Islamabad [Pakistan], July 29 (ANI): As Pakistan’s economy slumps to a new low, ratings by S&P Global, an American credit rating agency, has cut Pakistan’s credit outlook to negative and markets think that Pakistan might soon follow Sri Lanka into debt default and economic crisis, media reports said.
Country’s external position is weakening with higher commodity prices, the rupee’s depreciation and tighter global financial conditions, The News International reported.
In a statement which the credit agency released on Thursday it was highlighted that Pakistan could be downgraded if support from bilateral and multilateral lenders quickly erodes or if usable foreign-exchange reserves fall further.
Furthermore, the media outlet while citing other foreign media said that the company also affirmed the nation’s rating at B-, on par with Ecuador and Angola. The Pakistani rupee has hit a new record low and has seen a tremendous fall in comparision to the US dollars. The rupee saw a stunning low with more than 30 per cent of its value lost in comparision to dollar this year.
The country’s dollar debt has reached record lows as it stares down to a USD 1 billion bond payment in December. Sri Lankan economy is in default and Pakistan seems to have followed suit.
Pakistani government is leaving no stone unturned to secure billions of dollars from the International Monetary Fund and countries like China and Saudi Arabia, as per the media portal.
An expert and analyst Andrew Wood in a statement said, “The Pakistan government has considerable external indebtedness and liquidity needs, and an elevated general government fiscal deficit and debt stock.” Several other analysts courted with the statement.
“Although the impact of these more difficult macroeconomic conditions has been partially mitigated by various reform initiatives undertaken by the government over the past few years, the risk of continued deterioration in key metrics, including external liquidity, is rising,” Wood added.
However, S&P is not an isolated agency which has downgraded Pakistan’s credit outlook rating. Moody’s Investors Service and Fitch Ratings already have a negative outlook on the country.
Now, these three companies rate Pakistan deep into junk. On the list of unfortunate economies that markets think might soon follow Sri Lanka into debt default and economic crisis.
Another major cause of concern if the soaring commodity prices in Pakistan. The country relies heavily on imported food and energy. With prices soaring, its current-account balance has widened and hard currency has drained away. (ANI)