The credit profile of Pakistan (issuer rating B3) reflects the country’s“baa2” economic strength, which is underpinned by the robust long-term GDPgrowth potential and large scale of the economy, balanced against low percapita incomes and global competitiveness, says Moody’s Investors Service(Moody’s).

Moody’s has completed the periodic review of a group of issuers thatincludes Pakistan and may include related ratings through a discussion heldon 17 May 2021. The review did not involve a rating committee, and thispublication does not announce a credit rating action and is not anindication of whether or not a credit rating action is likely in the nearfuture; credit ratings and/or outlook status cannot be changed in aportfolio review and hence are not impacted by this announcement.

Moody’s reviews all of its ratings periodically in accordance withregulations — either annually or, in the case of governments and certainEU-based supranational organizations, semi-annually. This periodic reviewis unrelated to the requirement to specific calendar dates on which EU andcertain other sovereign and sub-sovereign rating actions may take place.

Moody’s conducts these periodic reviews through portfolio reviews in whichit reassesses the appropriateness of each outstanding rating in the contextof the relevant principal methodology(ies), recent developments, and acomparison of the financial and operating profile to similarly rated peers.

Moody’s stated that the credit profile of Pakistan (issuer rating B3)reflects the country’s “baa2” economic strength, which is underpinned bythe robust long-term GDP growth potential and large scale of the economy,balanced against low per capita incomes and global competitiveness; its“b2” institutions and governance strength that balances still weakexecutive institutions and fiscal policy credibility and effectivenessagainst a lengthening track record of effective checks and balances andjudicial independence, as well as increasing monetary and macroprudentialpolicy effectiveness; the government’s “ca” fiscal strength driven by itshigh 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 external vulnerability, as foreign-exchange reserve adequacy, thoughimproving, remains low compared to peers.

This document summarizes Moody’s view as of the publication date and willnot be updated until the next periodic review announcement, which willincorporate material changes in credit circumstances (if any) during theintervening period, it added.

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