KARACHI: Moody’s Investors Service has changed Pakistan’s credit rating outlook to stable from negative following the International Monetary Fund IMF bailout program that stabilized south Asian country’s economy.
Moody’s had downgraded Pakistan’s ratings outlook to negative in June 2018, citing soaring external vulnerability risk due to depleting foreign exchange reserves.
The rating agency has affirmed Pakistan’s local and foreign currency long-term issuer and senior unsecured debt ratings at B3.
The change in outlook to stable is driven by Moody’s expectations that the balance of payments dynamics will continue to improve, supported by policy adjustments and currency flexibility.
Rationale for outlook change are narrowing current account deficits, in combination with enhancements to the policy framework including currency flexibility, lower external vulnerability risks in Pakistan. However, foreign exchange reserve adequacy will take time to rebuild, Moody’s said in a statement on Monday.
“The upgradation of outlook to stable is affirmation of government’s success in stabilizing the country’s economy and laying a firm foundation for robust long term growth,” Dr. Abdul Hafeez Shaikh, Pakistan’s de facto Finance Minister, tweeted after Moody’s announcement.
In Pakistan such upgrading and downgrading of ratings and economic indicators are also used for political points scoring to large extent by political rivals. On Monday after the Moody’s announcement Asad Umar, federal Minister of planning, took to twitter to take the credit of the rating updgration.
“After 5 years of PML-N govt on June 20, 2018 Moody’s downgraded Pak outlook from stable to negative. This was 2 months BEFORE PTI formed govt. After 15 months of PTI govt Moody’s upgrades Pak from negative to stable. Now you decide who destroyed Pak economy & who is rebuilding it,” Umar tweeted.
Pakistan posted current account surplus in October for the first time in four years after $6 billion IMF bailout program. The country has increased key interest rates to more than double and devalued Pak rupee around 50 percent during last two years.
Moody’s says the fiscal strength has weakened with higher debt levels largely as a result of currency depreciation, ongoing fiscal reforms, including through the country’s (IMF) program, will mitigate risks related to debt sustainability and government liquidity.
The rating agency expects Pakistan’s current account deficit to continue narrowing in the current and next fiscal year, averaging around 2.2% of GDP, from more than 6% in fiscal 2018 and around 5% in fiscal 2019.
Under Moody’s baseline assumptions, subdued import growth will likely remain the main driver of narrowing current account deficits.
The country’s current account deficit has narrowed by 73.5 percent during the July-October of current fiscal year FY20 mainly due to declining imports, according to ministry of Finance.
Moody’s sees the possibility of monetary conditions easing when inflation gradually declines toward the end of the current fiscal year.
The rating affirmation reflects Pakistan’s relatively large economy and robust long-term growth potential, coupled with ongoing institutional enhancements that raise policy credibility and effectiveness, albeit from a low starting point.
“These credit strengths are balanced against structural constraints to economic and export competitiveness, the government’s low revenue generation capacity that weakens debt affordability, fiscal strength that will remain weak over the foreseeable future, as well as political and still-material external vulnerability risks,” the statement added.
On the fiscal side, Pakistan’s metrics have weakened recently, with wider fiscal deficits and an increase in government debt burden largely as a result of currency depreciation over the course of fiscal 2019. However, Moody’s expects ongoing fiscal reforms, anchored by the IMF program and technical assistance from other development partners, to contribute to a gradual narrowing of fiscal deficits. The reforms would also mitigate debt sustainability and government liquidity risks, according to the statement.
Moody’s expects the government’s fiscal deficit to remain relatively wide at around 8.6% of GDP in fiscal 2020, compared to 8.9% in fiscal 2019, before narrowing to an average of around 7% over fiscal 2021-23. High interest payments owing to policy rate hikes will continue to weigh on government finances and significantly constrain fiscal flexibility, the statement added.
Pakistan stocks exchange’s key index KSE-100 has surged by 39 percent since a low in August that makes it the top global performer in the world in last four months, according to the date shared by ministry of finance.
