External pressures continue to weigh on Pakistan's Forex reserves: Moody's

ISLAMABAD: Moody’s rating agency has said that external pressures continue to weigh on Pakistan’s foreign-exchange reserve adequacy, while political and government liquidity risks remain elevated in Pakistan.

In its latest periodic review of Pakistan economy stated that the credit profile of Pakistan (rating B3) reflects the country’s “Moderate (+)” economic strength, which is underpinned by the relatively robust GDP growth potential and large scale of the economy, limited by very low per capita income and global competitiveness.

The review said that external pressures continue to weigh on the country’s foreign-exchange reserve adequacy, while political and government liquidity risks remain elevated in Pakistan.

In a previous Moody’s had anticipated possible deviation from fiscal reforms in India and Pakistan due to escalating political tensions between the two biggest south Asian economies, saying lukewarm growth could throw a spanner in their revenue-enhancing measures.

“Both economies are already facing near-term challenges, and a sustained conflict would risk resulting in weaker growth through a prolonged hit to consumer and business confidence, as well as foreign direct investment,” Moody’s said in an earlier report.