Business

S&P Global Ratings downgrades Pakistan’s credit score

Published

2 years ago

Farwa

S&P decreases Pakistan’s credit score from B- to CCC+.
Agency maintains Pakistan’s outlook stable.
Fitch and Moody’s have already ranked Pakistan’s bonds below investment grade.

KARACHI: S&P Global Ratings has downgraded Pakistan’s credit score due to the series of shocks — from flooding to surging inflation — that has deteriorated the country’s external, fiscal and economic metrics, reported The News.

The nation’s credit score was downgraded from B- to CCC+ by S&P, which expects Pakistan’s dwindling foreign reserves to remain under pressure in the coming year, just as political risks linger, according to a statement.

“Pakistan’s already low foreign exchange reserves will remain under pressure throughout 2023, barring a material decline in oil prices or a step-up in foreign assistance,” S&P analysts Andrew Wood and YeeFarn Phua wrote.

The country also faces elevated political risks which may affect its policy trajectory over the next year.

Fitch Ratings and Moody’s Investors Service already rank the nation’s $7.8 billion in foreign bonds at seven notches below investment grade, the equivalent of S&P’s CCC+ rating, on par with El Salvador and Ukraine. S&P also raised the outlook for Pakistan to stable from negative on Thursday.

The country is facing an economic crisis with only enough reserves to cover one month of imports, a dollar shortage and a delay in its loan programme with the International Monetary Fund. Investors are pessimistic about Pakistan’s ability to keep up with its foreign debt obligations, with long-term dollar bonds continuing to trade at distressed levels despite the payment of a $1 billion bond this month.

S&P said this year’s severe floods, surging food and energy inflation, as well as rising global interest rates, will further depress Pakistan’s economic and fiscal outcomes, with refinancing challenges over the medium term.

Pakistan’s unprecedented floods in the summer killed more than 1,700 people, inundated a third of the nation and cut the nation’s growth by half. The floods have left about $32 billion in damages and losses to the nation’s economy.

Meantime, the current administration is set to end by August of next year or earlier, meaning it has limited time to implement economic reforms.

“We expect political uncertainty to remain elevated over the coming quarters, with continued pressure from the opposition to hold early elections,” the S&P analysts wrote.

The agency maintained its outlook at “stable”.

Business

The IMF assessment mission is scheduled to land in Pakistan on March 3.

Published

2 hours ago

Farwa

According to sources, the economic review and negotiations will go on until March 15.

The second $1 billion tranche will be released after the nine-member team, headed by Nathan Porter, evaluates Pakistan’s economic performance throughout the course of their two-week visit.

The IMF mission will also present its recommendations for the next financial year’s budget, sources said. “Any relief to the salaried class can only be offered after the lender agreed over it,” according to sources.

The IMF mission will hold talks with the ministries of finance and energy, planning ministry and the State Bank of Pakistan. The IMF delegation will also hold discussions with the FBR, OGRA, NEPRA and other state institutions and ministries.

Separate discussions with the governments of Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan will also be held by the IMF delegation.

Tax reforms such as the agriculture sector’s income tax, the advancement of privatization, fiscal policies, and energy sector reforms will be the main topics of debate. In addition, the IMF will examine inflation, interest rates, exchange rate management, and monetary policy.

Today, an IMF mission will discuss climate assistance with the governments of Punjab and Balochistan.

Business

The amount of trade between Saudi Arabia and Pakistan hits $700 million.

Published

1 day ago

Farwa

Through the Special Investment Facilitation Council (SIFC), Pakistan’s trade connections with Saudi Arabia have grown significantly, with bilateral trade volume rising from $546 million to $700 million and exports to the Kingdom growing by 22%.

As bilateral economic cooperation continues to grow, Saudi investors have shown a strong interest in Pakistan’s construction, energy, agricultural, and information technology sectors. The objective for exporting IT services between the two countries has been raised from $50 million to $100 million.

Saudi Arabia has set up a help desk dedicated to making it easier for Pakistani IT companies to register in the Kingdom in order to expedite commercial procedures. The goal of this program is to speed up economic collaborations between the two countries and lower administrative barriers.

The well-known Saudi restaurant chain AlBaik has revealed plans to open locations in Pakistan, which is a big step for the food service industry and should lead to the creation of new job possibilities in the area.

Officials have noted that stronger business links between the two countries lead to greater economic stability, and the SIFC has played a crucial role in promoting these trade advancements. For bilateral trade and investment projects, the Council remains a crucial facilitator.

According to a trade official with knowledge of the developments, “the establishment of dedicated support mechanisms, such as the help desk for IT companies, demonstrates a commitment to long-term economic partnership,” The goal of these programs is to improve the conditions for commercial collaboration between the two nations.

The increasing amount of trade and the diversity of investment sectors show that Saudi Arabia and Pakistan’s economic ties are changing as both countries seek to deepen their business alliances in a number of industries.

Business

After more than 50 years, Bangladesh and Pakistan resume direct trade.

Published

1 day ago

Farwa

After more than 50 years, the two governments will resume direct bilateral trade, with Bangladesh’s food ministry announcing Sunday that it will receive a supply of 25,000 tonnes of rice from Pakistan next month.

After former Prime Minister Sheikh Hasina was overthrown last August, relations between Bangladesh and Pakistan have begun to improve after decades of tense relations.

Since then, there have been increased bilateral interactions between Bangladesh and Pakistan. Nobel laureate Muhammad Yunus, the interim government’s senior adviser, has met twice with Pakistani Prime Minister Shehbaz Sharif.

According to the food ministry, Dhaka completed an agreement earlier this month to import grains from Pakistan.

“On March 3, the first shipment of 25,000 tonnes will reach Bangladesh,” Zia Uddin Ahmed, a ministry assistant secretary, told Arab News.

“This is the first time that Bangladesh has started importing rice from Pakistan at the government-to-government level since 1971.”

Following direct maritime contact between the two South Asian countries in November—a Pakistani cargo ship stopped in Bangladesh for the first time since 1971 with imports and exports arranged by private companies—their trade relations grew.

Resuming trade with Pakistan is a significant step for Bangladesh, according to Amena Mohsin, a lecturer at North South University and a specialist in international relations.

“We want to see progress in our bilateral relationship with Pakistan. Most significantly, we are currently going through a low point dispute with India, even though we constantly diversify our partnerships.

This most recent move to purchase rice from Pakistan is really significant in this context,” she told Arab News.