Moody’s downgrades Pakistan’s rating outlook to negative

[Arham_PakFan]

Moody’s Investors Service has downgraded the outlook on Pakistan’s rating to negative from stable and affirmed the ‘B3’ local and foreign currency long-term issuer and senior unsecured debt ratings.

The decision to change the outlook to negative is driven by Pakistan’s heightened external vulnerability risk, added the ratings agency.

“Foreign exchange reserves have fallen to low levels and, absent significant capital inflows, will not be replenished over the next 12-18 months,” stated Moody’s. “Low reserve adequacy threatens continued access to external financing at moderate costs, in turn potentially raising government liquidity risks.”

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A rating is Moody’s opinion of the credit quality of individual obligations or of an issuer’s general creditworthiness. Investors use ratings to help price the credit risk of fixed-income securities they may buy or sell.

The development comes as a blow to Pakistan where economic managers are facing a headache in taming a bulging import bill that is eating away at the country’s foreign exchange reserves. From almost $19.46 billion held by the State Bank of Pakistan (SBP) in October 2016, foreign exchange reserves dropped 48.3% to $10.07 billion on June 8, 2018. The decline comes at a time when the import bill peaked to a record high of $5.8 billion in May, increasing the already swelling trade and current account deficits.

The fragile external account position has already forced the SBP’s hand to let go off the Pakistani rupee that has now weakened over 15% in the last seven months after three separate rounds of devaluation.

While the previous government seemed to have put all its eggs in the China-Pakistan Economic Corridor (CPEC) – the multi-billion dollar project encompassing infrastructure and energy sector – its debt affordability due to low tax revenue and failure to attract sufficient capital has made it a particularly vulnerable economy.

World Bank sees Pakistan’s economy slowing next year

Moody’s acknowledged Pakistan’s robust growth potential, but pointed out that these strengths balance the country’s fragile external payments position as well as the “very weak” government debt affordability.

“The decision to affirm the B3 rating reflects Pakistan’s robust growth potential, supported by ongoing improvements in energy supply and physical infrastructure, which are likely to raise economic competitiveness over time.

“These credit strengths balance Pakistan’s fragile external payments position and very weak government debt affordability owing to low revenue generation capacity.”

The ratings agency also expects Pakistan’s external account to remain under significant pressure. “The coverage by foreign exchange reserves of imports will likely fall further from already low levels, while coverage of external debt payments due will weaken from currently adequate levels.

“In turn, higher foreign currency borrowing needs, in combination with the low levels of foreign exchange buffers, risks weighing on the ability of the government to access external financing at moderate costs.”

Shell plans to invest $15-16m to meet growing demand

Continued growth in imports – driven by demand for capital goods under CPEC, higher fuel prices and robust household consumption – will prevent a significant narrowing of the current account deficit. Although exports have picked up since the start of 2018, growing around 10-15% year-on-year in US dollar terms, they only amount to half the level of goods imports.

“Unless capital inflows increase significantly, Moody’s does not expect official foreign exchange reserves to replenish from their current low levels. Under baseline projection, the import cover of reserves will likely fall to around 1.7-1.8 months over the next fiscal year, below the adequacy level of three months generally recommended by the International Monetary Fund.”

Tax amnesty scheme

Moody’s said it expects the government’s tax amnesty scheme, which expires in June 2018, to have a modest impact of around $2-3 billion in foreign exchange inflows.

“Second, the coverage by foreign exchange reserves of external debt payments due is weakening, pointing to further external vulnerability risks. With a significant rise in equity inflows unlikely, Moody’s expects Pakistan’s external financing gap to be met by increased foreign currency borrowing, mainly by the government.

“While policymakers have started to respond to the external pressures, the policy tools available are politically challenging and would likely have a negative economic impact. Moody’s expects these measures to contribute to somewhat lower growth, at 5.2% on average over the next two fiscal years, from an expected 5.8% in FY18, and higher inflation at 7% in FY19, from around 4% in FY18. Further currency depreciation, higher policy rates, fiscal tightening, and/or higher regulatory duties would likely weigh further on growth and raise inflation above Moody’s current projections.

“Like many of its South Asian neighbours, Pakistan is also vulnerable to climate change risk. The magnitude and dispersion of seasonal monsoon rainfall continues to influence agricultural sector growth and rural household consumption. As a result, both droughts and floods can create economic and social costs for the sovereign.”

Moody’s said the negative outlook signals that a rating upgrade is unlikely. The outlook would likely be changed to stable if external vulnerability risks decreased materially and durably, including through policy adjustments that strengthen the external payments position. A resumption of fiscal consolidation pointing to a meaningful reduction in the debt burden would also be credit positive, added Moody’s.

https://tribune.com.pk/story/1738734/1-moodys-downgrades-pakistans-rating-outlook-negative/

 

[Mr.Q]

OK so this is why the KSE 100 crashed.
Not great news for Pakistan. Future of your economy now depends on the policies of the next Government.

 

[Mamoon]

Nothing to worry, only a matter of time before Imran comes into power.

 

[Bewal Express]

Nothing to worry, only a matter of time before Imran comes into power.

So no word how we got here but like all Nooras you want IK to solve the problems that you and crooks have created over decades.

 

[Mamoon]

So no word how we got here but like all Nooras you want IK to solve the problems that you and crooks have created over decades.

We are on our way out sir, the future is bright. Watch Imran Khan, Amir Liaquat, Sheikh Rasheed, Firdous Awan, Jahangir Tareen and Shah Mehmood Qureshi take this country to heights it has never scaled before.

 

[Bewal Express]

We are on our way out sir, the future is bright. Watch Imran Khan, Amir Liaquat, Sheikh Rasheed, Firdous Awan, Jahangir Tareen and Shah Mehmood Qureshi take this country to heights it has never scaled before.

Lets see, but at least we wont have people stealing 400 crore from clean water schemes and their supporters dont have the courage to condemn them for their blatant theft. IK can never be worse than these crooks, and that is what pains you.

 

[Asim_khan]

We are on our way out sir, the future is bright. Watch Imran Khan, Amir Liaquat, Sheikh Rasheed, Firdous Awan, Jahangir Tareen and Shah Mehmood Qureshi take this country to heights it has never scaled before.

I like how you missed out Asad Umar

 

[Slog]

We are on our way out sir, the future is bright. Watch Imran Khan, Amir Liaquat, Sheikh Rasheed, Firdous Awan, Jahangir Tareen and Shah Mehmood Qureshi take this country to heights it has never scaled before.

They will be better than the crap we have been served past five years

That's fact

 

[Napa]

OK so this is why the KSE 100 crashed.
Not great news for Pakistan. Future of your economy now depends on the policies of the next Government.

Pakistan's civilian government has only a limited impact on the economy. As long as the Pakistani Army continues its domination of the economy and nurtures jihadi groups as "assets" against India, modern industries will not develop in Pakistan and its biggest exports will remain soccer balls and mangoes.

Imran doesn't show any signs of understanding of how modern economies work and shows every sign of wanting to maintain the Army's dominance, so things will only get worse with him in power.

