ISLAMABAD: Citing the country's weakening economic position, Moody's, then Fitch, and now S&P Global - three major global rating agencies have downgraded Pakistan's long-term rating from stable to negative, according to media reports.
Pakistan has a weak external position, high commodity prices, and is witnessing a huge slump in its currency in comparision to the US Dollar. The south Asian nation was clearly teetering at the brink of default.
The credible global ratings agencies have pointed out that Pakistan's finance ministry must pull up its socks to combat the economic fallout. They said that if appropriate actions are taken by the country's finance ministry then it can be brought back to the previous rating however, the big question remains how it will be done. That's a very tough ask right now, reported Daily Times.
Pakistan needs reserves to provide stability in the immediate term to its economy. The situation as it stands currently, it seems like a far-reaching goal for Pakistan to revive investor confidence.
In a bid to reverse its downgraded rating, the country will have to put in mammoth efforts. However, things will still get a lot worse before they start to get any better. And all this while inflation is very likely to stay above 20 per cent.
All of this is cascading its effect on the common man who is going to have a very tough time. Moreover, some of these people who are at the very bottom of the food chain will bear the brunt of it all, as per the media portal.
Additionally, Pakistan is also under fire thanks to the political instability in the country. If the political elite were able to pause their bitter, ugly war for a while and concentrate on the economy the country might see a brighter light at the end of the tunnel.
In addition to the economic stability, Pakistan's political stability is also crucial as this is the only way to provide relief to people whose lives have been made miserable.
As Pakistan's economy slumps to a new low, ratings by S&P Global, an American credit rating agency, has cut Pakistan's credit outlook to negative and markets think that Pakistan might soon follow Sri Lanka into debt default and economic crisis, media reports said.
In a statement which the credit agency released on Thursday it was highlighted that Pakistan could be downgraded if support from bilateral and multilateral lenders quickly erodes or if usable foreign-exchange reserves fall further.
Furthermore, the media outlet while citing other foreign media said that the company also affirmed the nation's rating at B-, on par with Ecuador and Angola. The Pakistani rupee has hit a new record low and has seen a tremendous fall in comparision to the US dollars. The rupee saw a stunning low with more than 30 per cent of its value lost in comparision to dollar this year.
The country's dollar debt has reached record lows as it stares down to a USD 1 billion bond payment in December. Sri Lankan economy is in default and Pakistan seems to have followed suit.
Pakistani government is leaving no stone unturned to secure billions of dollars from the International Monetary Fund and countries like China and Saudi Arabia, as per the media portal.
An expert and analyst Andrew Wood in a statement said, "The Pakistan government has considerable external indebtedness and liquidity needs, and an elevated general government fiscal deficit and debt stock." Several other analysts courted with the statement.
"Although the impact of these more difficult macroeconomic conditions has been partially mitigated by various reform initiatives undertaken by the government over the past few years, the risk of continued deterioration in key metrics, including external liquidity, is rising," Wood added.
However, S&P is not an isolated agency which has downgraded Pakistan's credit outlook rating. Moody's Investors Service and Fitch Ratings already have a negative outlook on the country.