Moody's Downgrades Pakistan's Rating
Moody's has downgraded Pakistan's rating to Caa1 from B3 while outlook remains negative.
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Moody’s Investors Service (Moody’s) downgraded the Government of Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa1 from B3.
Pakistan's outlook remains unchanged and negative according to Moody's.
The decision to downgrade the ratings to Caa1 is driven by increased government liquidity and external vulnerability risks and higher debt sustainability risks, in the aftermath of devastating floods that hit the country since June 2022. The floods have exacerbated Pakistan’s liquidity and external credit weaknesses and vastly increase social spending needs, while government revenue is severely hit, Moody's statement.
Moody's also expects Pakistan’s current account deficit to widen to 3.5 to 4.5% of GDP for the next fiscal year which might partially be offset due to remittances that are likely to increase during a crisis situation like the recent floods.
While the Ministry of Finance has strongly contested 'Moody's rating' by issuing a statement that the rating is not truly reflective of Pakistan’s macroeconomic conditions.
GRAPHICS OF THE DAY
Moody's credit rating exhibit for Pakistan since October 1998
Pakistan's real GDP growth (%) forecast for FY 23 has been slashed from 4% to 2% by the World Bank and from 3% to 1% by Moody's
INSTAGRAM POSTS
Growth of Pakistan’s agricultural sector is projected to contract by 5% for the first time in two decades: World Bank — www.instagram.com
⚫ The agriculture sector’s growth increased from 3.5% in FY 21 to 4.4% in FY 22, the highest in 17 years, but is now projected to shrink to -1.1%
⚫ Estimate for the growth of Pakistan’s agriculture sector for FY 23 was around 3% before the floods and is projected to shrink to -1.1% after the floods
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SBP's forex reserves decreased by 1.3% week-on-week — www.instagram.com
⚫ The country's total foreign exchange reserves decreased to USD 13.5 billion, depicting a decrease of USD 173 million or 1.3% week-on-week mainly due to external debt and other payments
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FROM THE ARCHIVE
What can credit ratings teach us about investing in Pakistan? — macropakistani.com
Explore what credit ratings for countries represent, how they are assessed and what impact they have on Pakistan’s investment landscape. By Zain Faheem
Read more
TWEET
🇵🇰 🚗 An unusual place for cars.
What Else We’re Reading
Developing countries like Pakistan are leading the charge for compensation from rich nations, backed by new economic research (Bloomberg)
The hidden victims of Pakistan’s floods – the elderly (Al Jazeerah)
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