Pakistan’s credit rating was reduced by S&P Global Ratings as a result of flooding, high inflation, and the nation’s external, fiscal, and economic factors.
Pakistan’s credit rating was downgraded by S&P from B- to CCC+ due to political risk and dwindling foreign reserves.
Despite already being low, Pakistan’s foreign exchange reserves will continue to be under pressure through 2023, according to S&P analysts Andrew Wood and YeeFarn Phua.
High political risks in the nation could cause changes in policies over the following year.
The nation’s $7.8 billion in foreign debts were rated by Fitch Ratings. And Moody’s Investors Service as seven notches below investment grade, along with El Salvador and Ukraine. On Thursday, S&P changed Pakistan’s outlook to stable.
Low reserves, a dollar shortage, and a postponed IMF loan programme have put the country in an economic crisis. As a result, despite Pakistan’s $1 billion bond payment this month, long-term dollar bonds continue to trade at distressed levels.
According to S&P, severe floods, increased food and energy costs, and rising international interest rates might further harm Pakistan’s economy and finances, leading to problems with medium-term refinancing.
The summer floods in Pakistan killed 1,700 people, submerged a third of the nation, and drastically reduced economic growth. The economy lost $32 billion due to floods.
