Recently, Moody’s revised Pakistan’s rating. In view of the fact that Moody’s performed the rating action unilaterally without consulting or meeting with the Ministry of Finance or the State Bank of Pakistan, the Ministry of Finance has been highly critical of the ratings decision.
According to the statement, the Finance Ministry strongly disputed the rating. As of
Two meetings were held between the Finance Ministry and Moody’s team in the last 24 hours, where data and information were shared that contradicted their rating decision.
After reviewing economic and financial conditions, the Ministry of Finance is pleased to report that government policies have contributed to financial stability during the last few months. As a result, it is possible for Pakistan’s government to meet its external obligations with sufficient liquidity and financing.
Fiscal discipline and debt sustainability are crucial to the continuation of the IMF program. The country also needs to be able to meet its domestic and external obligations. A commitment to IMF agreements remains on the part of the country.
The “deterioration of the near- and medium-term economic outlook” provided by Moody’s does not reflect the real picture, nor does its use of fundamentals-based estimates reflect the current situation. Due to the lack of transparency and accuracy in the data, the estimated US$ 30 billion economic cost of floods is premature. Once confirmed, the information will be available.
As a result, a complete and precise assessment of GDP growth is not possible at this point; therefore, Moody’s revised GDP growth estimate of 0-1% is unfounded. It is also counterproductive to convert economic losses into financial losses. In terms of expenditures, the government will be involved in the massive rebuilding of public infrastructure over several years, with immediate increases in current expenditures being met by reallocating budgeted funds. Due to this, the risk of a deficit increase is reduced. Moreover, a rise in nominal GDP will likely compensate for any decline in revenue on the revenue front. Over $2 billion was committed during recent multilateral meetings by the Asian Development Bank (ADB).
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