Staff Report
ISLAMABAD: Moody’s Investors Service has downgraded the Pakistan’s government local and foreign currency credit ratings to Caa3 from Caa1 after the drop in the country’s forex reserves and rise in default risk on foreign debt repayment.
It has also lowred the rating for the senior unsecured MTN program to (P)Caa3 from (P)Caa1.
Moody’s changes outlook
However, the global rating agency has changed the outlook to stable from negative.
Pakistan’s foreign exchange reserves have shrinked to extremely low levels, far lower than needed to cover its imports requirements and external debt obligations.
Although the government is implementing some tax decisions to fulfill the conditions of the International Monetary Fund (IMF) program and a disbursement by the lending agency may help to cover the country’s immediate needs, unstable governance and heightened social risks affect Pakistan’s ability to continually implement the many policies that would secure large amounts of money and decisively reduce risks to the balance of payments.
