Pakistan ‘strongly contests’ Moody’s ratings downgrade

ALJAZEERA:

Pakistan said on Friday that it “strongly contests” a ratings downgrade by agency Moody’s, adding that it had adequate liquidity and financing arrangements to meet its external liabilities despite being hit by catastrophic floods.

Moody’s cut Pakistan’s sovereign credit rating on Thursday by one notch further into junk territory to Caa1 from B3, making it harder for the country to tap international markets for funds. It cited increased government liquidity and external vulnerability risks in the wake of floods in August that killed more than 1,600 people and caused billions of dollars in damage.

“The rating action by Moody’s was carried out unilaterally without prior consultations and meetings with our teams from the Ministry of Finance and State Bank of Pakistan,” Pakistan’s finance ministry said in a statement.

Concerns are rising about the health of Pakistan’s economy as foreign exchange reserves run low, the local currency weakens and inflation stands at decades-high levels despite the resumption of an International Monetary Fund funding programme in August.

Worries centre around its ability to pay for imports, such as energy and food, and meet sovereign debt obligations.

Data this week showed foreign exchange reserves at the central bank stood at $7.9bn. That would cover imports for barely a month.