Pakistan's B3 Credit Profile Supported By Robust Growth, Potential: Moody's

New York, (Pakistan Point News - 21st May, 2018) : Moody's Investors Service says it continues to expect solid economic activity in Pakistan, driven by investments related to CPEC Pakistan's B3 stable credit profile is supported by the country's robust growth performance and potential, a large � but low-income � economy, and an improved track record of reforms that started under its 2013-16 International Monetary Fund (IMF) program, Moody's Investors Service said on Monday.

In its press release issued earlier today, the credit rating agency said it continues to expect "solid economic activity, driven by investments related to the China-Pakistan Economic Corridor (CPEC)." The stable outlook on Pakistan's B3 sovereign rating reflects balanced risks to the country's credit profile, the agency said, pointing out that there is potential for a further strengthening in the country's growth as a successful implementation of CPEC can transform the economy by removing infrastructure bottlenecks and stimulating both foreign and domestic investment.

According to Moody's, credit challenges include Pakistan's "high general government debt burden and low debt affordability, weak physical and social infrastructure weighing on economic competitiveness, an increasingly vulnerable external payments position, and high political risk". The moderate but rising level of external government debt also exposes the country's finances to sharp Currency depreciations. In addition, the high level of imports � largely because of CPEC � continues to exert pressure on the external account, it added.

The press release cited triggers for an upgrade of Pakistan's sovereign rating which include a fundamental strengthening in the external liquidity position, a significant reduction in the government deficit and debt burden, and sustained progress in structural reforms. Triggers for a rating downgrade, meanwhile, include a stalling of the government's post-IMF program economic reform agenda, material widening of the fiscal deficit, worsening of the external payments position, loss of multilateral/bilateral support, or renewed political instability, the agency added.