The Ministry of Finance has questioned the rating action by Moody’s in which it downgraded Pakistan’s sovereign credit rating from B3 to Caa1
In a statement, it said that the rating action by Moody’s was carried out unilaterally without prior consultations and meetings with our teams from the Ministry of Finance and State Bank of Pakistan.
The statement said that following Moody’s intimation of the rating action, the ministry held two meetings with Moody’s team over the past 24 hours, sharing data and information which clearly show a picture contradicting Moody’s rating action.
It said that the Government of Pakistan has adequate liquidity and financing arrangements to meet its external liabilities. Pakistan is currently under the International Monetary Fund (IMF) Programme, the continuity of which is based on confirmation and confidence in the country’s ability to maintain fiscal discipline, debt sustainability, and ability to discharge all its domestic and external liabilities. The country remains committed to the agreements reached under the IMF prorgamme, it added.
Moody’s “worsening near- and medium-term economic outlook” does not depict the correct picture due to gaps in the information available with Moody’s and its use of estimations is not grounded in fundamentals. As such, the estimate of the economic cost of the floods at $30 billion is premature as the data is still being compiled in collaboration with World Bank and other partners, to ensure transparency and accuracy, and will be available once the figures are firmed up.
Downward revision of GDP
Thus, the impact on the GDP growth rate cannot be fully and accurately assessed at this time and so Moody’s downward revision of the GDP growth rate at 0-1 percent has no solid basis. Similarly, translating economic losses into fiscal deficit is contested. On the expenditure front, the government will largely be involved in public infrastructure rebuilding, and that too, over a number of years.
Source: Pro Pakistan