Moody's upgrades Pakistan's credit rating amid improved economic conditions
Date
8/29/2024 8:38:29 AM
(MENAFN) Moody's Investors Service has raised Pakistan's credit ratings, upgrading its local currency, foreign currency, and senior unsecured issuer default ratings from Caa3 to Caa2. This positive adjustment is largely attributed to recent improvements in the country's macroeconomic environment, enhanced government liquidity, and a more stable position in external markets. The upgrade indicates a decreased likelihood of Pakistan defaulting on its financial obligations, particularly following a staff-level agreement with the International Monetary Fund (IMF) in July for a USD7 billion Extended Fund Facility.
Moody's highlighted that while Pakistan's foreign exchange reserves have seen a significant increase, doubling since June 2023, they still fall short of fully covering the nation's external financing needs. The agency noted that the agreement with the IMF, announced on July 12, 2024, for a 37-month program, has provided greater assurance regarding Pakistan’s external financing sources. The IMF's approval of the program is contingent upon Pakistan securing financing assurances from both development and bilateral partners, with expectations that the Executive Board will approve the program in the coming weeks.
This rating upgrade follows recent statements from Pakistan’s central bank chief, who revealed plans to secure approximately USD4 billion from commercial banks in the Middle East. The move reflects ongoing efforts to stabilize the country’s financial situation and support its economic recovery.
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