Moody’s Investors Service has placed Pakistan at B3 with a stable outlook and senior unsecured ratings thanks to the foreign funded infrastructural projects and macro-economic stability in the country. The China-Pakistan Economic Corridor will address critical infrastructure constraints and tree-year extended fund facility program of the International Monetary Fund has continuing effects on the macro-stability. However, the government has failed to generate new sources of income other than costly loans which it is extravagantly obtaining from various international donor agencies. The foreign exchange reserves are maintained on the crutches of foreign loans which are piling up with every passing day. Experts believe the burden of loans is increasing, trade deficit have crossed $32 billion mark and political chaos is adversely affecting the economic growth in the country. The geopolitical situation is fragile and hostile neighbours are doing everything possible to isolate Pakistan from the rest of the world. On another note, generation of indigenous financial resources should be the first priority of the government but those who matter have never thought anything on this subject at any stage. As a result, vulnerabilities of the economy are growing as full dependence on imports is closing the local industrial units at a large scale.
At a time the countries in the region are registering two digit growth rates, Pakistan hardly reached 4.5 percent growth in its gross domestic project in the fiscal year ending June 2016. However, Moody’s hopes the country will be able to maintain this level of growth rate in the coming years. According to the agency, the median rate of growth for B-rated sovereigns was just 2.7 percent in 2016. Until the country enhances its industrial surplus and agricultural production, it will be difficult to bring down the fiscal deficit to the desired level. It is yet to be seen how much the government will able to maintain fiscal deficit by banking on $6 billion IMF loan, the country is still looking for loans from various donor agencies. According to experts, the next few years are very difficult for the country as it will not only have to return the old loans, but will also have to pay the markup on fresh loans. Pakistan will have to achieve the real GDP growth of over 6 percent over the next few years to maintain fiscal discipline. As regard to CPEC, it will take time to materialize its economic benefits.
