S&P Global Ratings cut Pakistan’s credit outlook to negative from neutral as the nation’s external position weakens with higher commodity prices, the rupee’s depreciation and tighter global financial conditions.
The nation could be downgraded if support from bilateral and multilateral lenders quickly erodes or if usable foreign-exchange reserves fall further, S&P said in a statement Thursday. The company also affirmed the nation’s rating at B-, on par with Ecuador and Angola.
The rating agency said that it revised the outlook to negative to reflect Pakistan’s weakening external metrics against a backdrop of higher commodity prices, tighter global financial conditions, and a weakening rupee.
The Pakistani rupee has lost more than 30% of its value versus the dollar this year and the country’s dollar debt has reached record lows as it stares down to a $1 billion bond payment in December. The nation is striving to stave off fears it will follow Sri Lanka into a default this year with the government working to secure billions of dollars from the International Monetary Fund and countries like China and Saudi Arabia.
Moody’s Investors Service and Fitch Ratings already have a negative outlook on the country. The three companies rate Pakistan deep into junk.
