US lauds finance ministry's efforts, hails Moody's upgrading Pakistan outlook to ‘stable’

[Abdullah719]

Moody's changes Pakistan's outlook to stable from negative, affirms B3 rating

Source: https://www.moodys.com/research/Moo...to-stable-from-negative-affirms-B3--PR_410440

Singapore, December 02, 2019 -- Moody's Investors Service ("Moody's") has today affirmed the Government of Pakistan's local and foreign currency long-term issuer and senior unsecured debt ratings at B3 and changed the outlook to stable from negative.

The change in outlook to stable is driven by Moody's expectations that the balance of payments dynamics will continue to improve, supported by policy adjustments and currency flexibility. Such developments reduce external vulnerability risks, although foreign exchange reserve buffers remain low and will take time to rebuild. Moreover, while fiscal strength has weakened with higher debt levels largely as a result of currency depreciation, ongoing fiscal reforms, including through the country's International Monetary Fund (IMF) programme, will mitigate risks related to debt sustainability and government liquidity.

The rating affirmation reflects Pakistan's relatively large economy and robust long-term growth potential, coupled with ongoing institutional enhancements that raise policy credibility and effectiveness, albeit from a low starting point. These credit strengths are balanced against structural constraints to economic and export competitiveness, the government's low revenue generation capacity that weakens debt affordability, fiscal strength that will remain weak over the foreseeable future, as well as political and still-material external vulnerability risks.

Concurrently, Moody's has affirmed the B3 foreign currency senior unsecured ratings for The Second Pakistan Int'l Sukuk Co. Ltd. and The Third Pakistan International Sukuk Co Ltd. The associated payment obligations are, in Moody's view, direct obligations of the Government of Pakistan.

Pakistan's Ba3 local currency bond and deposit ceilings remain unchanged. The B2 foreign currency bond ceiling and the Caa1 foreign currency deposit ceiling are also unchanged. The short-term foreign currency bond and deposit ceilings remain unchanged at Not Prime. These ceilings act as a cap on the ratings that can be assigned to the obligations of other entities domiciled in the country.

 

[Mian]

In other news Pakistan Stock Exchange just crossed 40k mark!

 

[Bewal Express]

Great news- It has taken huge political sacrifices by the Kaptaan for the country to be slowly put onto the right track.

 

[Syed1]

Foreign media is covering Pakistan's economic revival, while local media is busy counting a thieves fake platelet count, or other non-issues.

 

[Syed1]

Stock exchange up.
Moodys rating up.
Investor confidence high.
US sending 15 trade delegations next year.
Circular debt down.
Imports down.
Exports up.
Currency stable.
Current account surplus.
FDI up.

Headlines are about tomatoes.


(Copied from another source)

 

[MenInG]

This is amazing news and a great compliment to IK Govt's policies.

Alhamdolillah we are moving in the right direction - Thank God the days of Sharifs are gone.

 

[kk1992]

Where are Long essay walay,

copy and past walay,

supporter of NS from neighboring country just because NS gave an impression of going against Army and IK because both highlighted Indian government RSS/BJP crimes in Kashmir,

promoter of talking point that incompetent government is worse than a corrupt government and 'khata hai tu khilata bhi hai",

those who praise NS because he built roads as if other parties in power would have gone against building roads and bridges?, and where are those who kept ignoring this simple and important point, NS kept USD undervalued.

It is a slow process and slowly the fake critics with agenda will continue to get embarrassed.

 

[Syed1]

Ya Allah please grant some sabar and bardasht to our dear patwaris in these troubling times. Hang in there [MENTION=131701]Mamoon[/MENTION], four more years of kapray phaar ke rona dhona ahead of you. Good luck

 

[Savak]

Moody's is controlled by the Establishment, Fauj

 

[szrana007]

Moody's is controlled by the Establishment, Fauj

Hahahaha, you can expect anything from leftist conspiracy theorists.

 

[blackanhyellow]

Great news- It has taken huge political sacrifices by the Kaptaan for the country to be slowly put onto the right track.

The political capital used up for these reforms can not be underestimated.

No other party in the history of the country would ever make the tough choices if it meant losing some votes.

Still, PTI needs to do a better job selling (or explaining) these reforms to the ordinary person who does not understand economics and who only cares about getting food on the table for his family. People in poverty do not care about how indebted the country is as long as their children have enough to eat. Long term gains in economy means these people may have to suffer in the short term, so care needs to be taken to balance reforms while at the same time making sure the poor are not completely neglected.

These are steps in the right direction though, so hopefully by the time the 5 years are over, PTI has won back public support.

 

[Bewal Express]

The political capital used up for these reforms can not be underestimated.

