NEW YORK – Moody’s Investors Services has downgraded Pakistan’s outlook from ‘stable’ to ‘negative’, in wake of heightened external vulnerability risk and uncertainty to secure additional external financing to meet its needs, the agency announced on Thursday.
“Pakistan’s weak institutions and governance strength add uncertainty around the future direction of macroeconomic policy, including whether the country will complete the current IMF Extended Fund Facility (EFF) programme and maintain a credible policy path that supports further financing,” said Moody’s in an official statement.
The rating agency however affirmed B3 local and foreign currency issuer and senior unsecured debt ratings as well as the (P)B3 senior unsecured medium-term note (MTN) programme rating of the cash strapped country.
Moody’s maintained that Pakistan would conclude its seventh review under the IMF EFF programme by the second half of this calendar year and would maintain its engagement with the Fund, leading to additional financing from other bilateral and multilateral partners.
The US-based company maintained that it expects Islamabad’s current account to remain under significant pressure, on the back of elevated global commodity prices through 2022 and 2023.
It projects the current account deficit to come in at 4.5-5% of GDP for the current year, slightly wider than expected.
The South Asian country is currently in talks with the global lender on the seventh review of the EFF programme.
Govt decides to complete term amid deepening political, economic crisis
The country of nearly 221 million is in financial crisis amid political upheaval in the past two months. Officials raised the local fuel prices last week under the stern condition to resume the IMF program.
Pakistan hopes for revival of 6 billion IMF bailout package next month
