Moody’s says no risk to Pakistan’s rating, aid

We don’t think IMF programme is going to be disrupted: Moody’s analyst.

KARACHI:

Pakistan does not face an immediate risk of a withdrawal of foreign aid despite international accusations that it gave shelter to Osama bin Laden, Moody’s Investors Service said on Wednesday.

Its sovereign credit rating also remained justified, at least for now, said Moody’s sovereign analyst for Pakistan Aninda Mitra. Moody’s currently rates the struggling country’s debt as B3, or “highly speculative”.

“As worrying as some of the headlines may be on the nature of relationship between Pakistan and the US, I don’t see any huge near-term impact that could affect the rating,” Mitra told Reuters on phone from Hanoi.

“There is enough unpredictability here for me to make a definitive comment as to what will happen one year from now or six months from now. But for now, we don’t think that the money is suddenly going to stop or the IMF programme is completely going to be disrupted. Nor do we see Pakistan completely walking away from this alliance,” he added.

Many US lawmakers are demanding a review of the billions of dollars in aid that Washington gives to Pakistan after US forces found and killed the world’s most-wanted man on Monday in a house near in Abbottabad.

On Wednesday, a local media report said all missions from international financial institutions, including the IMF, the World Bank and the Asian Development Bank had cancelled their visit to Pakistan on concerns that there may be a backlash from militants after the killing of bin Laden. The IMF declined to comment and no one was available for comment at the finance ministry.

But Mitra said the relationship between Pakistan and the United States was necessary for both sides. “No matter what you see in the press, arguments about the credibility of the Pakistani government, of the armed forces.... I think the co-dependency between Pakistan and the US is still very, very high,” he said.

“I think the rating is appropriately positioned to capture a lot of instability and unpredictability within the policy framework, or any political risks that could weigh on the policy framework,” he added.

Published in The Express Tribune, May 5^th, 2011.