Islamabad: Moody’s Investors Services, a renowned global credit rating agency, has declared Pakistan’s economic outlook to be ‘stable’; reaffirming the country’s rating of B3 on Monday, according to news sources.
This revision in the country’s economic rating is based on Moody’s predictions. According to the agency, Pakistan’s balance of payment dynamics is expected to improve in the aftermath of the policy adjustments and currency flexibility. These developments are expected to reduce external vulnerability despite the fact that foreign exchange reserve buffers are still low and will take time to regrow.
The rating agency had downgraded Pakistan’s ratings in June 2018 to ‘negative’ and cited heightened external vulnerability risk owing to the dwindling foreign exchange reserves.
Moody’s associated this improvement with the ongoing fiscal reforms backed by the International Monetary Fund (IMF) programme, as it is likely to mitigate risks related to debt sustainability and government liquidity.
This affirmation is a reflection of the country’s large economy and strong long-term growth potential which is currently being strengthened by the institutional improvements.
The Moody’s service reported that the credit strengths are balanced against structural constraints to the economic and export competitiveness, national fiscal strength, government’s low-revenue generation capacity, and political risks.
Meanwhile, the Ministry of Finance has welcomed the upgrade and linked it to the success of the government’s economic policies.
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