While corruption by politicians is a problem, a far bigger problem for Pakistan is that entrepreneurs do not have a secure environment in which to invest and create wealth, and foreign investors do not want to invest in a country teeming with jihadis.

Many countries have experienced rapid economic development with the government skimming off 10% or even more. It is great if the government is honest, but that is not the real problem for Pakistan.

 

[venomousx]

Each day i wake up to such depressing news. Someone is putting us on a grey list. Someone's changing our outlook to negative. Wth is going on?!

 

[Mr.Q]

Pakistan's civilian government has only a limited impact on the economy. As long as the Pakistani Army continues its domination of the economy and nurtures jihadi groups as "assets" against India, modern industries will not develop in Pakistan and its biggest exports will remain soccer balls and mangoes.

Imran doesn't show any signs of understanding of how modern economies work and shows every sign of wanting to maintain the Army's dominance, so things will only get worse with him in power.

While corruption by politicians is a problem, a far bigger problem for Pakistan is that entrepreneurs do not have a secure environment in which to invest and create wealth, and foreign investors do not want to invest in a country teeming with jihadis.

Many countries have experienced rapid economic development with the government skimming off 10% or even more. It is great if the government is honest, but that is not the real problem for Pakistan.

Great post man. We’re outsiders, yet we can see all these problems in their setup and understand the gravity of the situation. Most Pakistanis here seem to be in a different world. I don’t know if it’s their false pride or ignorance, but they refuse to see these issues. Most of them are living in other countries and don’t plan to live in Pakistan so they’re not affected by any of this I guess! Some of them believe that Imran Khan will solve everything. Let’s hope he does but even the other day a friend of mine was saying he talks and acts like a dictator already.

 

[Greenstorm]

Great post man. We’re outsiders, yet we can see all these problems in their setup and understand the gravity of the situation. Most Pakistanis here seem to be in a different world. I don’t know if it’s their false pride or ignorance, but they refuse to see these issues. Most of them are living in other countries and don’t plan to live in Pakistan so they’re not affected by any of this I guess! Some of them believe that Imran Khan will solve everything. Let’s hope he does but even the other day a friend of mine was saying he talks and acts like a dictator already.

Ah yes, few Indians who have never been to Pakistan are so intelligent that they can see all our faults and we folks are so ignorant and dumb that we do not know what is good for us. Your concern is highly appreciated.

 

[slipcatch]

Pakistan's civilian government has only a limited impact on the economy. As long as the Pakistani Army continues its domination of the economy and nurtures jihadi groups as "assets" against India, modern industries will not develop in Pakistan and its biggest exports will remain soccer balls and mangoes.

Imran doesn't show any signs of understanding of how modern economies work and shows every sign of wanting to maintain the Army's dominance, so things will only get worse with him in power.

While corruption by politicians is a problem, a far bigger problem for Pakistan is that entrepreneurs do not have a secure environment in which to invest and create wealth, and foreign investors do not want to invest in a country teeming with jihadis.

Many countries have experienced rapid economic development with the government skimming off 10% or even more. It is great if the government is honest, but that is not the real problem for Pakistan.

You come up with some of the most repeated delusional explanation of Pakistan's issue. And always try hard to connect everything with Pak Army and India.

I like your effort tho.

 

[slipcatch]

Great post man. We’re outsiders, yet we can see all these problems in their setup and understand the gravity of the situation. Most Pakistanis here seem to be in a different world. I don’t know if it’s their false pride or ignorance, but they refuse to see these issues. Most of them are living in other countries and don’t plan to live in Pakistan so they’re not affected by any of this I guess! Some of them believe that Imran Khan will solve everything. Let’s hope he does but even the other day a friend of mine was saying he talks and acts like a dictator already.

Ironic.

I thought you were calling his supporters delusional.

 

[Mr.Q]

Ah yes, few Indians who have never been to Pakistan are so intelligent that they can see all our faults and we folks are so ignorant and dumb that we do not know what is good for us. Your concern is highly appreciated.

Ironic.

I thought you were calling his supporters.

This thread is about the state of your economy. You don’t have to visit a country to know the state of its economy and in Pakistan’s case, one doesn’t have to be an expert to know how the absence of domestic businesses is leading to exploitation by foreign companies and fund houses. Things aren’t organised and there’s no accountability. There are numerous issues.

I didn’t call anyone dumb. I’m not criticising the ordinary people. But I’m surprised by the lack of reaction. It’s as if people are happy with the current rate of progress. Many of you guys are proud of your army’s dominance in your society and the justifications given are ridiculous tbh. Almost all of you guys here are well educated and have good exposure to the modern world.

I was one of those guys who thought Imran Khan would be a great leader for Pakistan and that he’ll bring change. I’m not so sure about that now although he might be the best option you’ve got for now.

Anyways, your country your business. Sorry if I hurt anyone’s feelings.

 

[Pakpak]

Great post man. We’re outsiders, yet we can see all these problems in their setup and understand the gravity of the situation. Most Pakistanis here seem to be in a different world. I don’t know if it’s their false pride or ignorance, but they refuse to see these issues. Most of them are living in other countries and don’t plan to live in Pakistan so they’re not affected by any of this I guess! Some of them believe that Imran Khan will solve everything. Let’s hope he does but even the other day a friend of mine was saying he talks and acts like a dictator already.

Cut the outsider crap. Indians only talk here agendas which is blatantly obvious. Even people like me who are massively against army's meddling can see it obviously.

You're a good poster, stay like that instead of this useless trolling.

 

[slipcatch]

This thread is about the state of your economy. You don’t have to visit a country to know the state of its economy and in Pakistan’s case, one doesn’t have to be an expert to know how the absence of domestic businesses is leading to exploitation by foreign companies and fund houses. Things aren’t organised and there’s no accountability. There are numerous issues.

I didn’t call anyone dumb. I’m not criticising the ordinary people. But I’m surprised by the lack of reaction. It’s as if people are happy with the current rate of progress. Many of you guys are proud of your army’s dominance in your society and the justifications given are ridiculous tbh. Almost all of you guys here are well educated and have good exposure to the modern world.

I was one of those guys who thought Imran Khan would be a great leader for Pakistan and that he’ll bring change. I’m not so sure about that now although he might be the best option you’ve got for now.

Anyways, your country your business. Sorry if I hurt anyone’s feelings.

What was the reaction you were looking for to satisfy your concern toward Pakistan?

You are confusing, Army is criticized regularly in media, print and by ordinary people, something that India media purposely ignore it for the obvious reason. But the difference is that people of Pakistan also understand the important role Army has to play to protect Pakistan.

May be the lack of reaction is due to your lack of looking for reaction.

 

[Mr.Q]

Cut the outsider crap. Indians only talk here agendas which is blatantly obvious. Even people like me who are massively against army's meddling can see it obviously.

You're a good poster, stay like that instead of this useless trolling.

I don’t have any agendas. I usually respond only to topics involving India.

