ISLAMABAD: The S&P Global Ratings has revised the outlook on Pakistan’s long-term ratings to negative from stable after Moody’s and Fitch.
The S&P affirmed its ‘B-’ long-term and ‘B’ short-term sovereign credit ratings on Pakistan, as well as ‘B-’ long-term issue rating on the country’s senior unsecured notes and Sukuk Trust Certificates.
“Pakistan’s external position weakens against a backdrop of higher commodity prices, tighter global financial conditions, and a weakening rupee,” said the agency. The agency said that it could lower its ratings if Pakistan’s external indicators continued to deteriorate, but the outlook could be revised to stable if its external position stabilises and improves.
Evidence of improvement could include a sustained rise in usable foreign exchange reserves. Pakistan’s domestic demand continues to recover, it is now facing a new challenge in the form of rising prices, particularly for staple goods, said the agency.
“Prevailing price dynamics, including costlier edible oils, fuel, electricity, and grains, are likely to hurt the pace of private consumption growth in the current fiscal year ending June 2023,” said the agency.
“The Pakistan government has considerable external indebtedness and liquidity needs, and an elevated general government fiscal deficit and debt stock,” it said. “Prevailing price dynamics, including costlier edible oils, fuel, electricity, and grains, are likely to hurt the pace of private consumption growth in the current fiscal year ending June 2023,” it said.