ISLAMABAD: On the basis of strengthening external liquidity position and continued efforts toward fiscal consolidation, Moody’s Investors Service, a rating agency, revised the outlook on Pakistan’s foreign currency government bond rating to positive from stable
As per the Moody’s note, net foreign reserves with the State Bank of Pakistan climbed to $11.2 billion as of 13 March 2015, from $3.2 billion at the end of January 2014. The cushion provided by foreign reserves coupled with dwindling external debt repayments to the IMF has reduced external vulnerabilities.
The government’s steady progress in achieving structural reforms under the International Monetary Fund programme is also behind the progress. It affirmed the government’s issuer rating and senior unsecured rating at Caa1 which also affirmed for US dollar Trust Certificates issued by The Second Pakistan International Sukuk Company Limited.
Pakistan has made progress towards fiscal consolidation though wide fiscal deficits and high debt levels remain a credit constraint. In FY2014, the government was able to bring the deficit down to 5.5pc of GDP (excluding grants), from 8.2pc the previous year. The government is targeting a further shrinkage in the deficit, to 4.9pc of GDP in FY2015. Although the pace of deficit reduction may be less marked than the budget forecasts suggest, we expect the authorities will continue along the path of fiscal consolidation.
