Pakistan's politics may jeopardise positive credit fundamentals: S&P
How Pakistan’s political transition unfolds over the next few months will give a strong indication on whether the country’s ratings will remain supported by reforms, foreign investment and a prudent policy mix.
By INDIATIMES NEWS NETWORK |
MUMBAI: How Pakistan’s political transition unfolds over the next few months will give a strong indication on whether the country’s ratings will remain supported by reforms, foreign investment and a prudent policy mix, or whether they will be eroded by continued instability or a regression into a highly politicized and ineffectual administrative environment under an elected government, says Standard & Poor's Ratings Services, in a report titled "Pakistan At A Turning Point--Is Sovereign Credit Quality At Risk?"
"Fiscal slippages may arise, jeopardizing the currently favorable debt trajectory," says S&P credit analyst Agost Benard. "Foreign currency inflows could also be affected, thus hurting Pakistan's external liquidity position. The other notable risk is that economic growth could also suffer," he says in the report.
Standard & Poor's has revised the outlook on the sovereign rating on Pakistan to negative after President Pervez Musharraf declared a state of emergency on Nov 3.
The sovereign credit ratings (foreign currency: B+/B; local currency BB/B) remain unchanged for now because the country's economic fundamentals are sufficiently strong to withstand a period of uncertainty without a material decline in credit quality.
"Greater clarity is only likely after the National Assembly elections, scheduled for Jan 8, 2008, but it's clear that past achievements could be put at risk and credit supporting factors diminish, should political uncertainty persist or, if the new paradigm yields revolving-door governments, where political imperatives detract from reforms and fiscal consolidation," Benard said
"Fiscal slippages may arise, jeopardizing the currently favorable debt trajectory," says S&P credit analyst Agost Benard. "Foreign currency inflows could also be affected, thus hurting Pakistan's external liquidity position. The other notable risk is that economic growth could also suffer," he says in the report.
Standard & Poor's has revised the outlook on the sovereign rating on Pakistan to negative after President Pervez Musharraf declared a state of emergency on Nov 3.
The sovereign credit ratings (foreign currency: B+/B; local currency BB/B) remain unchanged for now because the country's economic fundamentals are sufficiently strong to withstand a period of uncertainty without a material decline in credit quality.
"Greater clarity is only likely after the National Assembly elections, scheduled for Jan 8, 2008, but it's clear that past achievements could be put at risk and credit supporting factors diminish, should political uncertainty persist or, if the new paradigm yields revolving-door governments, where political imperatives detract from reforms and fiscal consolidation," Benard said
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