Moody’s said on Wednesday that he had increased Pakistan’s credit rating of a “CAA1” notch of “CAA2” due to an improvement in the external financial situation and he attributed to the country a “stable” prospect.
The announcement occurred a few hours from the Minister of Finance of Pakistan, Mohammed Aurangzeb, saying that there was more room at the Central Bank to reduce the country’s key policy by 11% on the back of positive economic indicators.
“Improvement of the credit rating is a sign that economic policies are heading for the right management,” said Prime Minister Shehbaz Sharif in a statement.
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Pakistan’s international bonds increased by 1 hundred between 90 and 100 cents on the dollar after upgrading the ratings. He has raised most of them to their highest level since the beginning of 2022, when fears of a full -fledged debt crisis made them dive at 30 cents.
Moody’s decision to increase the note of a notch after Fitch and S&P did the same help Pakistan’s ability to increase external debt. Pakistan claims that its economy is on a recovery path after a bailout of $ 7 billion in the IMF has helped stabilize it.
“We have changed the prospects of the Pakistan government to a positive stable,” Moody’s said in a statement.
“The upgrade to CAA1 reflects the improvement of the external position for the improvement of Pakistan, supported by its progress in the implementation of the reform within the framework of the FMI extended funds program,” he said.
The affordability of Pakistan debt has improved, but remains one of the weakest among classified sovereigns, said Moody’s, adding that the CAA1 note also reflected the low governance of the country and the high degree of political uncertainty.
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Aurangzeb told a gathering of businessmen in Islamabad before Moody’s announcement which he expected to improve the credit rating of Pakistan by other agencies after Fitch and S&P.
“We hope the progress in terms of policy rate going south,” he added.
Aurangzeb said it was his personal point of view that there was more room for a drop in rate towards the end of the year, adding that the central bank was for the final of the issue.
The next policy rate announcement is due on September 15.
The Central Bank left its key interest rate unchanged at 11% on July 30, going against analysts’ expectations. In a Reuters survey, they had a reduction of 50 to 100 basic points.
The bank said that inflation prospects had deteriorated due to the increase in energy prices.
Inflation accelerated at 4.1% in annual shift in July.
