The credit profile of Pakistan (issuer rating B3) reflects the country’s “baa2” economic strength, which is underpinned by robust long-term GDP growth potential and large scale of the economy, balanced against low per capita incomes and global competitiveness, says Moody’s Investors Service (Moody’s).
Moody’s has announced the completion of a periodic review of ratings of Pakistan and stated that the periodic review of a group of issuers that includes Pakistan and may include related ratings has been completed.
The review did not involve a rating committee, and this publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and/or outlook status cannot be changed in a portfolio review and hence are not impacted by this announcement.
The credit profile of Pakistan (issuer rating B3) reflects the country’s “baa2” economic strength, which is underpinned by the robust long-term GDP growth potential and large scale of the economy, balanced against low per capita incomes and global competitiveness; its “b2” institutions and governance strength that balances weak executive institutions and fiscal policy credibility and effectiveness against a lengthening track record of effective checks and balances and judicial independence, as well as increasing monetary and macroprudential policy effectiveness; the government’s “ca” fiscal strength is driven by its narrow revenue base which hinders debt affordability, reduces fiscal flexibility and increases the debt burden given ongoing infrastructure and social spending needs; and “b” susceptibility to event risk driven by the external vulnerability, as foreign-exchange reserve adequacy, though gradually improving, remains low.
Moody’s further stated that it reviews all of its ratings periodically in accordance with regulations — either annually or, in the case of governments and certain EU-based supranational organizations, semi-annually. This periodic review is unrelated to the requirement to specify calendar dates on which EU and certain other sovereign and sub-sovereign rating actions may take place.
Moody’s conducts these periodic reviews through portfolio reviews in which Moody’s reassesses the appropriateness of each outstanding rating in the context of the relevant principal methodology (ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.