Pakistan hopes for Moody’s rating upgrade as economic indicators improve
- Last year, Moody's downgraded Pakistan’s credit rating to ‘Caa3’
Federal Minister for Finance and Revenue Muhammad Aurangzeb expects Moody’s Investor Service (Moody’s) would upgrade Pakistan’s credit rating soon, reflecting the country’s improved economic fundamentals and the government’s commitment to reforms.
The remarks came during Aurangzeb’s meeting with representatives from Moody’s on the sidelines of the World Bank Group-IMF Spring Meetings in Washington D.C.
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Last year, Moody’s downgraded the government of Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa3 from Caa1.
Back then, the credit rating agency said the decision to downgrade the ratings was driven by its assessment that Pakistan’s increasingly fragile liquidity and external position significantly raises default risks to a level consistent with a Caa3 rating.
The country’s very weak fiscal strength and elevated political risks also constrain its credit profile, it said.
However, earlier this year in February, Moody’s said Pakistan’s rating would likely be upgraded if the government’s liquidity and external vulnerability risks decreased materially and durably.
Meanwhile, as per the Ministry of Finance statement, Aurangzeb, who is currently in Washington attending World Bank-IMF Spring meetings being held from April 15 to 20, briefed Moody’s on Pakistan’s key economic indicators and macro-economic stabilization achieved after entering into a Stand-by Arrangement (SBA) with International Monetary Fund (IMF).
He highlighted the government’s key priorities including tax and energy sector reforms, as well as the privatization agenda.
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“Finance Minister indicated the government’s intention of tapping international capital markets, with a focus on the Middle East and China, to support Pakistan’s economic growth and development,” read the statement.
Aurangzeb also addressed questions related to inflation, foreign exchange reserves, debt repayments, external account vulnerability, and domestic liquidity and expressed confidence in the government’s ability to address these challenges and create an environment conducive to sustainable economic growth.
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