ISLAMABAD The finance ministry has rejected Moody’s decision to downgrade Pakistan’s autonomous credit standing to Caa1– veritably high credit threat status– as’ unilateral’ and’ not truly reflective of the country’s macroeconomic conditions.
Moody’s on Thursday downgraded Pakistan’s long- term foreign debt standing to Caa1 from B3.
The standing agency said the decision to downgrade the conditions to Caa1 is driven by increased government liquidity and external vulnerability pitfalls and advanced debt sustainability pitfalls, in the fate of ruinous cataracts that hit the country since June 2022.
” The Caa1 standing reflects that Pakistan will remain largely reliant on financing from multinational mates and other sanctioned sector creditors to meet its debt payments, in the absence of access to request backing at affordable costs,” Moody’s added.
In a statement, the finance ministry said the standing action by Moody’s is explosively queried as the action was” carried out unilaterally without previous consultations and meetings with brigades from the Ministry of Finance and State Bank of Pakistan”.
The ministry said it held two meetings with the Moody’s platoon over the once 24 hours, participating data and information which easily show a picture contradicting Moody’s standing action. The statement said the government has acceptable liquidity and backing arrangements to meet its external arrears.
Pakistan is presently under the IMF programme, the durability of which is grounded on the evidence and confidence in country’s capability to maintain the financial discipline, debt sustainability and its capability to discharge all its domestic and external arrears.” The country remains married to the agreements reached under IMF prorgamme.
The statement said” Moody’s “ worsening near- and medium- term profitable outlook ” doesn’t depict the correct picture due to gaps in information available with Moody’s and its use of estimations isn’t predicated in fundamentals”.” As similar, the estimate of profitable cost of the cataracts at$ 30 billion is unseasonable as the data is still being collected in collaboration with World Bank and other mates, to insure translucency and delicacy, and will be available once the numbers are concrete up.” therefore, the impact on GDP growth rate can not be completely and directly assessed at this time and” so Moody’s downcast modification of GDP growth rate at 0- 1 percent has no solid base.” also, the statement said, rephrasing profitable losses into financial deficiency is queried.
” On the expenditure front, government will largely be involved in public structure reconditioning, and that too, over a number of times.” The ministry said the supplement in critical current expenditure is being met throughre-allocations andre-appropriations of calculated finances therefore mollifying the threat of rising deficiency. On the profit front, the increase in nominal GDP is likely to compensate for any dip in earnings.
The statement said an print of restructuring of Pakistan’s debt is refuted unequivocally as presently no similar offer is under consideration or is being pursued as has been categorically stated by the finance minister.” Ministry of Finance explosively feels that the downgrading of Pakistan’s standing isn’t truly reflective of Pakistan’s macroeconomic conditions.”