Lahore: The US-based bond credit rating agency, Moody’s Investor Services, has notified a ‘stable outlook’ rating for Pakistan’s banking sector over the next 12-18 months – acquired by the country in the aftermath of a robust funding effort sponsored by various international financial institutions and other states, a news source reported.
The report anticipates that the government will remain
willing to support at least the systematically important banks in case of need.
However, its ability to do so will be limited by fiscal challenges which is
reflected by its B3 rating.
Moody’s Senior Vice President Constantinos Kypreos said that
Pakistan’s sovereign credit profile had improved in recent months; benefiting
the banks through their high exposure to government securities, which account
for around 40pc of their assets.
The report noted that operating environment would improve due
to ongoing infrastructure projects, development in power generation sector and
domestic security – all of which are shoring up Pakistan’s economic activity.
The agency did, however, add that economic growth would still
remain subdued although the exchange rate has stabilized since June 2019 and
markets expect the State Bank of Pakistan to lower policy rates over the next
few years.
