By Muhammad Luqman
Moody’s Investor Service, one of the world’s most respected and widely utilized credit rating agency has reaffirmed Pakistan’s credit profile as B3 stable. The reaffirmation is based on South Asian country’s strong growth performance and potential, a relatively large economy and the sustained reforms programme undertaken by the Government in the last five years.
Moody’s credit analysis also highlights the greater transparency which Pakistan has achieved in its economic field besides keeping inflationary pressure to low levels and investing heavily in the energy and infrastructure sectors under the US $ 60 billion China Pakistan Economic Corridor (CPEC).
The stable outlook reflects the country’s potential to further strengthen its growth beyond current levels with successful implementation of CPEC projects, cashing in on both foreign and domestic investments, continued robust activity of large scale manufacturing and a rebounding agriculture sector all of which would aid Pakistan to shift to a higher growth trajectory on sustained basis.
Moody’s in its report also highlights the size of Pakistan’s economy, with a nominal GDP of $305 billion in fiscal 2017 – the third largest among sovereigns in B rating category – which affords the country resilience to local and external shocks. Pakistan also fares better in GDP growth among its peers with 5.8 percent growth in fiscal 2018, as compared to the median 2017 growth of 3.8 percent among B rated sovereigns.
The report refers to implementation of structural reforms and the fiscal discipline achieved by the country in recent years. Moody’s expects fiscal deficit to remain around 5.5 percent of GDP in fiscal 2018 on the back of strong revenue collection in the first six months which witnessed a 20 percent rise as compared to the corresponding year-earlier period.
Some areas where the country requires renewing its focus are increasing the revenue base, investing in social sectors, improving competiveness, reinvigoratingprivatization and managing debt profile astutely. The future outlook, however, bodes well for Pakistan as the reform agenda continues and key targets of macroeconomic stability, fiscal discipline and growth supporting initiatives continue on track. Moody’s expect the country to maintain the growth momentum in the next fiscal also.
Government of Pakistan welcomes the re-affirmation of Pakistan’s sovereign rating by Moody’s Investors Service. It shows that Pakistan’s economy, despite challenges, is on a stable path to a higher growth trajectory.