No other party in the history of the country would ever make the tough choices if it meant losing some votes.

Still, PTI needs to do a better job selling (or explaining) these reforms to the ordinary person who does not understand economics and who only cares about getting food on the table for his family. People in poverty do not care about how indebted the country is as long as their children have enough to eat. Long term gains in economy means these people may have to suffer in the short term, so care needs to be taken to balance reforms while at the same time making sure the poor are not completely neglected.

These are steps in the right direction though, so hopefully by the time the 5 years are over, PTI has won back public support.

Forget about the poor not understanding the mess the Nooras and ppp created by their decade looting, even the "educated" don't understand or don't want to understand. Pose a question to the likes [MENTION=131701]Mamoon[/MENTION], [MENTION=107753]uberkoen[/MENTION] and they run quicker than Usain Bolt. When I posed a question to some thick Noora about NS economic policy, he told me to Google it.
Kaptaan must not take any short cuts, which will no doubt be tempting as like all politicians he wants to win elections. He must continue on this path for the sake of PK and IA people will appreciate it. If it doesn't happen, well the people can't say they weren't warned.

 

[blackanhyellow]

Forget about the poor not understanding the mess the Nooras and ppp created by their decade looting, even the "educated" don't understand or don't want to understand. Pose a question to the likes [MENTION=131701]Mamoon[/MENTION], [MENTION=107753]uberkoen[/MENTION] and they run quicker than Usain Bolt. When I posed a question to some thick Noora about NS economic policy, he told me to Google it.
Kaptaan must not take any short cuts, which will no doubt be tempting as like all politicians he wants to win elections. He must continue on this path for the sake of PK and IA people will appreciate it. If it doesn't happen, well the people can't say they weren't warned.

In these PP poster's cases, they are likely not even close to being considered poor, and were likely benefiting from PMLN's reign regardless of the actual long term health of the economy.

Having PTI in power means more taxes, which means they will likely have to pay more. So I can understand their frustrations. That is something we have to understand, so that we can understand where they are coming from. We can call them names like Patwaris etc... but this wont solve anything.

A lot of PTI's supporters that we see on PP or on social media are overseas Pakistanis, and so PTI's reforms may not hit our pockets as directly as it does some of these posters that are living in Pakistan. Dont get me wrong, PTI has a lot of support in Pakistan too (which ofcourse is the reason they were voted in power), and those people are willing to take the hits on their pockets because they trust Imran.



But if PMLN supporters are deluded thinking that Noon league's tenure was rosy, then we also have to call them out on that. PMLN's economic policy was not sustainable, they were essentially taking loans to subsidize people's standard of living and cost of goods. That house of cards was going to collapse at some point, so it was better that PTI took hard decisions now, so that in the future Pakistan did not go bankrupt due to mismanagement of the economy.

 

[Savak]

Forget about the poor not understanding the mess the Nooras and ppp created by their decade looting, even the "educated" don't understand or don't want to understand. Pose a question to the likes [MENTION=131701]Mamoon[/MENTION], [MENTION=107753]uberkoen[/MENTION] and they run quicker than Usain Bolt. When I posed a question to some thick Noora about NS economic policy, he told me to Google it.
Kaptaan must not take any short cuts, which will no doubt be tempting as like all politicians he wants to win elections. He must continue on this path for the sake of PK and IA people will appreciate it. If it doesn't happen, well the people can't say they weren't warned.

You are being very generous, you should call a spade a spade and even tag mgtow and call these individuals "beneficiaries of PML N and PPP corruption"

 

[Savak]

In these PP poster's cases, they are likely not even close to being considered poor, and were likely benefiting from PMLN's reign regardless of the actual long term health of the economy.

Having PTI in power means more taxes, which means they will likely have to pay more. So I can understand their frustrations. That is something we have to understand, so that we can understand where they are coming from. We can call them names like Patwaris etc... but this wont solve anything.

A lot of PTI's supporters that we see on PP or on social media are overseas Pakistanis, and so PTI's reforms may not hit our pockets as directly as it does some of these posters that are living in Pakistan. Dont get me wrong, PTI has a lot of support in Pakistan too (which ofcourse is the reason they were voted in power), and those people are willing to take the hits on their pockets because they trust Imran.



But if PMLN supporters are deluded thinking that Noon league's tenure was rosy, then we also have to call them out on that. PMLN's economic policy was not sustainable, they were essentially taking loans to subsidize people's standard of living and cost of goods. That house of cards was going to collapse at some point, so it was better that PTI took hard decisions now, so that in the future Pakistan did not go bankrupt due to mismanagement of the economy.

