S&P affirms stable outlook of Pakistan’s economy

ISLAMABAD: The Standard & Poor’s credit rating agency has affirmed stable outlook of Pakistan’s economy.

The rating agency also affirmed ‘B-’ long-term and ‘B’ short-term sovereign rating while maintaining the long-term outlook at stable rating.

The government’s securing of an International Monetary Fund (IMF) reform and funding programme, along with considerable additional bilateral and multilateral funding, will help to address near-term funding risks. The rating agency urged for continued reform progress necessary to address Pakistan’s credit vulnerabilities.

The S&P said its stable outlook reflected its expectations that funding from the IMF and other partners will be sufficient for Pakistan to meet its considerable external obligations over the next one to two years.

The New York-based rating agency said that Pakistan’s rating remained constrained by a narrow tax base and domestic and external risks, which continue to be high.

It forecast Pakistan’s economy to slow down to 2.4 per cent of the GDP during the current fiscal year, which is 12-year low. Taken together with the country’s relatively fast population growth of approximately 2pc per year, real per capita economic growth will fall to 0.4pc.

That will contribute to a decline in the country’s 10-year weighted average per capita growth to 1.8pc, below the global average of 2.3pc for economies at a similar level of income, noted the S&P releases issued on Thursday.

The agency forecast GDP per capita to fall to above $1,200 by the end of this fiscal year, versus $1,565 in fiscal 2017-2018 owing to over 25pc exchange rate loss.