Pakistan does not face an immediate risk of a withdrawal of foreign aid despite international accusations that it gave shelter to Osama bin Laden, Moody''s Investors Service said on Wednesday. Its sovereign credit rating also remained justified, at least for now, said Aninda Mitra, Moody''s sovereign analyst for Pakistan. Moody''s currently rates the struggling country''s debt as B3, or "highly speculative".
"As worrying as some of the headlines may be on the nature of relationship between Pakistan and the US, I don''t see any huge near-term impact that could affect the rating," Mitra told Reuters on the phone from Hanoi. "There is enough unpredictability here for me to make a definitive comment as to what will happen one year from now or six months from now. But for now, we don''t think that the money is suddenly going to stop or the IMF programme is completely going to be disrupted. Nor do we see Pakistan completely walking away from this alliance."
Many US lawmakers are demanding a review of the billions of dollars in aid that Washington gives to nuclear-armed Pakistan after US forces found and killed the world''s most-wanted man on Monday in a house near the capital Islamabad. He may have lived in the fortified compound in the military garrison town of Abbottabad for the last five to six years. On Wednesday, a local media report said all missions from international financial institutions, including the IMF, the World Bank and the Asian Development Bank had cancelled their visit to Pakistan on concerns that there may be a backlash from militants after the killing of bin Laden.
Last month, a senior IMF official said he hoped to send a team to Pakistan in the next couple of weeks to assess its progress in meeting key economic targets, but said the fund has not decided yet when it is going to disburse the remaining two tranches of more than $3 billion from a $11 billion bailout programme that is helping to prop up the economy.
The IMF declined to comment, and no one was available for comment at the Finance Ministry. Pakistan''s stock market fell as much as 2.6 percent on Wednesday on concerns that that the killing of bin Laden could lead to a delay in international aid, dealers said.
But Mitra said the relationship between Pakistan and the United States was a necessary one for both sides. The US and other donors are desperate to prevent the country from becoming a failed state. "No matter what you see in the press, arguments about the credibility of the Pakistani government, of the armed forces.... I think the co-dependency between Pakistan and the US is still very very high," he said.
"Pakistan still is needed for supplying the war effort in Afghanistan, bases for drone attacks and so on," he said. Pakistan also needs the United States for the coalition support fund it receives and for social assistance, as well as the backing of its ongoing International Monetary Fund (IMF) programme, he said.
"I think the rating is appropriately positioned to capture a lot of instability and unpredictability within the policy framework, or any political risks that could weigh on the policy framework," he said. Pakistan has pledged to implement tax and energy sector reforms, demonstrate fiscal discipline and give full autonomy to its central bakn, but the reforms have yet to be implemented.