Honestly, I was only expressing my concern for your economy in this particular thread. I don’t think [MENTION=142162]Napa[/MENTION] had other intentions either.

 

[Mr.Q]

What was the reaction you were looking for to satisfy your concern toward Pakistan?

You are confusing, Army is criticized regularly in media, print and by ordinary people, something that India media purposely ignore it for the obvious reason. But the difference is that people of Pakistan also understand the important role Army has to play to protect Pakistan.

May be the lack of reaction is due to your lack of looking for reaction.

I obviously don’t follow Pak media that closely. But what I have noticed is that things haven’t changed much there. Btw, I was talking about the reaction to the state of the economy in general. Army is only one of the factors that contribute to it. Anyways not interested in discussing this anymore as you guys think I’m trolling.

 

[Yossarian]

Ah yes, few Indians who have never been to Pakistan are so intelligent that they can see all our faults and we folks are so ignorant and dumb that we do not know what is good for us. Your concern is highly appreciated.

I was talking to a distant cousin in Pakistan via what54pp video call. He was sitting in a mango orchard on his farm, which is located a couple of miles from the nearest village, which in turn is approx 50 miles from the nearest town. And his cellphone signal was such that the sound and video image was crystal clear.

Now compare that with where I live in the UK. My house is located in a small village on the outskirts of a small town in England. The cellphone signal in our area is so bad that my mobile phone operator has provided me with a signal booster that connects to my (fibre) broadband router, and all the cell phones in the house automatically switch to the booster when in the house to make/receive phone calls and data.
ie In the rich industrialised West, I can't even get a decent phone signal in many parts of towns and cities, whilst a 3rd world country has a modern telecom system that appears to be much superior.

According to my cousin in Pakistan, virtually everyone in most households, even poor households, has a mobile phone. It costs as little as 14 Pakistan rupees (around 9 pence UK, or 12 cents USA) for 250 minutes calling allowance. And not much more for unlimited data usage for 24 hours. The 250 mobile minutes includes calls to the UK from Pakistan.
Now compare that to the cost of monthly calling/data plans, or pay-as-you-go calling plans, or calling rates from landlines or mobile phones, in the UK or USA.

My cousin had a shock when I told him that I'd just bought a medium sized watermelon for £4 (approx 600 Pak rupees), along with a box of 6 mangoes for £7.50 (or just under 200 Pak rupees per mango).

The point I'm trying to make is that 'being a more (or less) advanced country' is a relative term. Looking at another country from one's own perspective whilst sitting in one's own country is very misleading.

 

[saeed5646]

I was talking to a distant cousin in Pakistan via what54pp video call. He was sitting in a mango orchard on his farm, which is located a couple of miles from the nearest village, which in turn is approx 50 miles from the nearest town. And his cellphone signal was such that the sound and video image was crystal clear.

Now compare that with where I live in the UK. My house is located in a small village on the outskirts of a small town in England. The cellphone signal in our area is so bad that my mobile phone operator has provided me with a signal booster that connects to my (fibre) broadband router, and all the cell phones in the house automatically switch to the booster when in the house to make/receive phone calls and data.
ie In the rich industrialised West, I can't even get a decent phone signal in many parts of towns and cities, whilst a 3rd world country has a modern telecom system that appears to be much superior.

According to my cousin in Pakistan, virtually everyone in most households, even poor households, has a mobile phone. It costs as little as 14 Pakistan rupees (around 9 pence UK, or 12 cents USA) for 250 minutes calling allowance. And not much more for unlimited data usage for 24 hours. The 250 mobile minutes includes calls to the UK from Pakistan.
Now compare that to the cost of monthly calling/data plans, or pay-as-you-go calling plans, or calling rates from landlines or mobile phones, in the UK or USA.

My cousin had a shock when I told him that I'd just bought a medium sized watermelon for £4 (approx 600 Pak rupees), along with a box of 6 mangoes for £7.50 (or just under 200 Pak rupees per mango).

The point I'm trying to make is that 'being a more (or less) advanced country' is a relative term. Looking at another country from one's own perspective whilst sitting in one's own country is very misleading.

Great post bro

 

[DeadBall]

I was talking to a distant cousin in Pakistan via what54pp video call. He was sitting in a mango orchard on his farm, which is located a couple of miles from the nearest village, which in turn is approx 50 miles from the nearest town. And his cellphone signal was such that the sound and video image was crystal clear.

Now compare that with where I live in the UK. My house is located in a small village on the outskirts of a small town in England. The cellphone signal in our area is so bad that my mobile phone operator has provided me with a signal booster that connects to my (fibre) broadband router, and all the cell phones in the house automatically switch to the booster when in the house to make/receive phone calls and data.
ie In the rich industrialised West, I can't even get a decent phone signal in many parts of towns and cities, whilst a 3rd world country has a modern telecom system that appears to be much superior.

According to my cousin in Pakistan, virtually everyone in most households, even poor households, has a mobile phone. It costs as little as 14 Pakistan rupees (around 9 pence UK, or 12 cents USA) for 250 minutes calling allowance. And not much more for unlimited data usage for 24 hours. The 250 mobile minutes includes calls to the UK from Pakistan.
Now compare that to the cost of monthly calling/data plans, or pay-as-you-go calling plans, or calling rates from landlines or mobile phones, in the UK or USA.

My cousin had a shock when I told him that I'd just bought a medium sized watermelon for £4 (approx 600 Pak rupees), along with a box of 6 mangoes for £7.50 (or just under 200 Pak rupees per mango).

The point I'm trying to make is that 'being a more (or less) advanced country' is a relative term. Looking at another country from one's own perspective whilst sitting in one's own country is very misleading.

It's even worse here in Germany, something that I had not expected at all. It's all about binding you to a useless minimum 2 year contract with the worst connection and service here.

 

[Greenstorm]

I was talking to a distant cousin in Pakistan via what54pp video call. He was sitting in a mango orchard on his farm, which is located a couple of miles from the nearest village, which in turn is approx 50 miles from the nearest town. And his cellphone signal was such that the sound and video image was crystal clear.

Now compare that with where I live in the UK. My house is located in a small village on the outskirts of a small town in England. The cellphone signal in our area is so bad that my mobile phone operator has provided me with a signal booster that connects to my (fibre) broadband router, and all the cell phones in the house automatically switch to the booster when in the house to make/receive phone calls and data.
ie In the rich industrialised West, I can't even get a decent phone signal in many parts of towns and cities, whilst a 3rd world country has a modern telecom system that appears to be much superior.

According to my cousin in Pakistan, virtually everyone in most households, even poor households, has a mobile phone. It costs as little as 14 Pakistan rupees (around 9 pence UK, or 12 cents USA) for 250 minutes calling allowance. And not much more for unlimited data usage for 24 hours. The 250 mobile minutes includes calls to the UK from Pakistan.
Now compare that to the cost of monthly calling/data plans, or pay-as-you-go calling plans, or calling rates from landlines or mobile phones, in the UK or USA.

