KARACHI: *In a big news on economic front, Moody’s rating agency changesPakistan’s outlook from negative to stable.*
Moody’s rating agency has changed Pakistan’s outlook to stable fromnegative. The Moody’s has kept Pakistan’s rating outlook unchanged to B-3.It further said the Pakistani economy is improving and the biggestchallenge being faced by the Pakistani economy, the current accountdeficit, is also shrinking.
Earlier, the Moody’s in a report released in September, said, “Over thenext 12-18 months, banks in Pakistan would see their credit profileschallenged by their high exposure to the country’s low-rated sovereign debtand a slowing economy.”
The report had said that the banks’ operating conditions would bedifficult, as GDP link growth slowing to 4.3% inthe fiscal year ending June 2019, down from 5.8% in 2018.
The agency also observed that Pakistan’s banks face the risk ofmacroeconomic contagion through a range of channels, including their largeholdings of government securities, which caps their credit profiles to thesovereign, and from the authorities’ weakening capacity to support thebanks in case of need.
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The report, however, had said, “On a more positive note, the banks wouldcontinue to benefit from stable customer deposits and high liquidity.”
The rating agency weighs the five largest banks in Pakistan by assets.These banks together by assets account for 50 pct of the banking systemdeposits.
