NEW YORK (Web Desk) – Moody’s Investors Service has today (Wednesday) affirmed the Government of Pakistan’s B3 issuer and senior unsecured ratings, and maintained a stable outlook.
Pakistan’s medium-term growth outlook is strong, supported by the China-Pakistan Economic Corridor (CPEC) project to address critical infrastructure constraints, and the continuing effects of macrostability-enhancing reforms started under the International Monetary Fund (IMF)’s Extended Fund Facility (EFF) program in 2013-16.
However, the government’s debt burden is high and fiscal deficits remain relatively wide, driven by a narrow revenue base that also restricts development spending. In addition, foreign exchange reserve adequacy, albeit stronger than a few years ago, would still be vulnerable to any significant increase in imports. Domestic politics and geopolitical risk also continue to represent a significant constraint on the rating.
The decision to maintain the stable outlook on Pakistan’s B3 rating reflects broadly balanced risks related to these two sets of factors
Concurrently, Moody’s has affirmed the B3 foreign currency senior unsecured ratings for The Second Pakistan Int’l Sukuk Co. Ltd and The Third Pakistan International Sukuk Co Ltd.
Pakistan’s Ba3 local currency bond and deposit ceilings remain unchanged. The B2 foreign currency bond ceiling and the Caa1 foreign currency deposit ceiling are also unchanged. These ceilings act as a cap on the ratings that can be assigned to the obligations of other entities domiciled in the country.