January 17, 2002	Thursday	Ziqa’ad 2, 1422

ISLAMABAD, Jan 16: Rating affirmed by Standard & Poor’s Wednesday on Pakistan has reduced the risk of selected default on the government’s rated debt owed to private creditors.

The rating conducted by Standard & Poor’s reflects decline in the risk of selective default in the wake of recent debt relief given to Pakistan by the Paris Club Creditors, a press release of the Poor’s says.

According to Standard and Poor’s, Pakistan’s foreign currency ratings are ‘B-Stable/B’ and local currency ratings are ‘B+/Stable/B’.

The stable outlook balances better relations with external official creditors and recently improved liquidity against entrenched institutional and structural weakness and heightened regional tensions.

Going forward, Standard & Poor’s expects that continued adherence to its IMF programme should expand Pakistan’s narrow tax base, help maintain budgetary austerity, bolster privatization efforts, and deepen administrative reform.

Sustained reform that leads to greater fiscal flexibility and better external liquidity, coupled with lower regional tension, could improve Pakistan’s credit standing and lead to an improvement of the rating.

On Dec. 13, 2001, Pakistan concluded its third Paris Club framework agreement since 1999, which followed the granting of a three-year $1.3 billion concessionary PRGF loan by the IMF in early December 2001.

The agreement includes a private sector burden-sharing stipulation; nevertheless, official creditors are not expected to enforce adherence to this stipulation since a further rescheduling of private commercial debt, only about $1.7 billion, could erode already weak investor sentiment and undermine prospects for sorely needed foreign investment.—APP