Credit agency rates country from a B to B-
One of the three major global rating agencies, Fitch, has downgraded Pakistan’s debt rating from a B to B-, Reuters reported on Friday.
Low reserves, elevated debt repayments and a weakening fiscal position are some of the reasons cited by the agency for the fall in rating.
The credit agency stated that inflation in the country has risen due to a significant rupee depreciation and higher energy prices.
Fixing Pakistan’s troubled economy is the biggest challenge facing the new PTI government. This is because the government’s expenditures are much higher than its revenue, which leads to a loss of Rs2.2 trillion, leaving it with little money to spend on its citizens. It, therefore, relies on borrowing from banks to meet its expenses.
On the international front, the country’s monthly imports exceed its exports as for every dollar earned, two leave the country. The country is then left with fewer dollar reserves to pay for essential imports (oil, raw materials, machinery etc) and to repay its foreign loans.
The government has been reaching out to friendly countries, including China, Malaysia, and UAE, for further assistance, in addition to being in talks with the International Monetary Fund for a bailout package.