Pakistan’s economy needs emergency measures: Moody’s

Pakistan’s economy needs emergency measures: Moody’s

KARACHI: As Pakistan’s trade deficit continue to swell, international rating agency Moody’s has called up for emergency measures to curtail increasing import bill.

Moody’s extols State Bank of Pakistan’s (SBP) measures of imposing 100pc cash margin on various consumer items but fears an increase in illegal movement of these items as result of this measure. 

Moody’s terms imposition of 100pc cash margin on various consumer items as ‘extraordinary measures’.

Report published by international rating agency has forecasted widening of current trade deficit due to rise in oil price and alarming increase in Pakistan’s imports.

Though China-Pakistan Economic Corridor will have positive impact on upward trajectory of economic indicators but CPEC-linked imports of heavy machinery will continue to stretch gap between imports and exports.

According to report, Pakistan is offsetting impact of an increase in capital goods’ imports under the (CPEC) by imposing 100 per cent cash margin on a number of items.

Moody’s hints at possible borrowing of loans by Nawaz regime for payment of import bills. Rating agency has warned that borrowing loans will upsurge payments in terms of loans and interests.

A recent report of central bank narrated account deficit has soared by 90pc to $4.72 billion in seven months of ongoing fiscal year.

“How Pakistani policymakers choose to handle such external balance of payment pressures related to the CPEC will affect our assessment of the sovereign’s credit quality,” said the report.

However, $50 billion CPEC-linked investment will help in vanquishing load shedding. CPEC will not only accelerate economic activities but will also bring foreign direct investment (FDI).