Ahmed Mukhtar Naqshbandi
ISLAMABAD: Amid severe economic challenges Pakistan is confronted with at all fronts, international credit rating agency – Fitch Ratings, on Tuesday, slashed Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘CCC-‘ from ‘CCC+. ‘
According to Fitch’s statement, the company does not typically assign outlooks to sovereign nations with a rating of ‘CCC+‘ or below.
The agency flagged worsening external liquidity and the decline of foreign exchange (FX) reserves to critically low levels as the main reasons for the downgrade.
“The downgrade reflects further sharp deterioration in external liquidity and the decline of foreign exchange (FX) reserves to critically low levels,” Fitch Ratings said.
“This is partly a result of widespread floods, which will undermine Pakistan’s efforts to rein in twin fiscal and current account deficits.”
Fitch assumes successful conclusion of Pakistan, IMF review
Fitch assumed a successful conclusion of the 9th review of Pakistan’s IMF programme. Default or debt restructuring is an increasingly real possibility, the agency said.
Completion of the review hinges on additional front-loaded revenue measures and increases to regulated electricity and fuel prices.
