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Another international agency downgrades Pakistan’s long-term rating outlook to negative

After Moody’s and Fitch, another rating agency Standard and Poor’s (S & P) downgraded the outlook on Pakistan’s long-term ratings to negative.

The ratings of Pakistan have been downgraded on the increasing risk to the government’s liquidity. “B-“ long-term and “B” short-term sovereign credit ratings as well as “B-“ long-term issue rating on senior unsecured notes and Sukuk trust certificates were affirmed.

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The negative outlook has reflected the increasing risks to the external liquidity position of Pakistan during the previous year of the difficult economic landscape. According to S & P the reform prospects for Pakistan depend upon political stability and macroeconomic conditions.

The rating agency said in a statement that rupee depreciation, high commodity prices and tight global financial conditions have weakened the external position of the country. It further said that even after the disbursement of the International Monetary Fund (IMF) loan tranche under the extended fund facility (EFF) program, the external sources would remain under pressure.

According to the rating agency, tight domestic monetary conditions and elevated inflation would affect the country’s economy however during the next few years Pakistan would achieve moderate growth.

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It also said that the government has shown great willingness to implement difficult financial reforms but political risk and inflation would change the policies over the next year.

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