My cousin had a shock when I told him that I'd just bought a medium sized watermelon for £4 (approx 600 Pak rupees), along with a box of 6 mangoes for £7.50 (or just under 200 Pak rupees per mango).

The point I'm trying to make is that 'being a more (or less) advanced country' is a relative term. Looking at another country from one's own perspective whilst sitting in one's own country is very misleading.

Exactly. No matter how much of an expert one is in his field and how much he has read about a particular country, he will never be able to draw an accurate picture of reality without experiencing it first hand specially if you are getting your information through biased sources which is very common these days.

Many people are missing the bigger picture here. Pakistan is heading in the right direction. Military has managed to keep the country intact under tough and challenging circumstances. Now it is slowly losing its control and grip because of the emergence of judiciary and media. More people are getting awareness about their rights, corruption is seen as an issue, performance of rulers is being discussed before elections. These things did not used to happen before. Things will take time but we are on the right track. A clean, competent and an honest elected leader at the top will only accelerate this process.

 

[Yossarian]

It's even worse here in Germany, something that I had not expected at all. It's all about binding you to a useless minimum 2 year contract with the worst connection and service here.

And you're talking about the richest and most advanced country in Europe. And yet a poor 3rd world country has what appears on the surface as being a much more modern and advanced, and certainly vastly cheaper (for a consumer) mobile phone system than it's much wealthier Western counterpart.

 

[DeadBall]

And you're talking about the richest and most advanced country in Europe. And yet a poor 3rd world country has what appears on the surface as being a much more modern and advanced, and certainly vastly cheaper (for a consumer) mobile phone system than it's much wealthier Western counterpart.

Think it is mostly the German consumers not rising up as one and questioning this blatant lies these major companies like 02, Vodafone, 1 & 1 etc tell, the speeds and packages they advertise is not even close to what they provide, I have an XXL package with 25GB mobile data but it got over after 2 GB. Called them and after about a month until it was was expired anyway they admitted their mistake but to no use. Even in Romania which had the third best Internet connection in the world recently and currently on 7/8 I still got 90 to 100 mbps.

Was thinking of getting prepaid so that you are not a slave to them for 2 years anymore but there aren't any packages that can provide me with what I require so far. These companies have almost total control without even delivering half of the services promised. They really have the market conquered.

Am still quite befuddled how people are still letting this happen.

 

[Napa]

Cut the outsider crap. Indians only talk here agendas which is blatantly obvious. Even people like me who are massively against army's meddling can see it obviously.

You're a good poster, stay like that instead of this useless trolling.

Instead of accusing posters of having agendas, why don't you discuss the issues and refute the points they make?

 

[Napa]

I was talking to a distant cousin in Pakistan via what54pp video call. He was sitting in a mango orchard on his farm, which is located a couple of miles from the nearest village, which in turn is approx 50 miles from the nearest town. And his cellphone signal was such that the sound and video image was crystal clear.

Now compare that with where I live in the UK. My house is located in a small village on the outskirts of a small town in England. The cellphone signal in our area is so bad that my mobile phone operator has provided me with a signal booster that connects to my (fibre) broadband router, and all the cell phones in the house automatically switch to the booster when in the house to make/receive phone calls and data.
ie In the rich industrialised West, I can't even get a decent phone signal in many parts of towns and cities, whilst a 3rd world country has a modern telecom system that appears to be much superior.

According to my cousin in Pakistan, virtually everyone in most households, even poor households, has a mobile phone. It costs as little as 14 Pakistan rupees (around 9 pence UK, or 12 cents USA) for 250 minutes calling allowance. And not much more for unlimited data usage for 24 hours. The 250 mobile minutes includes calls to the UK from Pakistan.
Now compare that to the cost of monthly calling/data plans, or pay-as-you-go calling plans, or calling rates from landlines or mobile phones, in the UK or USA.

My cousin had a shock when I told him that I'd just bought a medium sized watermelon for £4 (approx 600 Pak rupees), along with a box of 6 mangoes for £7.50 (or just under 200 Pak rupees per mango).

The point I'm trying to make is that 'being a more (or less) advanced country' is a relative term. Looking at another country from one's own perspective whilst sitting in one's own country is very misleading.

I would say that comparing cell phone plans and cost of service to make inferences about economic development is futile.

My Verizon data plan for the US costs me $100 a month, that is about INR 6,500. My Jio data plan in Delhi cost me $6 for the same service, and worked quite well in remote areas. However it did not lead me to think that India is as developed economically as the US.

The difference is data plan costs simply is a result of the market (oligopolistic) power of Verizon, which gives them a market capitalization of $200 bn. The cell phone industry in South Asia is much more competitive and firms don't have the same market power.

Moody has not downgraded Pakistan because it is ill informed and is a victim of "Looking at another country from one's own perspective whilst sitting in one's own country is very misleading."

Moody's has downgraded Pakistan because its trade balance keeps worsening. The trade balance keeps worsening because Pakistan hasn't developed modern industries and earns foreign exchange by exporting items such as soccer balls and mangoes.

The difference in the cost and quality of cell phone plans does not mean that Pakistan actually has modern industries and foreigners like Moody's are unaware of that fact. The reality is that economic development in Pakistan is not happening. While India produces multi-billion dollar IT firms like TCS (current market cap greater than all of KSE), Infosys, Cognizant etc, Pakistan produces scammers like Axact which proudly proclaims itself to be "World's Leading IT Company".

You are not going to progress unless you learn to deal with reality.

 

[Yossarian]

..... While India produces multi-billion dollar IT firms like TCS (current market cap greater than all of KSE), Infosys, Cognizant etc, ......

Ah, here we go again. No matter what the topic, our Indian friends always turn it into a "India is better than Pakistan at this ... and this ... and this ...." rant.

Football fan:
"Hey, did you watch the match between Germany and Mexico? ....Mexico won!"

Reply by you-know-where-they're-from:
"India does more trade with Mexico than Pakistan. And there are more Indian I.T. CEO's in Mexico and Germany than Pakistani computer programmers in the whole of Pakistan! ..."


<iframe width="560" height="315" src="https://www.youtube.com/embed/4GC_Q2YKNR0" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe>

 

[slipcatch]

Ah, here we go again. No matter what the topic, our Indian friends always turn it into a "India is better than Pakistan at this ... and this ... and this ...." rant.

Football fan:
"Hey, did you watch the match between Germany and Mexico? ....Mexico won!"

Reply by you-know-where-they're-from:
"India does more trade with Mexico than Pakistan. And there are more Indian I.T. CEO's in Mexico and Germany than Pakistani computer programmers in the whole of Pakistan! ..."


<iframe width="560" height="315" src="https://www.youtube.com/embed/4GC_Q2YKNR0" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe>

Agenda is different. Trying to portray Pakistani Army as an evil institution. Portraying bad relationship between two countries on the Pakistani Army alone. In an attempt to absolve themselves from crime against humanity and innocents in Kashmir, Indian government and media has to have a boogeyman to justify their crimes against Kashmiris and minority.

As you can see from this particular poster every comment related to Pakistan has always end up on blaming Army.

