Pakistan’s Credit Rating Boosted by International Ratings Agency
S&P Global Ratings has upgraded Pakistan’s sovereign credit rating (in both alphabetical order and numerical order or corresponding scoring scale), applied the rating to a stable outlook to Pakistan, as it is confident in the economic recovery of the country, along with its financial stability. The upgrade was announced on Thursday, highlighting the positive impact of International Monetary Fund (IMF) support on Pakistan’s finances and reserves.
Reasons Behind the Credit Upgrade
S&P Global reports that the stable outlook reflects an expectation that the current economic recovery in Pakistan, along with the government’s efforts to enhance revenue, will stabilise the fiscal and debt indicators. It is also expected by the agency that continued official financing of Pakistan will enable the country to roll over its commercial credit lines over the next 12 months, allowing it to remit its foreign liabilities.
Market Reaction to the Upgrade
International bonds due over five years rose in Pakistan after the upgrade in its credit rating, with the 2051 maturity increasing 1.6 cents to 84.85 cents on the dollar, according to Tradeweb data. Gains were also realised in other maturities, such as 2031 and 2036. In the short maturities, the changes were smaller.
Prime Minister Shehbaz Sharif Welcomes the Rating Improvement
Prime Minister Shehbaz Sharif was pleased with the decision by S&P Global, which upgraded its rating, noting that the action was an acknowledgement of Pakistan’s efforts to stabilise its economy. He pointed out that such an upsurge in ratings would help Pakistan access international capital markets and alleviate tension in paying foreign debt.
Economic Policies and Global Recognition
The Prime Minister noted the positive trend in Pakistan’s macroeconomic indicators and the good momentum being reported by international financial institutions and credit rating agencies. He commended the government’s economic policies, claiming that they are effective and acknowledged internationally.
Impact on Investor Confidence and Future Outlook
Investors should gain confidence in Pakistan’s economy following the upgraded rating, and more foreign investment is likely to enter the country, facilitating its economic growth in a sustainable manner. The economic team celebrated the upgrade, which Prime Minister Shehbaz attributed to the efforts and conscious planning of the team.
