KARACHI: Credit rating agency Moody’s kept Pakistan’s B3 rating with a stable outlook in a recent analysis, saying strong growth performance, fiscal deficit reduction and improved inflation dynamics underpin the rating.
At the same time, credit challenges include a relatively high general government debt burden, weak physical and social infrastructure, a fragile external payments position, and high political risk, the rating agency said. In particular, the government’s very narrow revenue base weighs on debt affordability. Moreover, exports and remittance inflows have slowed and capital goods imports have risen, resulting in renewed pressure on the external account.
Moody’s annual credit analysis method of Pakistan includes economic strength, which is assessed as “moderate”, institutional strength “very low (+)”, fiscal strength “very low (-)” and susceptibility to event risk “high”.
The rating agency notes that prospects for growth have improved following Pakistan’s successful completion of its three-year Extended Fund Facility (EFF) program with the International Monetary Fund (IMF) in September 2016 and the launch of the China-Pakistan Economic Corridor (CPEC) project in 2015.