Moody’s Investors Service not confident about coalition government

Moody’s Investors Service statement on coalition government

ISLAMABAD: On Tuesday, Moody’s Investors Service maintained the Caa3 rating of Pakistan with a stable outlook. However, it pointed out that highly controversial elections, high risks of liquidity, and external vulnerability challenges would affect the decision-making capacity of the forthcoming coalition government.

Moody’s Investors Service, one of the top three global rating firms, stated that they have not announced a credit rating action. The firm added that the rating of Pakistan remained unchanged with a stable outlook, including the Caa3 long-term issuer rating. Pakistan was downgraded to Caa3 from Caa1 by the agency in February 2023 due to the depletion of foreign exchange reserves and challenges with the IMF programme.

Commenting on the general elections held on Feb 8, 2024, the service indicated high political risks and uncertainty around the newly elected government regarding negotiations with the IMF. Moody’s Investors stated that the electoral mandate of the PML-N and PPP coalition government might not be strong enough to pursue difficult reforms. It further added that Pakistan’s ability to secure loans from other bilateral and multilateral partners would be severely constrained until a new programme is agreed.

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