Army is criticized daily in Pakistani media (approximately 80+ channels exist), in print, and by ordinary citizens. It is Pakistani Army and it is integral part of Pakistan's foreign policy and will remain integral Part of Pakistan's foreign policy, especially when it comes to Afghanistan and India.

For India to avoid any discussion and when they have no counter argument the best response for them is to say, Army is in control. Off course will always has a word in this matter.

 

[slipcatch]

I obviously don’t follow Pak media that closely. But what I have noticed is that things haven’t changed much there. Btw, I was talking about the reaction to the state of the economy in general. Army is only one of the factors that contribute to it. Anyways not interested in discussing this anymore as you guys think I’m trolling.

I do not think you are trolling rather miss-informed.

 

[Napa]

Ah, here we go again. No matter what the topic, our Indian friends always turn it into a "India is better than Pakistan at this ... and this ... and this ...." rant.

Football fan:
"Hey, did you watch the match between Germany and Mexico? ....Mexico won!"

Reply by you-know-where-they're-from:
"India does more trade with Mexico than Pakistan. And there are more Indian I.T. CEO's in Mexico and Germany than Pakistani computer programmers in the whole of Pakistan! ..."


<iframe width="560" height="315" src="https://www.youtube.com/embed/4GC_Q2YKNR0" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe>

It is your choice what to focus on, my post was about much more than India.

India is the obvious comparison for Pakistan as the people, geography and history are rather similar. I am obviously not going to compare Pakistan to New Zealand or Ecuador to make a point.

Pakistan's current economic crisis and especially difficulty in paying its import bill is very similar to 1991 Indian economic crisis. Here is the lead paragraph from the Wikipedia:

The 1991 Indian economic crisis had its roots in 1985 when India began having balance of payments problems as imports swelled, leaving the country in a twin deficit: the Indian trade balance was in deficit at a time when the government was running a large fiscal deficit. By the end of 1990 in the run-up to the Gulf War, the situation became so serious that the Indian foreign exchange reserves could barely finance three weeks’ worth of imports while the government came close to defaulting on its financial obligations. By July that year, the low reserves had led to a sharp devaluation of the rupee, which in turn exacerbated the twin deficit problem. This led the government to airlift national gold reserves as a pledge to the International Monetary Fund (IMF) in exchange for a loan to cover balance of payment debts.

The crisis later led to the liberalisation of the Indian economy.

https://en.wikipedia.org/wiki/1991_Indian_economic_crisis

India's problem back in 1991 was that the bureaucrats of the Indian government dominated the economy by their leadership of the public sector enterprises. This was similar to the manner in which Pakistani military dominates Pakistani economy through the Fauji Foundation etc.

Liberalisation of the Indian economy was achieved by privatizing or simply reducing the role of the private sector in the economy. The consequent economic growth and increase in exports resulted in India's forex reserves increasing from less than $1 bn on June 1991 to over $400 bn today.

You can ascribe all manner of ulterior motives to my posts but the question for Pakistanis remains unchanged, it is simply "Are you ready to undertake a similar reform of your economy and free it from government (Army) control?"

 

[Napa]

*simply reducing the role of the public sector in the economy.

 

[Napa]

Agenda is different. Trying to portray Pakistani Army as an evil institution. Portraying bad relationship between two countries on the Pakistani Army alone.

Every night when you go to bed, you should pray that I am correct and the Pakistani Army is what is holding back the Pakistani economy. Because that is a solvable problems. The alternative explanations for the poor performance of the Pakistani economy are the following and are not solvable:

1) The ruling party is corrupt. (Actually NS is the most business friendly PM Pakistan has had and Zardari or IK would only make the economy worse.)

2) Pakistani people are incapable of economic development. (Actually Pakistanis are very similar to Indians, especially Indian Punjabis.)

3) Pakistan is being held back by foreign countries. (If that were true, it won't get better as Pakistan hasn't been improving relations with foreign countries.)

 

[zn426]

All IK needs to do is clean up the government and get it out of the way. Case closed, period. I recognize that this is easier said than done, yet it can be done. I personally believe that the army is not going to cause further problems. Now that the public has felt the scars and pain of insurgency, they will throw a fit and cause a ruckus every time the military tries to do anything other than national defense of the country.

IK will surely liberalize the economy as he gives me the impression of a nationalist, yet I think he will recognize that trade with Pakistan's neighbors must increase for Pakistan to survive and thrive. It's time to stop living in the past. It's time to get the pipeline from Iran finished. It's time to build Pakistani industry. Pakistan has one huge advantage-they are very cheap compared with other countries in the region, so exports to the rest of the world will be cheaper.

 

[Yossarian]

It is your choice what to focus on, my post was about much more than India.

India is the obvious comparison for Pakistan as the people, geography and history are rather similar. I am obviously not going to compare Pakistan to New Zealand or Ecuador to make a point.

Pakistan's current economic crisis and especially difficulty in paying its import bill is very similar to 1991 Indian economic crisis. Here is the lead paragraph from the Wikipedia:



https://en.wikipedia.org/wiki/1991_Indian_economic_crisis

India's problem back in 1991 was that the bureaucrats of the Indian government dominated the economy by their leadership of the public sector enterprises. This was similar to the manner in which Pakistani military dominates Pakistani economy through the Fauji Foundation etc.

Liberalisation of the Indian economy was achieved by privatizing or simply reducing the role of the private sector in the economy. The consequent economic growth and increase in exports resulted in India's forex reserves increasing from less than $1 bn on June 1991 to over $400 bn today.

You can ascribe all manner of ulterior motives to my posts but the question for Pakistanis remains unchanged, it is simply "Are you ready to undertake a similar reform of your economy and free it from government (Army) control?"

And so the ranting continues:

Movie buff:
"So what did you think of Avengers: Infinity War ?"

Reply by you-know-where-they're-from:
"More Indian IT CEO's have acting parts in Bollywood movies annually than Pakistanis who attend Pakistani universities! ....And India has more cows than Pakistan....India has a longer coastline than Pakistan ....Monsoon rains arrive in India before Pakistan ....India produces a far greater annual tonnage and volume of human excrement than Pakistan ....the total weight of Indians is over 4 times greater than the total weight of all Pakistanis ...."

<iframe width="560" height="315" src="https://www.youtube.com/embed/XVPib7JiH_M" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe>

 

[Ocelot]

Every night when you go to bed, you should pray that I am correct and the Pakistani Army is what is holding back the Pakistani economy. Because that is a solvable problems. The alternative explanations for the poor performance of the Pakistani economy are the following and are not solvable:

1) The ruling party is corrupt. (Actually NS is the most business friendly PM Pakistan has had and Zardari or IK would only make the economy worse.)

2) Pakistani people are incapable of economic development. (Actually Pakistanis are very similar to Indians, especially Indian Punjabis.)

3) Pakistan is being held back by foreign countries. (If that were true, it won't get better as Pakistan hasn't been improving relations with foreign countries.)

