ISLAMABAD, Aug 21: The Singapore-based Standard & Poor’s Ratings Services has hinted at removing the log-term positive outlook from Pakistan's credit rating owing to domestic political and economic risks and emerging regional situation, it is learnt.
A senior official told Dawn on Monday that State Bank of Pakistan Governor Dr Shamshad Akhtar had informed the federal government about negative signals coming from S&P that clearly indicated a downward revision of Pakistan’s credit rating that was upgraded from "stable" to "positive outlook" in December last year.
“S&P analysts have been exchanging data with the central bank for a quite some time now but there is no deadline for the review as such,” the official said.
He said the central bank chief wrote to the federal government last week of a looming downgrading of the country's credit rating by S&P and its possible fallout on overall economy that had already been showing signs of imbalance. The SBP chief asked the finance ministry to immediately take up the matter with the prime minister to use his good offices in this regard.
Advisor to the finance ministry on economic affairs Dr Ashfaq Hassan Khan when contacted said a team of Standard & Poor's would be visiting Pakistan for discussions before finalising any revision. He said it was a very complicated process and a team of S&P analysts would review a number of things and analyse data and then present its findings to a committee.
He said he was not aware when the S&P team would visit
Pakistan and replied in negative when asked if S&P had informed the government about possible downward revision in credit rating.
Many economists have been talking about rising macroeconomic imbalances in the country, including last year's slowdown in economy and highest-ever trade and current account deficits at about $12 billion and $5 billion, respectively, and higher debt costs could ultimately make a large dent in Pakistan’s foreign exchange reserves.
Sources said uncertain political future in Pakistan before run-up to the elections, souring relations with India, border situation on the western side and emerging situation in the Middle East and its spill-over to the region, besides economic indicators, could be the basis for a downward revision in credit rating.
Standard & Poor's revised its credit rating on Pakistan to “positive” from “stable” in December last year, citing improvements in external debt indicators. The rating agency had then affirmed its current 'B+' foreign currency and 'BB' local currency long-term and its 'B' short-term sovereign ratings assigned to Pakistan.
Pakistan's trade deficit widened by 70.58 per cent to $1.239 billion in the first month of the fiscal year 2006-07 as against $726.936 million in the same month last year, as oil prices hit a new height in the international market.
