ISLAMABAD: Standard and Poor’s (S&P) Global Ratings, a global rating agency, on Monday affirmed Pakistan’s ‘B’ long-term and short-term sovereign credit rating.
“The outlook for the long-term ratings remains stable,” the S&P stated in its latest report. The stable outlook reflects the S&P expectations that Pakistan’s external and fiscal metrics will not worsen materially from their current levels.
“We believe the country’s economic prospects remain favourable,” it stated. S&P further expected Pakistan’s GDP to grow at an average of 5.7 percent in the period 2017-2020. Meanwhile, the government of Pakistan welcomed the annual rating report by S&P as a manifestation of soundness of economic policies. “Affirmation of Pakistan’s better economic prospects, higher and inclusive GDP growth in coming years with stable economic outlook reflects on the economic management of the government of Pakistan” the Ministry of Finance spokesperson said.
“We may raise our ratings on Pakistan if the country’s security environment settles to an extent that economic growth continues to trend higher, strengthening the country’s fiscal and external positions. Conversely, we may lower our ratings if the current infrastructure investments do not yield any positive impact on macroeconomic stability. Indications of this would include GDP growth below our forecast, or external or fiscal imbalances higher than what we expected,” the S&P stated.
The S&P has revised downward our expectation of Pakistan’s external performance due particularly to an expected surge in imports stemming from substantial infrastructure-related CPEC projects in the next two years. “In addition, we anticipate that further fiscal consolidation might be challenging, owing to lower-than-expected performance at the regional government level and the upcoming elections in June 2018. At the same time, we expect external imbalances to abate after the peak of CPEC investments,” the report said.
