ISLAMABAD: Minister for Finance and Revenue Muhammad Aurangzeb has termed the upgrade in Pakistan’s rating by Fitch, an international credit rating agency, and the policy rate reduction by State Bank of Pakistan (SBP), as ‘good news’ for the national economy.
“This reflects the journey that this government initiated 4-5 months ago with full vigour to get more permanence in the macroeconomic stability,” he said while talking to media after the Fitch upgraded Pakistan’s long-term foreign currency issuer default rating (IDR) from CCC to CCC+, and the SBP Monetary Policy Committee reduced the key policy rate by 100 basis points, taking it to 19.5 per cent.
He said the last fiscal year ended on a ‘very strong’ note as both fiscal and current account deficit sides remained in the ‘very much check,’ which greatly helped in stabilizing Pakistani rupee against dollar and improving the foreign exchange reserves, with more than two-month import cover. Besides, the inflation came down from 38 per cent to 12.5 per cent.
Aurangzeb expressed the confidence that other international agencies would also upgrade Pakistan’s rating during the current fiscal year on the external financing side “especially now when the staff level agreement has been in place.”
“All macro factors looking positive and going in the right direction,” he added.
Highlighting importance of this upgrading in the rating, he said it was important “If we have to take this programme (IMF) as the last one. There has to be a road to the market, coupled with export-led growth and foreign direct investment, which heavily depend on sovereign ratings.”
Vowing to take Pakistan to the international capital markets, the finance minister said China would support Pakistani in the Panda bonds, following which “We have to get into Euro bond and get back to the US market.”
He expressed the confidence that reduction in the policy rate would encourage the industrial sector, leading to move the wheel of national economy at the faster pace.
Aurangzeb was of the view that the policy rate would further reduce with a decline in inflation during the current fiscal year.
“By grace of Allah Almighty, this trend [of improvement in macroeconomic indicators and international ratings] will continue during the current fiscal year.”
