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S&P rates Pakistan as B negative
Credit rating agency Standard & Poor`s has rated Pakistan as B negative, citing the country`s low-income economy, high public and external debt.
Washington: Credit rating agency Standard &
Poor’s has rated Pakistan as B negative, citing the country`s low-income economy, high public and external debt.
Pakistan`s low-income economy, high public and external debt, structural fiscal weaknesses and significant political and security risks remain rating constraints, S&P said in a statement.
Observing that Pakistan continues to have donor support and adequate external liquidity, S&P affirmed the `B-` long-term and `C` short-term foreign and local currency sovereign ratings on Pakistan.
"The stable outlook reflects adequate external liquidity, supported by donor commitments," it said. "The ratings affirmation take into account Pakistan`s low income level, high public and external leverage, political and security risks, and fiscal inflexibility due to an exceedingly narrow tax base," S&P`s credit analyst Agost Benard said.
These constraints are balanced against an adequate external liquidity position -- largely due to the earlier IMF standby loan agreement and donor support, Benard said. "In addition, we affirmed the `B-` issue rating on the sovereign`s senior unsecured foreign-currency debt, as well as its recovery rating of `3`, which denotes the expectation of a meaningful recovery of 50-70 per cent in the event of a distressed debt exchange or payment default," the credit rating agency said.
Noting that Pakistan`s high public and external indebtedness is a rating constraint, S&P said it estimates Pakistan`s net general government debt at 50 per cent of GDP in 2011, and about 40 per cent of it is external debt.
Although the debt-to-GDP ratio has fallen from 74 per cent a decade ago, this was mostly due to debt forgiveness and high nominal GDP growth due to double-digit inflation in the past four years, Benard said.
PTI
Pakistan`s low-income economy, high public and external debt, structural fiscal weaknesses and significant political and security risks remain rating constraints, S&P said in a statement.
Observing that Pakistan continues to have donor support and adequate external liquidity, S&P affirmed the `B-` long-term and `C` short-term foreign and local currency sovereign ratings on Pakistan.
"The stable outlook reflects adequate external liquidity, supported by donor commitments," it said. "The ratings affirmation take into account Pakistan`s low income level, high public and external leverage, political and security risks, and fiscal inflexibility due to an exceedingly narrow tax base," S&P`s credit analyst Agost Benard said.
These constraints are balanced against an adequate external liquidity position -- largely due to the earlier IMF standby loan agreement and donor support, Benard said. "In addition, we affirmed the `B-` issue rating on the sovereign`s senior unsecured foreign-currency debt, as well as its recovery rating of `3`, which denotes the expectation of a meaningful recovery of 50-70 per cent in the event of a distressed debt exchange or payment default," the credit rating agency said.
Noting that Pakistan`s high public and external indebtedness is a rating constraint, S&P said it estimates Pakistan`s net general government debt at 50 per cent of GDP in 2011, and about 40 per cent of it is external debt.
Although the debt-to-GDP ratio has fallen from 74 per cent a decade ago, this was mostly due to debt forgiveness and high nominal GDP growth due to double-digit inflation in the past four years, Benard said.
PTI