Anyways the PTI has to deliver on the economy in terms of job creation, inflation reduction, FDI and kicking off economic activity otherwise there will be no second term.

 

[Muddaser]

Our local patriot will find a way to spin this against Imran Khan.

 

[Dios]

Good to see Pakistan's credit rating return to what it was during Nawaz Sharif's tenure.

 

[blackanhyellow]

Anyways the PTI has to deliver on the economy in terms of job creation, inflation reduction, FDI and kicking off economic activity otherwise there will be no second term.

Yes and Imran is quickly realizing these things are easier said then done. All of these dharnas (lawyers, shop keepers, JUI workers, etc...) is all because of the attempt to remove the status quo. These mafias (as Imran puts it) are essentially the people that were benefiting that now are worried about the changes to come.

I really appreciate PTI's welfare programs, but I dont know how much these things will help with alleviating poverty as there is so much of it.

Pakistan has to take the approach of wealth creation, increase the size of the middle class.

FDI, inflation rates, Job creation, wealth creation, literacy rates, health care, etc... are all linked in some way.

If you raise the bar in one, the other things will follow.

 

[Knight_Rider]

https://m.moodys.com/research-previ...3-rating-maintains-stable-outlook--PR_368847?

^^^ From Nawaz’s time.

Now the question is what significance has this rating and what exactly does it mean?

 

[blackanhyellow]

https://m.moodys.com/research-previ...3-rating-maintains-stable-outlook--PR_368847?

^^^ From Nawaz’s time.

Now the question is what significance has this rating and what exactly does it mean?

I believe it was changed to negative near the end of PMLN's tenure before Imran was elected.

 

[Bewal Express]

Good to see Pakistan's credit rating return to what it was during Nawaz Sharif's tenure.

And they mess that led to the negative ratings are also his legacy. Its good to IK take the very difficult decisions the duffer and his Munshi quite literally ran away from.

 

[Bewal Express]

https://m.moodys.com/research-previ...3-rating-maintains-stable-outlook--PR_368847?

^^^ From Nawaz’s time.

Now the question is what significance has this rating and what exactly does it mean?

And the mess that IK has had to deal with are also his legacy.

 

[blackanhyellow]

Good to see Pakistan's credit rating return to what it was during Nawaz Sharif's tenure.

That is wrong, PMLN left a negative rating before PTI took over.

 

[blackanhyellow]

Here is the source:

https://www.dawn.com/news/1415115

Rating changed to negative in June 2018,

PTI came into power August 2018.

If you own a calendar, you will know June comes before August.

 

[Bewal Express]

In these PP poster's cases, they are likely not even close to being considered poor, and were likely benefiting from PMLN's reign regardless of the actual long term health of the economy.

Having PTI in power means more taxes, which means they will likely have to pay more. So I can understand their frustrations. That is something we have to understand, so that we can understand where they are coming from. We can call them names like Patwaris etc... but this wont solve anything.

A lot of PTI's supporters that we see on PP or on social media are overseas Pakistanis, and so PTI's reforms may not hit our pockets as directly as it does some of these posters that are living in Pakistan. Dont get me wrong, PTI has a lot of support in Pakistan too (which ofcourse is the reason they were voted in power), and those people are willing to take the hits on their pockets because they trust Imran.



But if PMLN supporters are deluded thinking that Noon league's tenure was rosy, then we also have to call them out on that. PMLN's economic policy was not sustainable, they were essentially taking loans to subsidize people's standard of living and cost of goods. That house of cards was going to collapse at some point, so it was better that PTI took hard decisions now, so that in the future Pakistan did not go bankrupt due to mismanagement of the economy.

The short term benefits of an overvalued exchange rate are heavily outweighed by long term disastrous impacts on both competiveness of local industry and costly and uncompetitive exports. Its easier to teach Japanese to a troupe of Monkeys than educate a Noora on economics.

 

[Bewal Express]

Here is the source:

https://www.dawn.com/news/1415115

Rating changed to negative in June 2018,

PTI came into power August 2018.

If you own a calendar, you will know June comes before August.

Not in Nooradom, according to Maryam and her tweets, IK was to blame for the mess in 2017

 

[Syed1]

The following tweet is like a dagger through patwari hearts. Please apply burnol to burnt area, if your condition is like [MENTION=131701]Mamoon[/MENTION] you need to get admitted to a hospital ASAP.

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">After 5 years of pml n govt on june 20, 2018 moody's downgraded Pak outlook from stable to negative. This was 2 months BEFORE PTI formed govt. After 15 months of PTI govt moody's upgrades Pak from negative to stable. Now you decide who destroyed Pak economy & who is rebuilding it</p>— Asad Umar (@Asad_Umar) <a href="https://twitter.com/Asad_Umar/status/1201521573540311040?ref_src=twsrc%5Etfw">December 2, 2019</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

[Majid Khan]

Misread the thread title for a minute as something to do with Tom Moody not rating Pakistan's cricket team after the latest tour.