What kept Pakistan's economy back is the disastrous policy of Independent Power Production for energy back in the mid 90s, which saw a lot of furnace oil based power plants installed in the country. As oil prices rose, this has created both balance of payment and power crises for the last two decades, and made it very hard for the industry and the export sector to remain competitive. Only now Pakistan is installing coal based plants to generate cheap electricity and as the cost per unit will go down it's economy will improve.




Your country on the other hand generates 60% of your energy through coal, this has immensely helped your economy and keeps your exports more competitive w.r.t Pakistan.




Lastly your paranoia and phobia regarding Pakistan army is understandable, just read his statement how ridiculous it looks:



Regards.

 

[slipcatch]

Every night when you go to bed, you should pray that I am correct and the Pakistani Army is what is holding back the Pakistani economy. Because that is a solvable problems. The alternative explanations for the poor performance of the Pakistani economy are the following and are not solvable:

1) The ruling party is corrupt. (Actually NS is the most business friendly PM Pakistan has had and Zardari or IK would only make the economy worse.)

2) Pakistani people are incapable of economic development. (Actually Pakistanis are very similar to Indians, especially Indian Punjabis.)

3) Pakistan is being held back by foreign countries. (If that were true, it won't get better as Pakistan hasn't been improving relations with foreign countries.)

I’ve a condition called insomnia.

 

[Napa]

And so the ranting continues:

Movie buff:
"So what did you think of Avengers: Infinity War ?"

Reply by you-know-where-they're-from:
"More Indian IT CEO's have acting parts in Bollywood movies annually than Pakistanis who attend Pakistani universities! ....And India has more cows than Pakistan....India has a longer coastline than Pakistan ....Monsoon rains arrive in India before Pakistan ....India produces a far greater annual tonnage and volume of human excrement than Pakistan ....the total weight of Indians is over 4 times greater than the total weight of all Pakistanis ...."

<iframe width="560" height="315" src="https://www.youtube.com/embed/XVPib7JiH_M" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe>

It appears your view of the world is based on TV comedies.

For Pakistan's sake I hope there are Pakistanis who actually think about the issues rather than defaulting to inane mass media when confronted with difficult problems.

 

[Pakpak]

And so the ranting continues:

Movie buff:
"So what did you think of Avengers: Infinity War ?"

Reply by you-know-where-they're-from:
"More Indian IT CEO's have acting parts in Bollywood movies annually than Pakistanis who attend Pakistani universities! ....And India has more cows than Pakistan....India has a longer coastline than Pakistan ....Monsoon rains arrive in India before Pakistan ....India produces a far greater annual tonnage and volume of human excrement than Pakistan ....the total weight of Indians is over 4 times greater than the total weight of all Pakistanis ...."

<iframe width="560" height="315" src="https://www.youtube.com/embed/XVPib7JiH_M" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe>

LOL. Epic pwnages.

 

[slipcatch]

And so the ranting continues:

Movie buff:
"So what did you think of Avengers: Infinity War ?"

Reply by you-know-where-they're-from:
"More Indian IT CEO's have acting parts in Bollywood movies annually than Pakistanis who attend Pakistani universities! ....And India has more cows than Pakistan....India has a longer coastline than Pakistan ....Monsoon rains arrive in India before Pakistan ....India produces a far greater annual tonnage and volume of human excrement than Pakistan ....the total weight of Indians is over 4 times greater than the total weight of all Pakistanis ...."

<iframe width="560" height="315" src="https://www.youtube.com/embed/XVPib7JiH_M" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen></iframe>

ridiculousness

 

[Napa]

What kept Pakistan's economy back is the disastrous policy of Independent Power Production for energy back in the mid 90s, which saw a lot of furnace oil based power plants installed in the country. As oil prices rose, this has created both balance of payment and power crises for the last two decades, and made it very hard for the industry and the export sector to remain competitive. Only now Pakistan is installing coal based plants to generate cheap electricity and as the cost per unit will go down it's economy will improve.

Your country on the other hand generates 60% of your energy through coal, this has immensely helped your economy and keeps your exports more competitive w.r.t Pakistan.

Economic difficulties do not happen due to only one sector of the economy. If the rest of the economy was functioning well the power sector would have received necessary investment.

India has one of the world's largest (4th after the US, Russia and China) coal reserves. It is only natural that a lot of electricity generation is based on coal.

https://en.wikipedia.org/wiki/Coal_by_country

View attachment 82485


Lastly your paranoia and phobia regarding Pakistan army is understandable, just read his statement how ridiculous it looks:

View attachment 82486

Regards.

Swamy is a minor politician. Let alone a minister, he is not even a Lok Sabha member. There are thousands of other Indian politicians like him and a few statements like this one mean little.

 

[Yossarian]

It appears your view of the world is based on TV comedies.

For Pakistan's sake I hope there are Pakistanis who actually think about the issues rather than defaulting to inane mass media when confronted with difficult problems.

Those of us who are UK citizens living in Britain sometimes get a bit sick seeing virtually every thread, regardless of the topic, being diverted into rants of "Indians are better than Pakistanis at this .... and this ... and this ...." by the usual you-know-where-they're-from crowd.

 

[Napa]

Those of us who are UK citizens living in Britain sometimes get a bit sick seeing virtually every thread, regardless of the topic, being diverted into rants of "Indians are better than Pakistanis at this .... and this ... and this ...." by the usual you-know-where-they're-from crowd.

Whatever Indians may think or say, finally problems of Pakistan have to be solved by Pakistanis. It is for Pakistanis to think about the issues rationally and arrive at the right plan.

Of course, I believe that if the Pakistanis curb their Army it will not only benefit their economy but also help India by ending the low-level war the two countries are now engaged in. It is also true that though India does suffer from the antics of the Pakistani Army, the biggest losers are no doubt the Pakistani civilians.

 

[Ocelot]

Economic difficulties do not happen due to only one sector of the economy. If the rest of the economy was functioning well the power sector would have received necessary investment.

India has one of the world's largest (4th after the US, Russia and China) coal reserves. It is only natural that a lot of electricity generation is based on coal.



Swamy is a minor politician. Let alone a minister, he is not even a Lok Sabha member. There are thousands of other Indian politicians like him and a few statements like this one mean little.

Pakistan ranks 7th in world as far as coal reserves are concerned, still it didn't took advantage of it.

I guess Modi is also a minor politician who is screaming and shouting at Pakistan for conspiring with Congress against BJP in Gujrat elections. Who else that would be other than Pakistan Army, right? I guess since Pak Army is so powerful that it can influence Indian elections, Indians have full right to be scared and paranoid of it and politicians can keep this fear alive and garner votes.

 

[sshakir411]

Lol. Moody's doesn't take Moody's seriously.

 

[Napa]

Pakistan ranks 7th in world as far as coal reserves are concerned, still it didn't took advantage of it.

I guess Modi is also a minor politician who is screaming and shouting at Pakistan for conspiring with Congress against BJP in Gujrat elections. Who else that would be other than Pakistan Army, right? I guess since Pak Army is so powerful that it can influence Indian elections, Indians have full right to be scared and paranoid of it and politicians can keep this fear alive and garner votes.

