Islamabad: Moody’s Investors Service said in its new report that Pakistan’s (Caa1 positive), external liquidity position is strengthening and the likelihood of default is receding, as evidenced by a recovery in foreign reserves over the last year, according to a press release of the MIS issued on Tuesday.
The report also noted that the authorities’ efforts toward fiscal consolidation have resulted in a shrinking budget deficit. While gross borrowing requirements are high, the government has moved to lengthen the maturity of its debt burden and diversify borrowing away from the banking system.
Moody’s report further said that Pakistan is also moving forward on structural reforms under its program with the International Monetary Fund (IMF). These reforms focus primarily on fiscal consolidation, debt management, and addressing structural constraints in the energy sector. Further pointed out that China’s recent pledge to invest $46 billion in the China-Pakistan Economic Corridor (CPEC) which aims to connect the two countries via rail, road, and an oil and gas pipeline, is credited positive and will spur investment activity, boost bilateral trade flows and help ease Pakistan’s energy deficit over time.
Government’s IMF program further strengthening Pakistan’s external liquidity position, progress on structural reforms would remove infrastructure impediments, supply-side bottlenecks and bolster growth.