 

[Waseem]

Moody's is controlled by the Establishment, Fauj

Moody is Jamaima's cousin just like Vicky of Wikileaks.

I think we have been saying this for many months that eventually these steps would bring long term stability but obviously some people were more concerned about the short term pain which is somewhat understandable but PTI government had absolutely no other option (i hope real critics NOT propaganda brigade would acknowledge that now).

And all those who really thought parchis like Nawaz Sharif knew all about Economy while Oxford graduate Imran Khan knows nothing, i hope you will be ashamed a bit now?

 

[uberkoen]

You are being very generous, you should call a spade a spade and even tag mgtow and call these individuals "beneficiaries of PML N and PPP corruption"

So, as per your logic, anyone who has ever voted for PMLN or PPP has only done so because they benefited from the corruption? Brilliant logic! This is a brilliant example of burying ones head in the sand.

 

[uberkoen]

In these PP poster's cases, they are likely not even close to being considered poor, and were likely benefiting from PMLN's reign regardless of the actual long term health of the economy.

Having PTI in power means more taxes, which means they will likely have to pay more. So I can understand their frustrations. That is something we have to understand, so that we can understand where they are coming from. We can call them names like Patwaris etc... but this wont solve anything.

A lot of PTI's supporters that we see on PP or on social media are overseas Pakistanis, and so PTI's reforms may not hit our pockets as directly as it does some of these posters that are living in Pakistan. Dont get me wrong, PTI has a lot of support in Pakistan too (which ofcourse is the reason they were voted in power), and those people are willing to take the hits on their pockets because they trust Imran.



But if PMLN supporters are deluded thinking that Noon league's tenure was rosy, then we also have to call them out on that. PMLN's economic policy was not sustainable, they were essentially taking loans to subsidize people's standard of living and cost of goods. That house of cards was going to collapse at some point, so it was better that PTI took hard decisions now, so that in the future Pakistan did not go bankrupt due to mismanagement of the economy.

Does it though?

1. https://nation.com.pk/01-Nov-2019/fbr-s-tax-collection-shortfall-widening
2. https://tribune.com.pk/story/2069141/2-fbr-misses-quarterly-tax-target-rs116-billion/?amp=1


I don't even want to go into the rest of your points because it is abundantly clear you have no idea what you are talking about.

 

[Slog]

Noon League tenure was a disaster where our foreign reserves were dwindled to keep the currency artificially up and where the government wasted golden chance of reforms at a time when global economy was expanding at record rates and Crude was $30 per barrel.

 

[last_knight]

Here is the source:

https://www.dawn.com/news/1415115

Rating changed to negative in June 2018,

PTI came into power August 2018.

If you own a calendar, you will know June comes before August.

Come on ! PMLn reply : In June 18, Nawaz Sharif wasn't PM.

 

[Savak]

So, as per your logic, anyone who has ever voted for PMLN or PPP has only done so because they benefited from the corruption? Brilliant logic! This is a brilliant example of burying ones head in the sand.

Not at all. I have come across many die hard PML N and PPP supporters who will defend these parties no matter what and will always remain anti PTI no matter what. Upon further examination, it came too light that most of these people had a parent or a close relative who was highly connected to PPP and PML N with business and political interests. These people don't give a **** about the country, the fact our foreign debt shot up from $36 billion to $100 billion in the last decade with nothing to show for it, its all about their pockets

 

[Bewal Express]

Come on ! PMLn reply : In June 18, Nawaz Sharif wasn't PM.

You have been rumbled so now you are looking for anything to mitigate the humiliating climbdown-The PML was in power and Shall i quote you what Shahid abbasi said about who controlled him? [MENTION=142451]Mian[/MENTION]

 

[Mian]

Assistant Secretary of State for South and Central Asia Alice Wells lauding Pakistan finance ministry’s efforts hailed Moody’s Investors Service upgrading country’s credit rating to stable.

“Pleased to see that [MENTION=52200]moody[/MENTION]sInvSvc [Moody’s Investors Service]has revised Pakistan’s credit outlook to stable,” Wells tweeted, “Thanks to @FinMinistryPak’s [Ministry of Finance] reform efforts and IMF program.”

She also said that Pakistan can boost its growth, attract private capital, and expand exports with bold economic reforms.

On Monday, world’s leading bond credit rating agency revised Pakistan’s credit rating from ‘negative’ to ‘stable’ ahead of the launch of Eurobond and Sukuk worth around $2 billion in the world markets.

