Home Technology External Pressures Continue to Impact Pakistan’s Forex Reserves: Moody’s

External Pressures Continue to Impact Pakistan’s Forex Reserves: Moody’s

0
External Pressures Continue to Impact Pakistan’s Forex Reserves: Moody’s
External Pressures Continue to Impact Pakistan’s Forex Reserves: Moody’s

Moody’s, in its latest release, stated that external pressures continue to weigh on the country’s foreign-exchange reserves, while political and government liquidity risks remain elevated in Pakistan.

The credit rating agency stated that it reviews all of Pakistan’s ratings periodically, either annually, or in the case of governments and certain EU-based supranational organizations, semi-annually.

Moody’s Investors Service, in a review of Pakistan stated that the credit profile of Pakistan (issuer rating B3) reflects the country’s “Moderate (+)” economic strength, which is underpinned by the relatively robust GDP growth potential and large scale of the economy, limited by very low per capita incomes and global competitiveness.

“Very Low (+)” institutional strength takes into account very weak scores in the Worldwide Governance Indicators. But the greater central bank autonomy has increased monetary policy effectiveness.

The government’s “Very Low (-)” fiscal strength can be attributed to its very narrow revenue base which hinders debt affordability, reduces fiscal flexibility and increases the debt burden, given ongoing infrastructure spending needs, and rising interest expense.

And “High” susceptibility to event risk driven by the heightened external vulnerability, as external pressures continue to weigh on the country’s foreign-exchange reserve adequacy, while political and government liquidity risks remain elevated.

Moody’s further states that this periodic review is unrelated to the requirement to specific calendar dates on which the EU and certain other sovereign and sub-sovereign rating actions may take place.

Moody’s conducts these periodic reviews through portfolio reviews in which they reassess the appropriateness of each outstanding rating in the context of the relevant principal methodologies, recent developments, and a comparison of the financial and operating profile to similar peers.

Moody’s has now completed the periodic review of a group of issuers that includes Pakistan and may include related ratings.

The post External Pressures Continue to Impact Pakistan’s Forex Reserves: Moody’s appeared first on .

Originally Published on ProPakistani.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.