S&P raises Pakistan rating to 'B-', outlook stable
BS Reporter / Mumbai Aug 24, 2009, 13:17 IST
Standard & Poor's said today that it had raised its long-term sovereign credit rating Pakistan to 'B-' from 'CCC+'. The outlook is stable. S&P also raised the ratings on Pakistan's senior unsecured debt to 'B-' from 'CCC+'. The 'C' short-term sovereign credit rating and the 'B-' transfer and convertibility rating were affirmed.
"The ratings upgrade reflects Pakistan's improved external liquidity position, coupled with its successes in implementing corrective policy measures to rectify an unsustainable fiscal trajectory which evolved amid the political transition and associated instability of the recent past" said Standard & Poor's credit analyst Agost Benard.
In a statement, S&P said a narrowing current account deficit helped by buoyant remittance inflows, in combination with successive disbursals of IMF and other multilateral loans, have reduced the risk of near-term external payment difficulties for Pakistan. The IMF's recent expansion of its standby loan facility by $3.2 billion on top of the original $7.6 billion, together with donor commitments of $5.3 billion in grants for the next three years in turn provide additional support for the sovereign's ability to maintain adequate external liquidity.
"The ratings upgrade also takes into account fiscal stabilization, which brought the general government fiscal deficit down to 4.4% of GDP in fiscal 2009, from 7.4% in the previous year... Notwithstanding the 0.9% GDP slippage in last year's overall fiscal deficit target, Standard & Poor's believes that there are improved prospects for the planned revenue reforms to succeed, which are needed to lift Pakistan's chronically low revenue raising capacity."
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