“The change in outlook to stable is driven by Moody’s expectations that the balance of payments dynamics would continue to improve, supported by policy adjustments and currency flexibility,” read Moody’s report.

“The improvement in the outlook is highly expected to revive foreign investors’ confidence in Pakistan, compelling them to pour-in significant amounts in different sectors of the economy like manufacturing, agriculture and exports and portfolio investment in stocks and debt markets,” experts said.

The US-based rating agency revised upwards the outlook after a gap of 18 months. Earlier, it had downgraded the outlook to negative in June 2018.

https://tribune.com.pk/story/211144...ails-moody-upgrading-pakistan-outlook-stable/

 

[Mian]

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Pleased to see that <a href="https://twitter.com/MoodysInvSvc?ref_src=twsrc%5Etfw">@MoodysInvSvc</a> has revised Pakistan’s credit outlook to stable thanks to <a href="https://twitter.com/FinMinistryPak?ref_src=twsrc%5Etfw">@FinMinistryPak</a>’s reform efforts and IMF program. With bold economic reforms, Pakistan can boost growth, attract private capital, and expand exports. AGW</p>— State_SCA (@State_SCA) <a href="https://twitter.com/State_SCA/status/1201968472277864448?ref_src=twsrc%5Etfw">December 3, 2019</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

[Syed1]

Patwaris be like, US State Department is under influence of establishment.

 

[kk1992]

Where are those who were using Tomatoes prices to defend their support to supposedly competent but corrupt vote ko izzat do and mujay kyu nikala walay?

 

[shockbound]

Patwaris be like, US State Department is under influence of establishment.

Dont need patwaris to tell that they're advertising IMF while staying in good books.

Please come and live like an average Pakistani before assuming financial situation.

 

[Syed1]

Dont need patwaris to tell that they're advertising IMF while staying in good books.

Please come and live like an average Pakistani before assuming financial situation.

Overzealous modding strikes again





Why is it that state department was not praising the finance ministry during Noora government? Can you help me understand.

 

[WebGuru]

Overzealous modding strikes again





Why is it that state department was not praising the finance ministry during Noora government? Can you help me understand.

Because IMF was anti USA at that time

 

[Syed1]

Because IMF was anti USA at that time

IMF is under influence of establishment

 

[DeadBall]

IMF is under influence of establishment

Influence Mai Fauj (ki)

All adds up.

 

[MenInG]

KARACHI: Moody’s Investors Service on Thursday changed the outlook of five leading banks from ‘negative’ to ‘stable’ and affirmed their existing B3 long-term local currency deposit ratings.

The banks include Allied Bank Ltd (ABL), Habib Bank Ltd (HBL), MCB Bank Ltd, National Bank of Pakistan (NBP) and United Bank Ltd (UBL), according to an announcement by the New York-based rating agency.

The rating actions follow Moody’s decision on Dec 2 to affirm B3 rating for the Government of Pakistan and change the outlook on the sovereign rating to stable from negative and reflect reduced external vulnerability risks and ongoing fiscal reforms.

However, the banks’ outlook was changed mainly due to high exposures to the government securities which is almost risk-free and high yielding.

“The banks’ rating actions reflect improvements in the operating environment in Pakistan and in the country’s sovereign credit profile, which affect the banks’ given their high government exposures that link their credit profiles to that of the government and the expectation that the government’s capacity to support banks in case of need will not deteriorate,” said the agency.

The primary driver of Moody’s decision to change the outlook for the banks to stable is the extensive interconnectedness between their balance sheets and sovereign credit risk, owing to the banks’ high exposures to government securities.

The high direct exposure to government credit risk, in addition to the primarily Pakistan focus of their operations, links the banks’ credit profile to that of the government.

As a result, the improvements in the operating environment and in the sovereign credit profile have eased pressures on banks as well.

The stable outlook assigned to the local currency deposit ratings also reflects Moody’s expectation that the government’s capacity to support banks in case of need will not deteriorate.

The agency said this is reflected by the stable outlook on Pakistan’s sovereign B3 bond rating which is driven by reduced external vulnerability risks on the back of policy adjustments and currency flexibility as well as ongoing fiscal reforms that will mitigate risks related to debt sustainability and government liquidity.

Moody’s decision to affirm the banks’ ratings reflects their stable deposit-based funding structures, high liquidity buffers and good earnings generating capacity, as well as Pakistan’s high growth potential, said the agency.

The agency said further improvements in the operating environment and in the sovereign’s credit risk profile could place upward rating pressures.

