NEW YORK: Moody’s Investors Service also known as Moody’s has stated that the outlook of Pakistan’s currency has to stable from being negative.
Such developments reduce external vulnerability risks, although foreign exchange reserve buffers remain low and will take time to rebuild.
Moreover, the fiscal strength has weakened with higher debt levels largely as a result of currency depreciation, ongoing fiscal reforms, including through the country’s International Monetary Fund (IMF) program.
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The move comes after Pakistan’s relatively large economy and sturdy long-term growth potential, linked with ongoing institutional improvements that raise policy credibility and effectiveness.
Pakistan’s Ba3 local currency bond and deposit ceilings remained unchanged. The B2 foreign currency bond ceiling and the Caa1 foreign currency deposit ceiling have also been unchanged.
Narrowing current account deficits, in combination with enhancements to the policy framework including currency flexibility, lower external vulnerability risks in Pakistan. However, foreign exchange reserve adequacy will take time to rebuild.
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Moody’s expects the current account deficit of Pakistan to continue narrowing in the current and next fiscal year.
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