- Pakistan’s foreign-exchange reserves steadily increased: Moody’s.
- Ratings agency says country’s external vulnerabilities have eased.
- PM Shehbaz hails economic team for improving country’s outlook.
Moody’s Ratings on Monday upgraded Pakistan’s sovereign credit rating to B3 from Caa1, citing the country’s stronger external position, better fiscal metrics and lower domestic financing costs.
The global ratings agency maintained Pakistan’s outlook at “stable”, Bloomberg reported.
Pakistan’s external vulnerabilities have eased as foreign-exchange reserves steadily increased, supported by sustained macroeconomic stabilisation, said Moody’s.
“Lower domestic financing costs amid monetary easing and an improved fiscal position” have driven a “material improvement” in Pakistan’s debt affordability, Moody’s said.
The country’s strengthening credit profile is also showing “greater resilience to external shocks than in previous cycles,” including the ongoing Middle East conflict, it added.
The development comes as the country rebuilds its foreign-exchange reserves and pushes ahead with economic reforms after years of financial stress.
The rating action was announced after the close of stock market in the country today.
Most dollar bonds gained with the note maturing in 2051 up by the most since August 20, according to data compiled by Bloomberg.
S&P Global Ratings also upgraded Pakistan’s sovereign credit rating in July, citing improving economic and financial conditions.
Even with the upgrade, Pakistan’s debt remains in speculative-grade territory, though its risk assessment has improved from very high to high. Argentina, Nigeria and Kyrgyzstan have similarly rated sovereign debt, it added
Moody’s said Pakistan’s credit profile “remains vulnerable” because of fragile external finances, weak debt affordability and a relatively narrow revenue base.
‘Global confidence’
Reacting to the development, Prime Minister Shehbaz Sharif has welcomed Moody’s upgrade of Pakistan’s sovereign credit rating, praising the government’s economic team for its efforts to improve the country’s economic outlook.
In a statement, the premier commended the economic efforts of Deputy Prime Minister (DPM) and Foreign Minister Ishaq Dar and Chief of Defence Forces (CDF) and Chief of the Army Staff Field Marshal Asim Munir.
He said that the improvement in Pakistan’s credit rating reflects global confidence in the government’s economic policies and reforms.
The PM welcomed the recognition by international financial institutions and rating agencies of the improvement in Pakistan’s economic situation, saying the country’s economy was moving towards stability.
The premier said that the government had taken effective measures to stabilise the economy and improve the external sector.
“Global confidence in Pakistan is increasing as a result of continued efforts and reforms,” he said and vowed to accelerate reforms to put the economy on a sustainable footing and make Pakistan strong, self-reliant and sustainable.
In April, Pakistan sold a global bond in a private placement, returning to international debt markets after more than four years.
A month later, it sold its first yuan-denominated notes in China’s onshore market in its cheapest foreign-currency bond offering.
The country’s foreign-exchange reserves have risen to $17.1 billion, according to latest data.
