India and Pakistan are heading in opposite directions as per Moody...

desan

Prime Minister (20k+ posts)


Moody's upgrades Pakistan's outlook from 'under review for downgrade' to 'stable', maintains B3 rating.


Moody’s on Saturday confirmed Pakistan’s credit rating at B3 with the outlook at stable after it had initiated a review for downgrade in May earlier this year.

The stable outlook reflects Moody’s view that the pressures Pakistan faces in the wake of the coronavirus shock and prospects for its credit metrics, in general, are likely to remain consistent with the current rating level.

The rating agency said it expects Pakistan’s economic growth to be positive but will be low around 1 per cent-2 per cent for the ongoing fiscal year 2020-21 ending June 2021 after experiencing a recession in the previous fiscal year 2019-2020.

It added that Pakistan’s economy was relatively closed with a low reliance on exports and movement restrictions due to the pandemic will keep economic activity below the pre-outbreak levels for some time.

Meanwhile, Moody’s shared that the slow economic recovery will impact government revenue, keeping the fiscal deficit wide at around 8-8.5 per cent of GDP in the ongoing fiscal year (FY21) which will be at similar levels compared to FY20.

This, in turn, will result in the government’s debt burden remaining high at around 90 per cent of GDP by the end of FY21.

However, external financing needs have declined compared to the fiscal year 2018-19 because of a narrow current account deficit, which occurred due to macroeconomic adjustments over the past two years and continues to be assisted by effective policies including currency flexibility.

Moreover, it forecast the current account deficit (CAD) for ongoing FY21 at 2 per cent of GDP compared to 1.1 per cent recorded in FY20 and substantially narrower than the average of around 5.5 per cent in FY19.

“Stability in the balance of payments will, in turn, allow the State Bank of Pakistan, the central bank, to keep monetary policy accommodative as inflation declines. This keeps a lid on borrowing costs for the government domestically and lends further support to debt affordability,” it explained.

“The coronavirus pandemic is weighing on economic activity in Pakistan, resulting in lower tax revenue, a wider fiscal deficit, and a higher debt burden for the government.

While the continued spread of the virus poses downside risks to the economy and government finances, financial and technical support from development partners mitigates external vulnerability and liquidity risks,” said Moody’s.

“The government’s commitment to its current International Monetary Fund (IMF) Extended Fund Facility (EFF) continues to unlock a large financial envelope that Moody’s expects will cover its external financing needs over the next 12-18 months and provides an anchor for ongoing fiscal reforms.

Effective macroeconomic policies lower interest payments, supporting debt affordability, and provide policy buffers,” it added.

 
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desan

Prime Minister (20k+ posts)
Moody's cuts India's rating to lowest investment grade with negative outlook

Moody’s Investors Service downgraded India’s credit rating to a notch above junk on Monday, citing a prolonged period of slow growth in Asia’s third-largest economy, rising debt and persistent stress in parts of the financial system.

It said the cut to Baa3 from Baa2 was not driven directly by the impact of the coronavirus but that the pandemic had amplified vulnerabilities in India’s credit profile that were present and building prior to the shock.

Moody’s maintained a negative outlook for the new sovereign rating, citing worsening government finances as the coronavirus continues to hurt the economy.

India’s economy grew 3.1% in January-March, its slowest quarterly pace in at least eight years, and Moody’s expects a contraction of 4% in the current fiscal year, which runs until March 2021, due to the strict lockdown imposed in April and May.

The change brings Moody’s rating into line with Fitch and Standard and Poor’s, both of which rate India BBB-, although they assign stable rather than negative outlooks.

Moody’s had previously upgraded India’s rating from Baa3 to Baa2 in November 2017, which was seen as an endorsement of reforms undertaken by Prime Minister Narendra Modi’s government.

The agency said those measures to improve India’s fiscal strength, then at the heart of the government’s policy framework, had underwhelmed.

Modi’s government has announced a number of steps to help the poor and small businesses weather the pandemic, but Moody’s said it does not expect the measures to push India’s growth rate back towards the 8% that had recently seemed within reach.

 

jeelu

Minister (2k+ posts)
chalo kch to acha mila pr jb tk mehngai control m nahi ayege tb tk khan ko galiyan parege :P
Yeah a vast majority doesnt know about macroeconomic conditions..microeconomic conditions need to get better and quick if khan hopes to complete his term
 

ZS_Devil

Senator (1k+ posts)
Yeah a vast majority doesnt know about macroeconomic conditions..microeconomic conditions need to get better and quick if khan hopes to complete his term
jb tk term complete krega tb tk truma nikal chuka hoga i aur uske sath jo log hai wo apna profit nikal kr agey move on kr chuke hoge
 
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