S&P raises Pakistan’s rating to CCC+

[Naveed Yaseen]

HONG KONG: Standard & Poor’s ratings services raised Pakistan’s sovereign rating to CCC-plus from CCC, citing stability in the country’s external financial position after the International Monetary Fund (IMF) disbursed its first loan tranche.

The outlook is developing, which means the next rating action could be upward or downward. “The (IMF) disbursal appears to have stabilised the sovereign’s foreign reserve position, substantially alleviating the prospects of near-term debt service stress,” the rating agency said in a statement.

The S&P said ratings could be raised if Pakistan was able to meet the targets set by the IMF and was thereby able to get more donor support. But it also said the rating could be cut if there were shortfalls in meeting key fiscal and monetary benchmarks.

Last month, Pakistan won a final approval for an emergency $7.6 billion IMF loan to steady its finances after its foreign currency reserves fell to a level to cover only nine weeks’ worth of imports and its currency fell by 23 percent since the start of the year.

The IMF said Pakistan would aggressively trim its fiscal deficit, halt the State Bank of Pakistan financing of the government spending and curb the country’s current account deficit.

Specifically, the fiscal deficit will be trimmed to 4.2 percent of GDP in 2008/2009. reuters

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