The issue here is hardly whether politicians present an accurate picture of the world, they don't. So Modi ranted about Pakistan for a while, maybe 2% of his political speeches, so what?

I am not sure if you are saying that the Indian government wants to invade and take over Pakistan based on what Modi said in his speech. Anyone who thinks that is delusional. To attempt to do so would be a perfect way to ruin the economic progress India has been making.

As for Kashmir, it is not going anywhere. It will remain with India for the next hundred, or more likely many thousand years. If Pakistanis choose to make Kashmir an issue and give their Army command of their country because of Kashmir, then they are just ruining their economy for no benefit to anyone other than the Army generals.

 

[Napa]

Lol. Moody's doesn't take Moody's seriously.

However, international investors do.

 

[sjahmed23]

I would say that comparing cell phone plans and cost of service to make inferences about economic development is futile.

My Verizon data plan for the US costs me $100 a month, that is about INR 6,500. My Jio data plan in Delhi cost me $6 for the same service, and worked quite well in remote areas. However it did not lead me to think that India is as developed economically as the US.

The difference is data plan costs simply is a result of the market (oligopolistic) power of Verizon, which gives them a market capitalization of $200 bn. The cell phone industry in South Asia is much more competitive and firms don't have the same market power.

Moody has not downgraded Pakistan because it is ill informed and is a victim of "Looking at another country from one's own perspective whilst sitting in one's own country is very misleading."

Moody's has downgraded Pakistan because its trade balance keeps worsening. The trade balance keeps worsening because Pakistan hasn't developed modern industries and earns foreign exchange by exporting items such as soccer balls and mangoes.

The difference in the cost and quality of cell phone plans does not mean that Pakistan actually has modern industries and foreigners like Moody's are unaware of that fact. The reality is that economic development in Pakistan is not happening. While India produces multi-billion dollar IT firms like TCS (current market cap greater than all of KSE), Infosys, Cognizant etc, Pakistan produces scammers like Axact which proudly proclaims itself to be "World's Leading IT Company".

You are not going to progress unless you learn to deal with reality.

TCS, Infosys and Cognizant are comparable to Foxconn in China. There is nothing to envy there. Speaking of scammers, doesn't India have like the biggest phone call scammer ring who've been ripping off old grandma's by pretending to be IRS agents?

 

[JaDed]

It doesn't matter, SC will always be more happier than these western countries, these ratings are **

 

[Napa]

TCS, Infosys and Cognizant are comparable to Foxconn in China. There is nothing to envy there.

Its not a question of envy. The benefit of these India IT and other firms in modern industries is that they employ hundreds of thousands of Indians and give them the opportunity of a decent life.

Definitely China has been much more successful compared to India in pulling its people out of poverty.

Speaking of scammers, doesn't India have like the biggest phone call scammer ring who've been ripping off old grandma's by pretending to be IRS agents?

Axact is notable as if you do a Google search "Pakistani IT firm", Axact appears in the first or second page of results. Every country will always have its criminals. The question is whether progress is being made.

 

[enkidu_]

The political goons don't care about long-term issues like debt/FX reserves because they'll go to the UK or UAE if the country drowns, having already "hard-earned" all the blood-soaked money in the meantime.

It's up to the masses to vote for Imran Khan, or either expect a diligent dictatorship à la Ayyub Khan.

 

[Bhaijaan]

Pakistan needs 10 years of CPEC to transform its economy. A stable government is crucial need however. Stable government plus CPEC means no nothing can stop Pakistan’s march towards attaining a super economy status.

 

[sshakir411]

However, international investors do.

Ratings are updated when things are obvious. They're just an after thought and don't determine the outcome of the deal (credit or equity). I use the daily, including Moody's and the other two.

On topic...Pakistan's economy is probably a dump atm.

 

[davethebrave]

I would say there's nothing to worry about. This is just one part of Trump's revenge for giving him the bird. Stay friends with China, relax and ignore.

 

[Abdullah719]

KSE-100 endures worst day of 2018, plunges 1,290 points

The KSE-100 suffered its biggest intra-day fall of 2018 – both in terms of points and percentage – as uncertainty over outcome of the Avenfield Properties reference took toll on investor sentiment.

Panic selling meant the index plunged as much as 1,290 points, a retreat of 3.07%, in intra-day trading with major scrips across the board nearing or hitting their lower price limit.

By 1:40pm, the KSE-100 was hovering around the 40,275-point mark amid low volumes and absence of any buying interest whatsoever. The index opened at 41,564.42 points.

The panic comes a day after the accountability court reserved its judgement on the Avenfield properties case, saying that the decision will be announced on July 6.

The reference is among those filed by the National Accountability Bureau (NAB) against former prime minister Nawaz Sharif and his children on orders given by the Supreme Court during the Panamagate case.

“Verdict (on the Avenfield reference) is making investors jittery,” Samiullah Tariq, head of research at Arif Habib Limited, told The Express Tribune. “Investors fear clashes and deteriorating law and order in the aftermath of the verdict.”

Market talk suggested that the outcome of the verdict is casting a shadow on events leading up to the general elections slated to be held on July 25.

With macroeconomic indicators worsening in an election year, analysts and followers predict a further weakening of Pakistan’s economic position. As rupee weakens and oil prices rise, triggering inflation, rising interest rates and subdued demand is likely to take toll on economic growth.

The KSE-100 – a benchmark for market performance – has already been on a downward trend in the past year ahead of the elections
and amid political uncertainty. From its 2018 high of 46,637.62 on April 6, the index has plunged 13.61% in almost three months.

https://tribune.com.pk/story/1749550/2-kse-100-endures-worst-day-2018-plunges-1290-points/

 

[Rishikesh]

Pakistan’s GDP growth to fall behind Nepal, Maldives this year: UN

ISLAMABAD: The annual Economic and Social Survey of Asia and the Pacific 2019 titled ‘Ambitions beyond Growth’, released by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) on Thursday, forecast Pakistan’s GDP to remain lowest in the region at 4.2 per cent in 2019 and 4pc in 2020 compared to Bangladesh’s 7.3pc, India 7.5pc, Maldives and Nepal 6.5pc each in 2019.

The survey revealed that overall economic conditions in the region are stable with the projected 5-5.1 per cent GDP growth in 2019 and 2020 respectively. However, export-oriented sectors face headwinds from weaker demand in Europe and possibly in US, and looming uncertainty over ongoing US-China trade war.

Pakistan’s economy is experiencing severe balance of payment difficulties amid large fiscal and current account deficits and mounting pressures on the currency, the report adds.

Inflation in the developing Asia-Pacific region is forecast to increase moderately in 2019 to 4.2pc before dropping to 3.8pc in 2020. However, potentially higher tariffs against the backdrop of trade tensions and rising uncertainties, currency depreciation and unfavourable weather could push up consumer and food prices.

According to the survey, the region’s medium-to-long term prospects depend on structural transformation and broad-based productivity growth. The report cautions against countries shifting from an agriculture-based economy to one in which services play a dominant role, bypassing manufacturing sector.

