Moody's Service confirmed that Pakistan’s B3 credit rating with stable outlook and capable of paying back its foreign debt, after conducting review for downgrade, agency said in a statement.

The confirmation of the government's sound fiscal and financial policies in these times of unprecedented hardship and uncertainty, particularly in the wake of Covid-19 outbreak. Moody’s had initiated the review for downgrade this year on fear that Pakistan might default on paying off debt owed to the global private sector creditors due to its increasing financial need to support people and businesses under the lock down situations.

 

“However, a number of elements suggest that the probability of broad-ranging private sector involvement has diminished” the agency said in its report.

 

Moody's said it had confirmed the Pakistani government’s 'B3' local and foreign currency issuer and senior unsecured debt ratings with a stable position and outlook.

 

 

The statement made it clear that the agency is carefully watching the actions of the government of Pakistan in its struggle to seek debt relief, with particular highlighting on whether or not the government will ask private creditors for debt relief as well at some point in the future to consider

 

Pakistan’s Ba3 local currency bond and deposit ceilings remain unchanged. The B2 foreign currency bond ceiling and the Caa1 foreign currency deposit ceiling were also held steady.

 

“The stable and steady outlook reflects Moody’s view that the pressures Pakistan faces in the wake of the coronavirus COVID-19 shock and prospects for its credit metrics in general are likely to remain consistent with the current rating level” the report said.

 

Steadiness in the balance of payments will allow the government to keep monetary policy accommodative as inflation declines. This keeps a top on borrowing costs for the government domestically and lends further support to debt affordability and capabilities on its payments.

This review report is very positive for Pakistan's future growth and people who want to invest and plan business in the country

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