Moody's downgrades Pakistan's rating to Caa1; outlook remains negativeThe negative outlook captures risks around Pakistan's ability to secure required financing to fully meet its needs in the next few years. Elevated social and political risks compound the government's difficulty in implementing reforms, including revenue-raising measures, that would improve the country's fiscal position and alleviate liquidity stresses. The floods will also raise Pakistan's external financing needs, raising the risks of a balance of payments crisis. Pakistan's weak institutions and governance strength adds uncertainty around whether the country will maintain a credible policy path that supports further financing. The negative outlook also captures risks that, should a debt restructuring be needed, it may extend to private sector creditors.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
Pakistan's ESG credit impact score is Highly Negative (CIS-4), reflecting its high exposure to environmental and social risks, as well as its weak governance profile. Relatively weak institutions and very weak fiscal strength constrain the government's capacity to address ESG risks.
Exposure to environmental risk is Highly Negative (E-4 issuer profile score) because of Pakistan's vulnerability to climate change and the limited supply of clean, fresh and safe water. Pakistan drains a significant proportion of its scarce fresh water resources every year, and a large share of its population is exposed to unsafe drinking water. Water utility services tend to be intermittent, because of high leakage levels, limited supply and insufficient access to power. The inadequate quality of drinking water has health and economic consequences for Pakistan, such as contributing to stunting which undermines human capital. With varied climates across the nation, Pakistan is significantly exposed to extreme weather events, including tropical cyclones, drought, floods and extreme temperatures. In particular, the magnitude and dispersion of seasonal monsoon rainfall influence agricultural sector growth and rural household consumption. Agriculture accounts for around 20% of GDP and exports, and nearly 40% of total employment. Overall, around 70% of the entire population live in rural areas. As a result, both droughts and floods can create economic, fiscal and social costs for the sovereign.
Positive words for Ehsas programme the only positive pointed out in the Moody's report. Which these patwaris have been trying to sabotage and stop.
Exposure to social risk is Highly Negative (S-4 issuer profile score), driven by safety concerns that have limited investment and diversification opportunities. Very low incomes as well as limited access to quality healthcare, basic services, housing and education, especially in rural areas, are also important social issues. In addition, rising inflation has also led to higher social tensions as cost of living increases. That said, the government has taken steps to reduce poverty and inequality, strengthening social safety nets, and promoting human capital as key priorities through the 'Ehsaas' programme (national poverty alleviation programme), although effects will take time to materialise and are limited by still weak institutions and governance.
Thank you Bajwa, kangaroo courts and criminals changing NAB law:
Pakistan's governance risk exposure is Highly Negative (G-4 issuer profile score). International surveys of various indicators of governance, while showing some early signs of improvement, continue to point to weak rule of law and control of corruption, as well as limited government effectiveness.
Positive words for SBP reforms done by PTI:
The score also takes into account Pakistan's efforts in improving its macroeconomic policy effectiveness in recent years. For example, the government has amended the State Bank of Pakistan Act to strengthen the independence of the central bank and restrict the central bank from extending credit to the government.
And it all started in June this year by putting patwari jokers in charge
Moody's lowers Pakistan's outlook from stable to negative citing 'heightened external vulnerability'Moody's Investor Service on Thursday downgraded Pakistan's outlook from stable to negative, citing "heightened external vulnerability" and uncertainty around securing external financing to meet the country's needs.
Moody's lowers Pakistan's outlook from stable to negative citing 'heightened external vulnerability'
Affirms B3 credit rating, which it says incorporates Pakistan's robust growth potential and lends some capacity to absorb shocks.