ISLAMABAD: The Standard & Poor & # 39; s rating agency affirmed on Thursday the sovereign rating "B-" in the long term and "B" in Pakistan's short term, keeping the long-term perspective on the rating "stable."
The New York-based rating agency also confirmed the "B-" long-term issuance rating of Pakistan's senior sukuk debt and guarantee trust certificates. He said Pakistan's rating was still limited by a limited tax base and internal and external security risks, which remain high.
Pakistan's economic growth is forecast to slow to 2.4 percent of GDP during the current fiscal year, a minimum of 12 years. Together with the country's relatively rapid population growth of approximately 2{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} per year, real economic growth per capita will fall to 0.4{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} anemic.
That will contribute to a 10-year average per capita decline in the country's growth at 1.8pc, below the global average of 2.3pc for economies with a similar level of income, S&P releases issued Thursday said. The agency forecasts that GDP per capita will fall to just over $ 1,200 by the end of this fiscal year, compared to $ 1,565 in fiscal year 2017-2018 due to a loss of the exchange rate of more than 25{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5}.
The statement says that although the country's security situation has gradually improved in recent years, continuing vulnerabilities weaken government effectiveness and weigh on the business climate, adding that policy options have weakened support for sustainable public finances. and balanced economic growth.
"The level of corruption remains very high and the sovereign (Pakistan) occupies a poor place in the ease of doing business," said the S&P and added that the country faced a risk of long-standing conflict with neighboring states or groups not state.
He also said that Pakistan faced a dull economic outlook, along with a very stressed external position, as the government tries to address its high fiscal deficit and debt stock and, therefore, credit metrics will remain under medium-term pressure as a result. .
On the other hand, obtaining from the government a reform and financing program of the International Monetary Fund (IMF), together with considerable additional bilateral and multilateral funds, will help address short-term financing risks. However, the ongoing progress of the reform will probably be necessary to address Pakistan's credit vulnerabilities.
The S&P said its stable outlook reflected its expectations that the financing of the IMF and other partners will be sufficient for Pakistan to meet its considerable external obligations in the next one or two years.
However, the agency warned that it can reduce ratings if the country's fiscal, economic or external indicators continue to deteriorate, so that payments from the government's external debt are under pressure. On the contrary, it can raise the ratings if the economy significantly exceeds expectations, strengthening the fiscal and external positions of the country more quickly than expected.
Moderate internal sentiment, a negative fiscal impulse and difficult external conditions will weigh on medium-term economic growth and Pakistan's very low income level remains a qualification weakness.
Inadequate infrastructure and security risks continue to be structural impediments to foreign direct investment (FDI) and sustainable economic growth, he added.
Posted on Dawn, August 30, 2019
Source: https://www.dawn.com/news/1502536/pakistan-outlook-stable-sp
