Moody’s Investors Service raises Pakistan’s credit rating
Date
8/29/2024 8:43:32 AM
(MENAFN) Moody’s Investors Service has raised Pakistan’s credit rating, upgrading both its local and foreign currency issuer ratings, as well as its senior unsecured debt ratings, from Caa3 to Caa2. This adjustment is accompanied by a change in the country’s outlook from stable to positive.
This upgrade is a reflection of Pakistan's improving macroeconomic conditions and an enhanced government liquidity and external position. The country's default risk has diminished, bolstered by a recent staff-level agreement with the International Monetary Fund (IMF) for a USD7 billion Extended Fund Facility (EFF). This agreement is seen as a significant factor in the rating upgrade.
Since June 2023, Pakistan's foreign exchange reserves have doubled, though they still fall short of the levels required to fully address its external financing needs. The nation remains heavily dependent on timely financial support from international partners to meet its external debt obligations.
Despite these improvements, Pakistan's Caa2 rating underscores its severe debt affordability issues, which present substantial risks to debt sustainability. The country's interest payments are projected to consume about half of its government revenue in the upcoming years, highlighting ongoing challenges in managing its debt load.
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