Caa1 reflects Pakistan\u2019s improving external position, supported by progress under the IMF programme: Moody\u2019s
\nISLAMABAD
\nMoody\u2019s Ratings on Wednesday upgraded Pakistan\u2019s credit rating with a stable outlook from Caa2 to Caa1, citing the country\u2019s improved financial position supported by a loan from the International Monetary Fund (IMF).
\nThe Prime Minister Shehbaz Sharif greeted the finance team over this success and exhorted them to continue this momentum. Upgrade was secured after similar moves by S&P Global Ratings and Fitch Ratings in the past four months following repeated pledges by Prime Minister Shehbaz Sharif\u2019s government to stay the course on fiscal consolidation and multiple reforms, it said in a statement.
\nMoody\u2019s Ratings, in a statement, said that it has upgraded Pakistan\u2019s local and foreign currency issuer and senior unsecured debt ratings to Caa1 from Caa2. \u201cWe have also upgraded the rating for the senior unsecured MTN programme to (P)Caa1 from (P)Caa2. Concurrently, we changed the outlook for the Government of Pakistan to stable from positive.\u201d
\nThe upgrade to Caa1 reflects Pakistan\u2019s improving external position, supported by its progress in reform implementation under the IMF Extended Fund Facility (EFF) programme, the agency said. It added that foreign exchange reserves are likely to continue to improve, although Pakistan will remain dependent on timely financing from official partners. Meanwhile, Moody\u2019s said, the sovereign\u2019s fiscal position is also strengthening from very weak levels, supported by an expanding tax base.
\nIts debt affordability has improved, but it remains one of the weakest among rated sovereigns. The Caa1 rating also incorporates the country\u2019s weak governance and high political uncertainty. The stable outlook also reflects balanced risks to Pakistan\u2019s credit profile. On the upside, improvements in the debt service burden and external profile could be more rapid than we currently expect.
\nOn the downside, there remains risks of delays in reform implementation required to secure timely official financing, which would in turn weaken Pakistan\u2019s external position again.The upgrade to Caa1 from Caa2 rating also applies to the backed foreign currency senior unsecured ratings for The Pakistan Global Sukuk Programme Co Ltd, Moody\u2019s said.
\nThe rating agency said that the associated payment obligations are, in its view, direct obligations of the Pakistani government. \u201cConcurrently, we changed the outlook for The Pakistan Global Sukuk Programme Co Ltd to stable from positive, mirroring the stable outlook on the Government of Pakistan.\u201d Concurrent to today\u2019s action, Moody\u2019s has also raised Pakistan\u2019s local and foreign currency country ceilings to B2 and Caa1 from B3 and Caa2, respectively.
\nThe two-notch gap between the local currency ceiling and sovereign rating is driven by the government\u2019s relatively large footprint in the economy, weak institutions, and high political and external vulnerability risk.
\nThe two-notch gap between the foreign currency ceiling and the local currency ceiling reflects incomplete capital account convertibility and relatively weak policy effectiveness. It also takes into account risks of transfer and convertibility restrictions being imposed.<\/p>\n","protected":false},"excerpt":{"rendered":"
Caa1 reflects Pakistan\u2019s improving external position, supported by progress under the IMF programme: Moody\u2019s ISLAMABAD Moody\u2019s Ratings on Wednesday upgraded Pakistan\u2019s credit rating with a stable outlook from Caa2 to Caa1, citing the country\u2019s improved financial position supported by a loan from the International Monetary Fund (IMF). The Prime Minister Shehbaz Sharif greeted the finance …<\/p>\n","protected":false},"author":4,"featured_media":85420,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[75],"tags":[],"class_list":["post-85419","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-top"],"_links":{"self":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/85419","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/comments?post=85419"}],"version-history":[{"count":1,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/85419\/revisions"}],"predecessor-version":[{"id":85421,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/85419\/revisions\/85421"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/media\/85420"}],"wp:attachment":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/media?parent=85419"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/categories?post=85419"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/tags?post=85419"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}