S&P upgrades Pakistan’s credit ratings

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

Standard and Poor’s (S&P) ratings’ agency has raised Pakistan’s credit rating to positive from stable but affirmed its B- rating, as the country experiences economic growth, according to Bloomberg news agency.

“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, S&P raised the country’s 2015-17 average growth projection to 4.6% from 3.8%. “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.

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.

The 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.

Published in The Express Tribune, May 6^th, 2015.