on Monday raised Pakistan’s economic outlook from negative to stable on the back of the country’s reforms supported by an IMF programme, but kept its credit rating unchanged at B3.
The ratings firm said improvements in the balance of payments was a primary driver of the rating action, but added that foreign exchange buffers would still take time to rebuild.
Moody’s Investors Service (“Moody’s”) on Monday affirmed Pakistan’s local and foreign currency long-term issuer and senior unsecured debt ratings at B3 and changed the outlook to stable from negative.
According to a report issued by the bond credit rating business of Moody’s Corporation, “the change in outlook to stable is driven by Moody’s expectations that the balance of payments dynamics will continue to improve, supported by policy adjustments and currency flexibility.”
It further stated, “Such developments reduce external vulnerability risks, although foreign exchange reserve buffers remain low and will take time to rebuild. Moreover, while fiscal strength has weakened with higher debt levels largely as a result of currency depreciation, ongoing fiscal reforms, including through the country’s International Monetary Fund (IMF) programme, will mitigate risks related to debt sustainability and government liquidity.”
In June last year, Moody’s had lowered Pakistan’s outlook to negative from stable owing to erosion in foreign exchange buffers due to heightened external pressures.
Yesterday, Adviser to the Prime Minister on Finance Dr Abdul Hafeez Sheikh said that financial and trade deficit of the country was decreasing, and global organisations were acknowledging Pakistan’s economic growth.
Speaking at a press conference alongside Federal Board of Revenue (FBR) Chairman Syed Shabbar Zaidi, Hafeez Sheikh expressed that the economy has improved remarkably this fiscal year. “The current account deficit is decreasing,” he said, adding that last year’s current account deficit was reduced by 35%.
He apprised that the current account deficit for the first time surged in October.
The financial advisor said that global institutions, including the International Monetary Fund (IMF), the World Bank Group, Moody’s and the Asian Development Bank (ADB) have hailed Pakistan’s economic growth. He added that Bloomberg recognized that the Pakistan Stock Exchange (PSX) has improved, and outlined that Moody’s Investor Service has revised Pakistan’s rating from negative to stable.
He said that the country’s exports have been increasing and the foreign direct investment has been surging.
“Last month, Pakistani exports increased by 10 per cent while foreign investment increased by almost 236 per cent”, he asserted, adding that the PSX has crossed 40,000-level. – NNI