Pakistan’s long-term debt rating downgraded
Economic Issues(Online): Fitch Ratings, one of the three major global rating agencies, on Friday downgraded Pakistan’s long-term debt rating to ‘B-Negative’ owing to high debt repayment obligations, low foreign exchange reserves and fragile fiscal situation. The outlook, however, remains stable.
The New York-based agency said the downgrading of the rating from ‘B’ to ‘B-’ reflected heightened external financing risk from low reserves and elevated external debt repayments, as well as continued deterioration in the fiscal position, with a rising debt-to-GDP ratio. It said that a successful conclusion of the ongoing negotiations on IMF support could help stabilise external finances, but the programme would then face significant implementation risk.
Pakistan’s liquid reserves have continued to fall, reaching $7.3 billion as of Dec 6 — equivalent to 1.5 months of imports — despite significant stabilisation efforts by the State Bank of Pakistan and the new PTI government.
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