Moody’s would downgrade the banks’ ratings in the event of a weakening of Pakistan sovereign’s creditworthiness, it said.

Additional pressure may arise from a weakening in banks’ baseline credit assessment, driven by asset quality pressures that also affect banks’ capital buffers, it added.

https://www.dawn.com/news/1520728/moodys-upgrades-outlook-for-five-banks-to-stable

 

[Abdullah719]

Moody’s puts Pakistan under watch

Moody’s Investors Service – one of top three global credit rating agencies – has put Pakistan under watch for possible downgrade of its long-term local and foreign credit ratings, suspecting that Islamabad may default on debt repayments to “private sector creditors” due to economic mess under the coronavirus pandemic.

Spoiler

“Moody’s has placed the government of Pakistan’s local and foreign currency long-term issuer and senior unsecured B3 rating under review for downgrade,” the US-based rating agency announced on Thursday.

“Consistent with Moody’s approach globally, the review period will allow the rating agency to assess whether Pakistan … would likely entail default on private sector debt,” it said. The rating agency, however, did not mention the duration of the review period, as to how long it would monitor Islamabad’s debt repayment activities and when it would announce its final decision regarding downgrade.
Moody’s said Pakistan had improved its economic indicators well before the outbreak of Covid-19 late in March and was still capable of continuing to pay off the debt on time.

However, the possible deterioration in the country’s current account deficit, likely depletion in its foreign currency reserves and low tax and non-tax revenue collections due to limited economic activities and anticipated contraction in the domestic economy may weaken the government’s ability to continue paying off the debt on time, going forward, the agency said.

Moody’s alert may turn the rupee-dollar exchange rate volatile and may increase cost of new foreign borrowing for the country in international markets, an analyst said.

Moody’s said the decision to place the ratings under review for downgrade reflected its expectation that the government would request for bilateral official sector debt service relief under the recently announced G20 initiative.

“Suspension of debt service obligations to official creditors would be unlikely to have rating implications; indeed such relief would increase the fiscal resources available to the government for essential health and social spending due to the coronavirus outbreak,” it said.

“However, G20 has called on private sector creditors to participate in the initiative on comparable terms. Consistent with Moody’s approach globally, the review period will allow the rating agency to assess whether Pakistan’s participation in the initiative would likely entail default on private sector debt, notwithstanding the intended voluntary nature of private sector participation and the fact that the country has not, to Moody’s knowledge, indicated interest in extending the debt service relief request to the private sector; and, if so, whether any losses expected to arise from that participation would be consistent with a lower rating,” it said.

The G20 call for the private sector creditors to participate in the initiative on comparable terms “suggests that, for the countries that elect to seek official sector debt service relief, the initiative may also lead to the suspension of payments or renegotiation of private sector debt service obligations. It is in this context that Moody’s has placed Pakistan’s ratings under review,” the agency said.

“Pakistan has not indicated any interest in extending the debt service relief to include private sector creditors,” it said.

“The rating would likely be downgraded should Moody’s conclude that participation in the G20 debt service relief initiative would probably entail default on private sector debt and that losses experienced would likely exceed the threshold consistent with a B3 rating,” it said.

“The rating would likely be confirmed at its current level (stable at B3) should Moody’s conclude that participation in bilateral official sector debt service relief would unlikely entail default on private sector debt or, if it would, that any losses experienced would likely be minimal.”

The rapid spread of the coronavirus, sharp deterioration in the global economic outlook and a significant reduction in risk appetite are creating a severe economic and financial shock. “For Pakistan, the current shock transmits mainly through a sharp slowdown in economic activity, lower tax revenue as economic activity slows, and higher government financing needs relative to pre-coronavirus levels,” it said.

“However, ongoing reforms that pointed to nascent improvement in credit fundamentals before the outbreak and financing from development partners contain the pressure on the sovereign’s liquidity and external positions.”

Economy, debt to shrink

Moody’s expects Pakistan’s economy to contract by around 1% in fiscal year 2020 (ending June 2020) and to grow by 2-3% in fiscal 2021 – below potential.

The economic slowdown will weigh on government revenue and modestly raise spending, in turn pushing the fiscal deficit wider to close to 10% of GDP in fiscal year 2020.

As a result, Moody’s projects the government’s debt burden will reach around 85-90% of GDP in fiscal year 2020. However, the government’s commitment to fiscal reforms, including under its 2019-22 International Monetary Fund (IMF) programme, provides a crucial anchor for the continued expansion of its revenue base when economic activity gradually normalises.

