Pakistan's credit rating future tied to election outcomes: S&P Global Ratings

February 06, 2024 (MLN): Pakistan's prospects for attaining higher credit ratings hinge on the outcome of this week's elections and whether the resulting government can advocate for rigorous reforms, according to S&P Global Ratings. 

The ability of the incoming administration to garner public backing and collaborate effectively with essential institutions will greatly influence its capacity to access financing from the International Monetary Fund. Analysts from S&P, including Kim Eng Tan, underscored these points in a report released on February 4, 2024.

The ratings covered by Bloomberg further stated that Pakistan has a CCC+ rating, one step below the B category and signifies the nation is vulnerable to default.

"Together with new policy moves to improve investor confidence and bring down inflation, this could lift fiscal and external metrics sufficiently for the sovereign ratings to move to the 'B' rating category," S&P said.

Pakistan's elections on Thursday come at a crucial time as the nation's $3 billion IMF bailout is set to end in March, putting pressure on the new government to quickly secure another round of financing to avert a sovereign default. Political instability has also been weighing on Pakistan since Imran Khan, a popular leader, was ousted in April 2022 after a no-confidence parliamentary vote.

Imran Khan is barred from participating in the elections and has been convicted in three cases in the past week. While others in the fray include former foreign minister Bilawal Bhutto Zardari and sugar magnate Jahangir Tareen, Khan's rival and three-time prime minister Nawaz Sharif has been gaining ground. 

Copyright Mettis Link News