ISLAMABAD: Expecting the economic activity to rebound in two years despite governance challenges, Moody’s Investor Service on Thursday assigned P(B3) rating to Pakistan’s global medium-term note (MTN) programme and definitive B3 rating to the senior unsecured dollar bond notes issued under the programme with maturities of 5, 10 and 30 years.

In a statement, the New York-based rating agency said the payment obligations associated with the notes representing draw-downs from the programme are direct, unsecured obligations of the Government of Pakistan and pari passu with all its other unsecured and unsubordinated obligations.

Pakistan intends to use the net proceeds from each issuance for general budgetary purposes. The agency said the ratings mirror Pakistan’s long-term issuer rating of B3 that is underpinned by the country’s robust long-term growth potential, a relatively large but low-income economy, and a stable banking sector.

“Ongoing reforms and institutional enhancements also raise policy credibility and effectiveness, although from a low base,” it said, adding that it “expects economic activity in Pakistan to continue to rebound over the next two years as the country recovers from the coronavirus shock”.

Supply-side improvements, including through projects under the China-Pakistan Economic Corridor (CPEC), coupled with improvements in domestic security and trade policy, will also help spur long-term investments, with the potential to revitalise the economy’s industrial base over time, the rating agency observed.

Published in Dawn, April 2nd, 2021