Moody’s Investors Servicelinkperiodicallyreleases reviews of countries around the globe highlighting their creditratings and other financial research in light of recent developments. Inits latest review of Pakistanlinkon 18 December 2020, Moody’s has stated that the credit profile of Pakistani.e. “B3” reflects the country’s “baa2” economic strength.
They go on to say that the country’s current economic strength “baa2” issupported by the robust long-term GDP growth potential and large scale ofthe economy, balanced against low per capita incomes and globalcompetitiveness.
Moody’s says, “*its ‘b2’ institutions and governance strength that balancesstill weak executive institutions and fiscal policy credibility andeffectiveness against a lengthening track record of effective checks andbalances and judicial independence, as well as increasing monetary andmacroprudential policy effectiveness*.”
The review also says that the government’s “ca” fiscal strength driven byits high government debt burden and narrow revenue base which hinders debtaffordability and reduces fiscal flexibility given ongoing infrastructureand social spending needs; and its “b” susceptibility to event risk drivenby the external vulnerability, as foreign-exchange reserve adequacy, thoughimproving, remains low.
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