WEB DESK
Moody’s downgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa1 from B3, citing increased government liquidity and external vulnerability risks, following the devastating floods that hit the country earlier this year.
The decision is driven by increased government liquidity and external vulnerability risks and higher debt sustainability risks, in the aftermath of devastating floods that hit the country since June 2022. The floods have exacerbated Pakistan’s liquidity and external credit weaknesses and vastly increase social spending needs, while government revenue is severely hit.
Debt affordability, a long-standing credit weakness for Pakistan, will remain extremely weak for the foreseeable future. In the absence of access to market financing at affordable costs, Pakistan will remain highly dependent on financing from multilateral partners and other official sector creditors to meet its debt obligations.
