August 20, 2020: Standard and Poor’s has affirmed 'B-' long-term and 'B' short-term sovereign credit ratings on Pakistan. The outlook for the long-term rating is stable. It also affirmed 'B-' long-term issue rating on Pakistan's senior unsecured debt and sukuk trust certificates.
‘The COVID-19 pandemic has exacerbated Pakistan's economic downturn, and we expect the sovereign's credit metrics to remain under pressure for the next two to three years. Nevertheless, the government had made solid progress toward important fiscal and economic reforms prior to the start of the global coronavirus outbreak, and reform momentum should return once the pandemic is better contained. Multilateral and official funding will remain critical to Pakistan's external debt sustainability’ S&P said in a press release.
The stable outlook reflects expectations that funding from the IMF and other partners, along with a recent improvement in Pakistan's balance of payments position, will be sufficient for the country to meet its considerable external obligations over the next 12 months.
It also reflects expectations that donor and partner financing will ensure that Pakistan can meet its external obligations over the next 12 months, and that the country will continue to roll over its commercial credit lines.
S&P may lower its ratings if Pakistan's fiscal, economic, or external indicators deteriorate further, such that the government's external debt repayments come under pressure. Indications of this would include external or fiscal imbalances higher than what it expects.
Conversely, it may raise our ratings on Pakistan if the economy materially outperforms our expectations, strengthening the country's fiscal and external positions more quickly than forecast.