“Overall, Moody’s expects that the debt burden will return to a downward trend after the initial shock.”

https://tribune.com.pk/story/2221707/2-moodys-puts-pakistan-watch/

 

[MenInG]

Credit rating agency Moody's has upgraded Pakistan’s outlook from ‘under review for downgrade’ to ‘stable’, while maintaining a B3 rating, the agency said on Saturday.

The agency in its latest report also confirmed the B3 foreign currency senior unsecured ratings for The Third Pakistan International Sukuk Co Ltd. The associated payment obligations are, in Moody's view, direct obligations of the Government of Pakistan.

The agency noted that the 'review for downgrade' status had reflected Moody's assessment that the country's participation in the G20 Debt Service Suspension Initiative (DSSI) raised the risk that private sector creditors would incur losses.

“In the last few weeks, Moody's has considered the evidence of implementation of DSSI for a range of rated sovereigns and statements by G20 officials,” it said.

“While Moody's continues to believe that the ongoing implementation of DSSI poses risks to private creditors, the decision to conclude the review and confirm the rating reflects Moody's assessment that, at this stage, for Pakistan, those risks are adequately reflected in the current B3 rating,” it added.

The stable outlook reflects Moody's view that the pressures Pakistan faces in the wake of the coronavirus shock and prospects for its credit metrics in general are likely to remain consistent with the current rating level.

“In particular, while Moody's sees downside risks to Pakistan's economy because of movement and activity restrictions related to the pandemic, which would in turn intensify the government's fiscal challenges, strong support from development partners including for external financing, coupled with effective macroeconomic policies started ahead of the crisis, contain external vulnerability and liquidity risks,” it noted.

“While continued spread of the virus poses downside risks to the economy and government finances, financial and technical support from development partners mitigates external vulnerability and liquidity risks,” it said.

Moody’s also noted the Pakistani government’s commitment to the International Monetary Fund’s (IMF) Extended Fund Facility (EFF), which it expects will cover its external financing needs over the next 12-18 months and provide an anchor for ongoing fiscal reforms.

The credit agency also added it expects the country’s economic growth to be positive in fiscal 2021 (ending June 2021) from a recession in fiscal 2020, but still low at around 1-2%.

“While Pakistan's economy is relatively closed with low reliance on exports, movement restrictions due to coronavirus will keep economic activity below the pre-outbreak levels for some time,” it noted.

It added that the slow economic recovery will in turn weigh on government revenue, “Keeping the fiscal deficit wide at around 8-8.5% of GDP in fiscal 2021 under Moody's projections, at similar levels compared to fiscal 2020, and leaving the government's debt burden high at around 90% of GDP by the end of fiscal 2021.”

“Even in downside economic and fiscal scenarios, Moody's expects Pakistan to cover its external financing needs with continued significant financial support from its development partners, including the commitment to rollover most bilateral loans that come due, independent of how DSSI is implemented,” it said.

The agency said it also expects the government's ongoing engagement with development partners on fiscal reforms, such as through the IMF EFF and other programmes with the Asian Development Bank and World Bank, to contribute to a modest widening of the revenue base once the crisis passes, improving debt affordability and containing fiscal risks over the next few years.

On the subject of external financing, Moody's said the need seems to have declined relative to fiscal 2018-19 because of a narrower current account deficit, which occurred as a result of the macroeconomic adjustments over the past two years and continues to be supported by effective policies including currency flexibility.

It projected the the current account deficit to be around 2% of GDP in fiscal 2021, after 1.1% in fiscal 2020, substantially narrower than the average of around 5.5% over fiscal 2018-19.

“Stability in the balance of payments will, in turn, allow the State Bank of Pakistan, the central bank, to keep monetary policy accommodative as inflation declines. This keeps a lid on borrowing costs for the government domestically and lends further support to debt affordability,” it added.

A positive change in the country’s rating could continue if ongoing fiscal reforms were to expand the government's revenue base, raise debt affordability, and lower its debt burden beyond Moody's current expectations.

However, a change in the rating is also on the cards if downward pressure on the rating would stem from renewed deterioration in Pakistan's external position, including through a significant widening of the current account deficit and erosion of foreign exchange reserve buffers, which would threaten the government's external repayment capacity and heighten liquidity risks.

https://www.geo.tv/latest/301785-mo...ook-to-stable-from-under-review-for-downgrade

 

[Abdullah719]

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">1/2 FitchRatings has maintained Pakistan’s sovereign rating at “B-“ with a “Stable Outlook”, which further confirms Moody’s assessment published earlier this month.</p>— Ministry of Finance (@FinMinistryPak) <a href="https://twitter.com/FinMinistryPak/status/1295316616482377728?ref_src=twsrc%5Etfw">August 17, 2020</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">2/2 Once again, this is a clear affirmation of the Government’s well considered and effective economic and financial policies in some of the most challenging circumstances in living memory created by the Covid-19 Pandemic.</p>— Ministry of Finance (@FinMinistryPak) <a href="https://twitter.com/FinMinistryPak/status/1295316686082584576?ref_src=twsrc%5Etfw">August 17, 2020</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

[MenInG]

ISLAMABAD: The Standard & Poor’s (S&P) rating agency on Thursday affirmed Pakistan’s ‘B-’ long-term and ‘B’ short-term sovereign rating while maintaining ‘stable’ long-term outlook.

