Borrowing from global capital market: government to face challenges: economists

Pakistan will face challenges in borrowing from the international capital market in the wake of negative outlook on Pakistan''s long-tern foreign and local currency issuer default ratings by Fitch, according to former advisors to Finance Ministry.
Former Economic Advisors to Finance Ministry, Dr Ashfaque Hasan Khan and Sakib Sherani said that negative ratings by the Fitch reflect higher economic and political risks in the country and consequently the response to Pakistan''s bonds, Sukuk or Euro, will be low and the country has to offer a higher rate of return. This, they added, is not a good omen for the country and other rating agencies may also follow the same line.
Dr Ashfaque said Fitch ratings has also exposed distortion of facts about economic indicators by the former Finance Minister Ishaq Dar while Sakib Sherani said the timing of the ratings has caused embarrassment for the country because it disputed Prime Minister Shahid Khaqan Abbasi''s claim at the World Economic Forum Pakistan that Pakistan''s economy is improving.
Sherani said that immediate dent for the country would be in the global capital market in the form of likely lukewarm response and higher rate of return to bonds, whose issuance seems imminent. He said that Pakistan will have to borrow from the international capital market in the next few months to support its deteriorating balance of payment position. A response of genuine investors may be sidelined, he further stated while agreeing to Fitch assessment that the government will be unable to address the challenges to the economy due to approaching 2018 election.
Sherani said that loss to the Pakistan''s economy during the post International Monetary Fund (IMF) program period was much greater than the initial assessment by Fitch. Dr Ashfaque accused the former finance minister of distorting the economic indicators of fiscal deficit, debt to GDP ratio and growth, which are now being exposed by the rating agencies. He said that high debt to GDP ratio, which the independent economists have been pointing out during the last couple of years, is now being cited by the rating agency as well. He said that the debt servicing and repayment of debt will be a great challenge for the future governments owing the former finance minister''s borrowing policy.