Global rating agency, Fitch, demotes Pakistan’s economic rating – why?

 

The New York-based agency Fitch — one of the three major global rating agencies — noted high debt-to-GDP ratio, economic growth rate of 2.8 per cent and fiscal deficit at the elevated 7.9pc level besides high inflation and interest payments and weaker revenue growth as key weaknesses.

News Desk -January 14, 2020

Noting weak external and fiscal positions and slowing economy, Fitch Ratings on Monday affirmed Pakistan’s long-term Foreign Currency issuer default rating at ‘B-negative’ with a stable outlook.

These concerns were voiced by Adviser to the Prime Minister on Commerce, Textile, Industry & Production and Investment Abdul Razak Dawood at ‘Business-Way Forward’ where he said that though there is economic stabilisation in Pakistan the country has still not seen economic growth.

The New York-based agency — one of the three major global rating agencies — noted high debt-to-GDP ratio, economic growth rate of 2.8 per cent and fiscal deficit at the elevated 7.9pc level besides high inflation and interest payments and weaker revenue growth as key weaknesses.

This comes a month after Moody’s Investor Service – a leading global credit rating agency – upgraded Pakistan’s credit rating outlook to ‘stable’ from negative’ ahead of the launch of Eurobond and Sukuk worth around $2 billion in world markets.

Read more: International rating agency Moody’s moves Pakistan’s economy from negative to stable

It said the tighter macroeconomic policies were further slowing GDP growth, estimated at 2.8pc in FY20 from 3.3pc in FY19 and gradually recovery to 3.4pc by FY21. Inflation has also continued to rise sharply from the cost pass-through of the currency depreciation and increases in energy tariffs.

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