Moody’s downgrades Pakistan’s rating

Moody's report at Pakistan

Moody’s Investors Service has issued a Caa1 rating for Pakistan’s long-term issuer and senior unsecured debt. This rating reflects the country’s weak macroeconomic fundamentals and weak policymaking capacity. Moody’s notes that the country’s external debt burden is high, and its external liquidity position is weak. Additionally, Moody’s believes that Pakistan’s general government debt has been rising, which could lead to a further weakening of the country’s creditworthiness.

Default chances of Pakistan

Default risk for Pakistan is considered high due to its weak economy and the ongoing political unrest in the country. The country’s debt-to-GDP ratio has risen to over 70%, and its external debt has more than doubled since 2013. In addition, its current account deficit has been widening, and its currency has been volatile due to both domestic and external factors. Moreover, the country’s economic growth has been slow and below expectations over the past several years.
The default chance of Pakistan is considered to be high, due to its large and growing debt, weak economic growth, and persistent fiscal deficits. The country’s debt burden is estimated to be around 68% of its total GDP, which is significantly higher than the global average of around 60%. In addition, the country’s balance of payments is also in deficit, and its external debt is estimated to be around $90 billion. In addition, the country’s fiscal deficit has been rising in recent years and is expected to reach 6.7% of GDP in 2020. These factors have led to concerns among investors and creditors about the potential for a country to default.