Burke, VA – Pakistan’s credit rating outlook has been raised to positive from stable by Moody’s Investors Service as the South Asian country makes progress toward improving its economic fundamentals.
The rating is affirmed Caa1. At the same time, Moody’s has also affirmed Caa1 grades for Pakistan’s issuer rating as well as for U.S. dollar Trust Certificates issued by The Second Pakistan International Sukuk Company Limited, according to a statement by Moody’s.
The decision to revise the outlook on Pakistan’s foreign currency rating is “based on strengthening external liquidity position, continued efforts toward fiscal consolidation, and the government’s steady progress in achieving structural reforms under the IMF program.
The International Monetary Fund in September, 2013 approved a $6.6 billion loan for Pakistan under the Extended Fund Facility to help the country in its long-term payments obligations and stabilize the economy.
“Pakistan’s economy is improving, helped by prudent monetary and fiscal policies, strong capital inflows, robust remittances, and lower international oil prices,” Masood Ahmed, IMF Director of the Middle East and Central Asia Department who visited Pakistan early this month, said in a statement after meeting with the Pakistani officials.
Pakistan has successfully completed six programs review needed for release of loan instalments. The country’s central bank also slashed its key discount rates to the lowest in almost 13 years to 8 percent from 8.5 percent on March 21.
Pakistanis forecast to achieve 4.5 percent gross domestic product growth in the year FY15 ending June, 30, compared with on average 3.7 percent for the preceding five years.
Current account deficit in the year is expected to decline to 1.9 percent and turn into a surplus of $2.3 billion in the next fiscal year due to lower bill on oil import, according to a report by the Karachi-based Topline Securities Brokerage House.
Moody’s has maintained Pakistan’s long-term local currency bond and deposit country ceilings at B1, while the long-term foreign currency bond and deposit ceilings are maintained at B3 and Caa2, according to the statement.