After Moody's, S&P upgrades Pakistan's credit ratings

Ratings agency says positive outlook reflects expectations of Pakistan’s improved economic growth prospects

Standard and Poor’s ratings agency raised Pakistan’s credit rating to positive from stable but affirmed its B- rating, as the country experiences economic growth, according to The Bloomberg.

“The positive outlook reflects our expectations of Pakistan’s improved economic growth prospects, fiscal and external performance, and the supportive relationship of external donors over the next 12 months,” the ratings agency said.

As the IMF loan package and lower energy rates boost growth and improve finances, Standard and Poor raised the country’s 2015-2017 average growth projection to 4.6% from 3.8%.

Read: Pakistan’s economy enjoying period of optimism: report

“Risks include higher oil prices, weakness in key trading partners and violence,” the agency added.

The move comes a month after Moody’s upgraded Pakistan’s dollar bonds rating one notch from stable to positive on Wednesday on the back of the country’s improving macroeconomic indicators.

The financial ratings firm said its decision came in view of Pakistan’s strengthening foreign exchange reserves.

Read: Sovereign ratings: Pak-China economic corridor a ‘credit positive’, says Moody’s

Pakistan has been trying to boost its flagging economy since Prime Minister Nawaz Sharif was elected nearly two years ago.

“Moody’s Investors Service has revised the outlook on Pakistan’s foreign currency government bond rating to positive from stable,” the company said in a statement.

Last month, Pakistan and China signed agreement worth $46 billion for roads, ports and power plants.

Read: Pak-China corridor: Task force formed to monitor projects

The planned investment, 28 times more than the foreign direct investment Pakistan received in year ended June, will increase investment activity and help ease the country’s growing energy shortage, Moody’s said in a report on Monday.

S&P forecasts Pakistan will report an average budget deficit of 3.5% of gross domestic product during 2016-2019 with interest costs falling to about 25.5% of revenues from an estimated 30.6% in 2015. Further, inflation is expected to average 4.8% over 2015-2019.