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CPEC, IMF programme completion strengthen Pak economy: Moody’s

Moody’s, a globally recognised credit rating agency, said that the Pakistani economy has strengthened following the completion of a three-year programme under International Monetary Fund (IMF) in comments issued recently.

The agency went on to explain that the fiscal deficit has narrowed, while growth has been observed in the foreign exchange and structural reforms planned out earlier.

Primarily fuelled by the China-Pakistan Economic Corridor (CPEC), the nation’s economy is forecasted to register a 5% expansion rate over the coming two years, Moody’s stated.

CPEC, the agency discussed further, is set to reduce infrastructural gaps via higher investment in two main facilities – transportation services and power supply.

Pakistan’s general debt level, as gauged by the debt-to-GDP ratio, is not up to its standards, the agency stressed, adding that it came in at 67% against the 50% benchmark.

Among factors that hinder curbing the fiscal deficits, Moody’s highlighted the country’s limited tax base and expressed said that low savings, coupled with the shallow capital market, lead to instability in the domestic financing. However, successful efforts to resolve these issues, if put in place, may aid Pakistan in securing a much stronger credit profile.

The agency, nevertheless, underscored that Pakistan’s current account deficit is widening majorly due to the interest payments, while the level of debt incurred is expected to boost in order to finance imports.

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