Business | Economy
Pakistan still faces rating downgrade, Moody's says
Pakistan's debt rating remains on review for a downgrade as a "narrow avoidance" of default was not a vast improvement of its creditworthiness, Moody's Investors Service said.
- Bloomberg
- Published: 23:29 November 17, 2008
Islamabad: Pakistan's debt rating remains on review for a downgrade as a "narrow avoidance" of default was not a vast improvement of its creditworthiness, Moody's Investors Service said.
Moody's "will not take any immediate rating actions" based on the weekend announcement of a $7.6 billion bailout from the International Monetary Fund, said Aninda Mitra, a sovereign analyst at the ratings company in Singapore. Pakistan still needs to show it can meet debt payments due in the first half of 2009 and secure additional assistance from other donors, he said.
Officials from Pakistan and a group of potential donor countries were meeting yesterday in Abu Dhabi to set an agenda and date for a ministerial-level meeting later. South Asia's second-biggest economy needs external aid after its foreign-exchange reserves shrank 75 per cent in the past year to $3.5 billion, threatening its ability to repay debt.
Pakistan's credit rating was lowered by Moody's on October 28 to B3 from B2, six rankings below investment grade. The so-called 'Friends of Pakistan' group meeting yesterday included the US, UK, China and Saudi Arabia.
"We would like to see whether the IMF agreement results in unlocking assistance flows from other bilateral creditors who were approached by the government, but were reluctant in providing assistance," Mitra said yesterday.
The IMF loan may help the nation overcome a "crisis of confidence" and improve its debt rating, Rajat Nag, Managing Director at the Manila-based Asian Development Bank, said in an interview in New Delhi.
"There is no reason why it should not" lead to an upgrade in Pakistan's credit rating, Nag said. "The IMF programme will bolster confidence and I am optimistic Pakistan will be able to undertake the reforms required for the bailout package."
Business Editor's choice
-
Saudi-Bahraini economic ties hit new high
Whilst press reports continue speculating on a possible new political structure defining ties between Saudi Arabia and Bahrain, facts on the ground confirm ever- stronger economic ties between the two neighbours
-
Cupid targets the Fed with early tweets
Declarations range from pure romance to cute overtures and racier fare
-
Do unemployment figures flatter to deceive?
Jobseekers and recruiters give out mixed signals ranging from optimism to downright despair even as official data show recovery
