Tuesday, March 5, 2024

Pakistan’s current credit rating is supported by its robust long-term GDP growth potential

In light of recent developments, Moody’s Investors Service regularly publishes analyses of countries around the globe that highlight their credit ratings and other financial results. In its latest Pakistan review published on 18 December 2020, Moody’s reported that Pakistan’s credit profile i.e. “B3,” reflects the economic strength of the Country, “baa2.”

They continue to claim that the current economic strength of the Country ‘baa2’ is supported by a robust long-term potential for GDP growth and a broad economy, balanced against low per capita incomes and global competitiveness.

Moody’s reports, “its ‘b2’ institutions and governance power that balances the still weak credibility and effectiveness of executive institutions and fiscal policy against a lengthening record of effective checks and balances and judicial independence, as well as increasing the effectiveness of monetary and macro prudential policy.”

The review also states that the “ca” fiscal strength of the government is guided by its high government debt burden and narrow revenue base that hinders debt affordability and decreases fiscal flexibility given ongoing needs for infrastructure and social spending; and its “b” susceptibility to external vulnerability-driven event danger, as the adequacy of foreign-exchange reserves while improving, remains poor.

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