New frontier technologies may reduce the scope for industrialisation in “late entrant” developing countries, while high-value-added services require skilled workers. This calls for investment in people and enabling infrastructure, the survey suggests.

Stating that the next phase of structural transformation in the region must be environment-friendly, the survey illustrates that investments to speed up transition to more resource-efficient systems of production and consumption would not only reduce carbon emissions by a tenth, but deliver high economic returns and over time can reduce net financial costs to zero.

The 2019 survey points out that achieving Sustainable Development Goals by 2030 would require an annual additional investment of $1.5 trillion for Asia-Pacific developing countries — equivalent to 5pc of their combined GDP in 2018.

Despite rapid economic growth, the survey notes, too many people are left behind, without a fair chance in life, while environmental degradation has reached alarming levels, threatening the sustainability of past development gains. Hence, keeping the old paradigm of prioritising GDP growth at all costs is neither feasible nor desirable, the report argues.

https://www.dawn.com/news/1474039/pakistans-gdp-growth-to-fall-behind-nepal-maldives-this-year-un

 

[CricVet]

Pakistan is going thru chemo. We will be back on our feet in 10 years - No Doubt. As Imran said, "Ghabrana nahi hay". Pakistanis are resilient and we will prove it to the world by bouncing back.

 

[Bewal Express]

Moody’s Investors Service has downgraded the outlook on Pakistan’s rating to negative from stable and affirmed the ‘B3’ local and foreign currency long-term issuer and senior unsecured debt ratings.

The decision to change the outlook to negative is driven by Pakistan’s heightened external vulnerability risk, added the ratings agency.

“Foreign exchange reserves have fallen to low levels and, absent significant capital inflows, will not be replenished over the next 12-18 months,” stated Moody’s. “Low reserve adequacy threatens continued access to external financing at moderate costs, in turn potentially raising government liquidity risks.”

Pakistan trying to ink fresh LNG deals at lower rates

A rating is Moody’s opinion of the credit quality of individual obligations or of an issuer’s general creditworthiness. Investors use ratings to help price the credit risk of fixed-income securities they may buy or sell.

The development comes as a blow to Pakistan where economic managers are facing a headache in taming a bulging import bill that is eating away at the country’s foreign exchange reserves. From almost $19.46 billion held by the State Bank of Pakistan (SBP) in October 2016, foreign exchange reserves dropped 48.3% to $10.07 billion on June 8, 2018. The decline comes at a time when the import bill peaked to a record high of $5.8 billion in May, increasing the already swelling trade and current account deficits.

The fragile external account position has already forced the SBP’s hand to let go off the Pakistani rupee that has now weakened over 15% in the last seven months after three separate rounds of devaluation.

While the previous government seemed to have put all its eggs in the China-Pakistan Economic Corridor (CPEC) – the multi-billion dollar project encompassing infrastructure and energy sector – its debt affordability due to low tax revenue and failure to attract sufficient capital has made it a particularly vulnerable economy.

World Bank sees Pakistan’s economy slowing next year

Moody’s acknowledged Pakistan’s robust growth potential, but pointed out that these strengths balance the country’s fragile external payments position as well as the “very weak” government debt affordability.

“The decision to affirm the B3 rating reflects Pakistan’s robust growth potential, supported by ongoing improvements in energy supply and physical infrastructure, which are likely to raise economic competitiveness over time.

“These credit strengths balance Pakistan’s fragile external payments position and very weak government debt affordability owing to low revenue generation capacity.”

The ratings agency also expects Pakistan’s external account to remain under significant pressure. “The coverage by foreign exchange reserves of imports will likely fall further from already low levels, while coverage of external debt payments due will weaken from currently adequate levels.

“In turn, higher foreign currency borrowing needs, in combination with the low levels of foreign exchange buffers, risks weighing on the ability of the government to access external financing at moderate costs.”

Shell plans to invest $15-16m to meet growing demand

Continued growth in imports – driven by demand for capital goods under CPEC, higher fuel prices and robust household consumption – will prevent a significant narrowing of the current account deficit. Although exports have picked up since the start of 2018, growing around 10-15% year-on-year in US dollar terms, they only amount to half the level of goods imports.

“Unless capital inflows increase significantly, Moody’s does not expect official foreign exchange reserves to replenish from their current low levels. Under baseline projection, the import cover of reserves will likely fall to around 1.7-1.8 months over the next fiscal year, below the adequacy level of three months generally recommended by the International Monetary Fund.”

Tax amnesty scheme

Moody’s said it expects the government’s tax amnesty scheme, which expires in June 2018, to have a modest impact of around $2-3 billion in foreign exchange inflows.

“Second, the coverage by foreign exchange reserves of external debt payments due is weakening, pointing to further external vulnerability risks. With a significant rise in equity inflows unlikely, Moody’s expects Pakistan’s external financing gap to be met by increased foreign currency borrowing, mainly by the government.

“While policymakers have started to respond to the external pressures, the policy tools available are politically challenging and would likely have a negative economic impact. Moody’s expects these measures to contribute to somewhat lower growth, at 5.2% on average over the next two fiscal years, from an expected 5.8% in FY18, and higher inflation at 7% in FY19, from around 4% in FY18. Further currency depreciation, higher policy rates, fiscal tightening, and/or higher regulatory duties would likely weigh further on growth and raise inflation above Moody’s current projections.

“Like many of its South Asian neighbours, Pakistan is also vulnerable to climate change risk. The magnitude and dispersion of seasonal monsoon rainfall continues to influence agricultural sector growth and rural household consumption. As a result, both droughts and floods can create economic and social costs for the sovereign.”

Moody’s said the negative outlook signals that a rating upgrade is unlikely. The outlook would likely be changed to stable if external vulnerability risks decreased materially and durably, including through policy adjustments that strengthen the external payments position. A resumption of fiscal consolidation pointing to a meaningful reduction in the debt burden would also be credit positive, added Moody’s.

https://tribune.com.pk/story/1738734/1-moodys-downgrades-pakistans-rating-outlook-negative/

So all the problems that Nooras created have come to fruition, and apparently "Corruption is not a problem", for the beneficiaries of this theft. It will take a long time for PK to recover from the damage by the crooks over the last 10 years.

 

[Zeeraq]

This rating is from June and you'll see a lot of PML-N & PPP supporters (and their MNAs and MPAs) quote it and attribute this to PTI - like PTI came in power and conjured this mess in 7 months.

 

[Bewal Express]

This rating is from June and you'll see a lot of PML-N & PPP supporters (and their MNAs and MPAs) quote it and attribute this to PTI - like PTI came in power and conjured this mess in 7 months.

[MENTION=131701]Mamoon[/MENTION] this horrible that your crooks left, Why ? What did they have against a poor country?

 

[Pak Warrior]

Dont lose hope brothers, we know that it will be few years of hardship but Inshallah things will turn around and we will be in good shape. This has nothing to do with PTI and Imran Khan, this is the mess he inherited on silver plate by previous PM and Govt.