Improving inflows: Moody's changes Pakistan's rating outlook to 'stable'

Pakistan’s rating has been affirmed at 'Caa1'. Dar welcomes Moody's decision.

Global financial rating agency Moody's Investors Service has revised the outlook on Pakistan's foreign currency government bond rating to stable from negative.

Pakistan’s rating has been affirmed at 'Caa1'. Concurrently, Moody's has affirmed the government's issuer rating and senior unsecured rating at Caa1.

According to the statement issued by the financial agency on Monday, the decision to revise the outlook on Pakistan’s foreign currency rating was taken primarily based on the stabilisation in the country's external liquidity position.

The body noted that Pakistan’s current account deficit is modest at estimated 1.0 per cent of GDP for the for the fiscal year ending June 2014, while financial inflows have also increased due to a $2 billion Eurobond sale earlier this year, privatisation proceeds. Importantly, repayments to the IMF from the previously suspended program are tapering off, while disbursements from the ongoing program continue.

As a result of Eurobond sale, proceeds from privatisation along with disbursements from IMF, Pakistan’s foreign reserves have risen from a low of $2.9 billion in early February 2014 to $9.0 billion by the end of June 2014.

Dar welcomes Moody’s decision

The Minister for Finance Ishaq Dar appreciated and welcomed the revision of Pakistan’s foreign currency government bonds rating from negative to stable by Moody’s Investors Service.

“As a result of hard work, commitment and financial discipline introduced by the government that the world has changed its outlook towards Pakistan,” said Dar.

He said that with the over subscription of Euro Bond, successful auction of 3G/4G Spectrum, divestment of GOP shares, tax and energy sector reforms and improved economic indicators, the international confidence in Pakistan has increased to a level where we can build stronger economic base.