The New York-based rating agency also affirmed ‘B-’ long-term issue rating on Pakistan’s senior unsecured debt and sukuk trust certificates. It said the country’s rating remains constrained by a narrow tax base and domestic and external security risks, which continue to be high.

Although the country’s security situation has gradually improved over the recent years, ongoing vulnerabilities weaken the government’s effectiveness and weigh on the business climate.

It said the Covid-19 pandemic exacerbated Pakistan’s economic downturn but forecast the real GDP to recover to 1.3 per cent during the current fiscal year. “We expect the sovereign’s credit metrics to remain under pressure for the next two to three years”, said the S&P.

The agency, nevertheless, noted that the government had made solid progress toward important fiscal and economic reforms prior to the start of the global coronavirus outbreak, and reform momentum should return once the pandemic was better contained. Multilateral and official funding will remain critical to Pakistan’s external debt sustainability.

It said the stable outlook reflected rating agency’s expectations that funding from the International Monetary Fund (IMF) and other partners, along with a recent improvement in Pakistan’s balance of payments position will be sufficient for the country to meet its considerable external obligations over the next 12 months.

The rating agency said it may lower its “ratings if Pakistan’s fiscal, economic, or external indicators deteriorate further, such that the government’s external debt repayments come under pressure”. Indications of this would include external or fiscal imbalances higher than expected.

Conversely, it may raise ratings on Pakistan if the economy materially outperforms expectations, strengthening the country’s fiscal and external positions more quickly than forecast. It said the progress on reforms was likely to be delayed amid the pandemic.

The ratings reflect the fallout of the Covid-19 pandemic on the country’s already-weak economy, considerable external indebtedness and liquidity needs and an elevated general government fiscal deficit and debt stock.

“While Pakistan had made progress toward consolidating its fiscal accounts during the first nine months of its Extended Funding Facility programme with the IMF, related imbalances have been worsened by much slower economic growth since March 2020”, it noted.

The agency noted in particular that domestic demand in the economy remained very weak, as evident from contractions in both real consumption and imports in the fiscal year ended June 2020. Prospects for a near-term recovery have dimmed following strict domestic virus containment measures implemented between March and June, and in the face of a much weaker global economic outlook.

Despite having stabilised in the first three quarters of the fiscal year, a deep downturn in the April-June period led the Pakistani economy to a full-year contraction of nearly 0.4pc in fiscal year 2020. Renewed weakness in the economy will undermine revenue generation while complicating the government’s efforts to curtail expenditure.

The government is likely to focus on implementing last year’s new revenue measures in the current fiscal period, rather than to introduce additional policies against a backdrop of poor business and consumer sentiment.

Pakistan’s economy is likely to recover only gradually as the global pandemic is progressively better contained. Following Pakistan’s worst economic performance on record in FY20, the agency forecast a modest expansion of 1.3pc in FY21.

Taken together with its relatively fast population growth of approximately 2pc per year, real per capita economic growth will likely remain negative for a third straight year, at -0.7pc. That will contribute to a further decline in Pakistan’s 10-year weighted average per capita growth rate to just 0.6pc, well below the global median of 1.5pc for economies at a similar level of income.

The Pakistani rupee’s approximately 38pc depreciation against the dollar between 2017 and 2020 has also contributed to a considerable decline in the economy’s nominal GDP per capita. “We forecast GDP per capita to remain just above $1,200 by the end of this fiscal year, versus closer to $1,600 in fiscal 2018”.

Growth will also be constrained by domestic security challenges and extended hostility with neighboring India and Afghanistan. The former Pakistan Muslim League government improved the security situation within the country, and we would expect the government to continue this positive momentum.

However, tensions with neighboring India flared on multiple occasions in 2019, and further incidents, especially in the vicinity of the line of control in Kashmir, cannot be ruled out.

After an estimated general government fiscal deficit of 8.1pc of GDP in fiscal 2020, we forecast an elevated shortfall equivalent to 8.5pc of GDP this year, largely owing to revenue constraints amid the weak economy.

https://www.dawn.com/news/1575582/pakistans-long-term-outlook-stable-standard-poors