ISLAMABAD: Advisor to Prime Minister on Finance and Revenue Hafeez Shaikh tweeted on Monday saying that Fitch Ratings affirmation of Pakistan’s long-term foreign-currency Issuer Default Rating (IDR) at “B-” with a stable outlook is a “testament to the government’s balanced and effective financial management to protect livelihoods of citizens while also preventing COVID-19 spread”.
Fitch Ratings has maintained Pakistan’s sovereign rating at “B-“ with a “Stable Outlook”, further confirming Moody’s assessment. This is a testament to the Govt's balanced & effective financial management to protect livelihoods of citizens while also preventing COVID-19 spread.
— Dr. Abdul Hafeez Shaikh (@a_hafeezshaikh) August 17, 2020
The rating agency in its latest update stated that Pakistan’s “B-” rating reflects weak public finances, including large fiscal deficits and a high government debt/GDP ratio, a challenging external position characterized by large external debt repayments against low foreign-exchange reserves and low governance indicator scores.
The coronavirus pandemic has made the impact of this crisis worse by slowing down economic growth and increasing pressures on public finances. The external finances appear resilient to the shock due to the authorities’ policy actions and continuing multilateral and bilateral financial support.
The rating agency also said that the policy actions by the authorities over the past couple of years eased external vulnerabilities prior to the coronavirus shock. These included tighter monetary policy settings and the move to a more market-determined exchange rate regime, which contributed to a sharp narrowing of the current account deficit and a modest rebuilding of foreign-exchange reserves.
