LONDON, Dec 28: Standard & Poor’s revised its foreign currency credit rating on Pakistan to positive from stable on Wednesday, citing improvements in external debt indicators.

The ratings agency affirmed its current ‘B+’ foreign currency and ‘BB’ local currency long-term and its ‘B’ short-term sovereign ratings assigned to Pakistan.

“Sharp declines in the government’s external debt indicators and structural improvements that, over time, should help Pakistan’s export capacity motivated the change in outlook for the foreign currency rating,” S&P sovereign credit analyst Agost Benard said in a statement.

S&P kept a stable outlook on the local currency rating.

“Pakistan’s net general government external debt to current account receipts has improved to an estimated 81 per cent currently from 244 per cent at year-end 2000,” Benard said.

“Although this ratio may stabilize at this level and the country may run current account deficits approaching 4 per cent of GDP for the near future, we expect strong inward foreign direct investment to finance much of these deficits,” he said.

S&P’s Benard said the local currency rating outlook was not changed because tighter fiscal and monetary policies would be needed before the possibility of an upward revision.

“The longer-term challenge will be for the government to capitalize on its recent reforms of its tax system and passage of a fiscal responsibility law by raising government revenues significantly from its current level of 14 per cent of GDP and to demonstrate that the current pro-market, pro-growth set of policies will be sustained during successive administrations,” Benard said.—Reuters