In a positive sign for the Pakistani economy, global rating agency Moody’s has revised its outlook for the country’s banking sector from negative to stable.
This upgrade reflects recent improvements in the sector, including solid profits by banks, a stable funding situation, and easing economic and financial pressures.
Moody's report highlights several encouraging factors. Banks in Pakistan have been performing well, generating healthy profits. Additionally, the funding situation for the sector remains stable, indicating continued access to necessary resources. This stability is further bolstered by a projected decrease in inflation from 29% to 23% for the current fiscal year.
The report also points to an expected economic growth rate of 2% for the same period. The Pakistani government plays a crucial role in this growth, and Moody's acknowledges the significant support the banking sector provides through government loans in the form of securities. This reliance on the banking sector underscores its importance to the overall health of the Pakistani economy.
While the revised outlook is positive news, it's important to note that the banking sector is still classified as "CAA-3" by Moody's, which indicates a high credit risk.
