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Moody’s rates Pakistan’s economic growth ‘moderate’

Moody’s rates Pakistan’s economic growth ‘moderate’

Mubasher: Moody's on Tuesday announced its periodic review of issuers, including Pakistani government.

The international agency set Pakistan’s issuer rating at ‘B3,’ mirroring the nation’s ‘moderate (+)’ economic strength.

The Pakistani economic strength is driven by the relatively strong gross domestic product (GDP) growth potential and large scale of the economy, despite it is curtailed by very low per capita incomes and global competitiveness.

Moreover, the rating reflected Pakistan’s “Very Low (+)” institutional strength, with very weak scores in the worldwide governance indicators, despite the central bank’s further autonomy which upped monetary policy effectiveness.

Moody’s also assessed the government’s fiscal strength as “Very Low (-)” owing to very narrow revenue base which subdues debt affordability, lower fiscal flexibility and raises the debt burden, amid continued infrastructure expenditure needs and rising interest expense.

In addition, Pakistan’s economic growth was a “susceptibility to event risk” at ‘High’ driven by heightened external vulnerability, as external pressures continue to weigh on the country's foreign-exchange reserve adequacy, while political and government liquidity risks remain elevated in Pakistan,” Moody’s said.