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Moody's changes outlook on Pakistan's to negative

Moody's changes outlook on Pakistan's to negative

Mubasher: Moody's Investors Service has changed the outlook on Pakistan's rating to negative from stable and affirmed the B3 local and foreign currency long-term issuer and senior unsecured debt ratings.

The decision to change the outlook to negative is driven by heightened external vulnerability risk, according to a report issued on Wednesday.

The Pakistani foreign exchange reserves have fallen to low levels and, absent significant capital inflows, will not be replenished over the next 12 to 18 months.

“Low reserve adequacy threatens continued access to external financing at moderate costs, in turn potentially raising government liquidity risks,” the report noted.

On the other hand, the ratings agency noted that the decision to affirm the B3 rating reflects Pakistan's robust growth potential, supported by ongoing improvements in energy supply and physical infrastructure, which are likely to raise economic competitiveness over time.