Moodys upgrades Pakistan’s rating: Daily Times

KARACHI: Moodys Investors Service Monday upgraded Pakistan's rating from B3 with negative outlook to B3 with stable outlook.

Moodys cited greater financial assistance from the IMF and subsequent lowering of potential risks to BoP stability from any drop in private capital inflows as the reason for the rating upgrade.

Analysts said that this action is inline with the expectations due to some improvement on the economic front. However, despite this, Pakistan's credit rating is still lower than that for most other economies in the region, where respective long-term sovereign rating for Hungary and Turkey are Baa1 and Ba3.

Considering that Pakistan's broad economic fundamentals are comparable and in some cases even better than these two economies, analysts expected further upward revision in Pakistan's rating if political risks remain manageable.

In addition, they expected that aid flows would increase further in view of next Friends of Democratic Pakistan meeting in Turkey. "This should keep both the fiscal and the external side balanced and at the same time contribute towards reserve buildup", they believed.

Pakistan's economy has been showing considerable signs of recovery. Headline inflation has declined to 11.2 percent in July 2009 from its peak of 25.3 percent in August 2008. Core inflation has also dropped to 14.0 percent in July-09 from its peak of 18.9 percent in Feb-09.

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