Moody’s upgrades Pakistan’s credit rating outlook to stable
Moody’s upgrades Pakistan’s credit rating outlook to stable
- Pakistan's ratings outlook was downgraded to negative in June 2018
- Pakistan posted current account surplus in October for the first time in four years after $6 billion IMF bailout
Pakistan to organize single-country trade exhibition in Jeddah in February — official
- Around 100 Pakistani companies to participate in three-day exhibition from Feb. 5-7, says official
- Companies offering agro products, engineering, textile, garments and services invited to take part in exhibition
ISLAMABAD: Pakistan will organize a single-country trade exhibition in Jeddah from Feb. 5-7 next year, an official of the Trade Development Authority of Pakistan (TDAP) said on Sunday, in which products from around 100 companies will be showcased as Islamabad eyes the Saudi market to boost its exports.
Islamabad and Riyadh have been working in recent months to increase bilateral trade and investment, and the Kingdom this year reaffirmed its commitment to expedite an investment package worth $5 billion for Pakistan.
Pakistani and Saudi businesses had signed 27 agreements and memorandums of understanding (MoUs) worth $2.2 billion in October. During Prime Minister Shehbaz Sharif’s visit to the Kingdom last month, the two countries agreed to enhance that figure to $2.8 billion.
“Pakistan will organize a single-country exhibition from Feb. 5-7, 2025, in Jeddah, Saudi Arabia, with the aim of increasing exports to the Kingdom,” Faisal Awan, TDAP’s deputy manager, told Arab News.
The TDAP will organize the exhibition, which Awan said would feature 100 Pakistani companies so they can “showcase their products directly to Saudi buyers in their own country.”
The official said TDAP has already published advertisements inviting Pakistani companies to showcase their products, setting Nov. 25 as the deadline to apply.
“We have invited companies from all sectors including engineering, agro products, textile and garments and services,” Awan added.
TDAP has also invited manufacturers from various sectors such as engineering, home appliances, machinery, pharmaceuticals, surgical instruments, cables and agro products such as fruits, vegetables, rice, meat, seafood, spices and processed foods, according to the advertisement seen by Arab News.
The invitation also extends to the textile and garments sector that offers knitwear, ready-made garments, home textiles, yarns, linen and fabrics, as well as the services sector which covers telecom, computer and information services.
“So far, we have received an excellent response with over 50 applications submitted in just over a week,” Awan said.
The TDAP is providing a subsidy of around 80 percent on the rates for stalls at the exhibition, Awan shared. He said the authority is charging only Rs 200,000 ($720) for each stall while the actual cost is around Rs 1.2 million ($4,319).
“Other arrangements such as visa, air tickets and accommodation must be handled by the company itself,” he said.
Awan said that while every market has its dynamics, Pakistan has a lot of expectations from the Saudi market due to the increasing business collaborations between the two countries in recent months.
“Since we have had a lot of delegations coming and going from Saudi Arabia in recent months, our expectations are very high,” Awan said. “And we aim to secure orders in the millions of dollars.”
The TDAP official said leads generated during the exhibition would be expected to materialize in the next five to six months.
Pakistan and Saudi Arabia enjoy strong trade, defense and cultural ties. The Kingdom is home to over 2.7 million Pakistani expatriates and serves as the top source of remittances to the cash-strapped South Asian nation.
Islamabad has eyed increasing collaboration in economic and trade sectors as it grapples with a prolonged economic crisis that drained its resources, triggered double-digit inflation in the country and weakened its currency over the past two years.
In 2023, Pakistan formed the Special Investment Facilitation Council (SIFC), a hybrid civil-military body tasked with fast-tracking decisions related to foreign investment.
The SIFC aims to attract investment in minerals, agriculture, livestock, energy, tourism and other vital sectors of Pakistan’s economy, mostly from Gulf countries.
Direct Pakistan-Bangladesh shipping route marks rebuilding ties
- Dhaka’s ties with New Delhi frayed after former PM Sheikh Hasina flew to India after violent protests
- Ship from Karachi brought goods from Pakistan and the United Arab Emirates to Bangladesh’s Chittagong
DHAKA: The first cargo ship in decades to sail directly from Pakistan to Bangladesh successfully unloaded its containers, port officials told AFP Sunday, as both sides seek to rebuild ties after decades of frosty relations.
The two countries, once one nation, split in 1971 after a brutal war, with Bangladesh then drawing closer to Pakistan’s rival India.
But its ties with New Delhi have frayed after a student-led revolution in August toppled Bangladesh’s autocratic leader Sheikh Hasina, who fled to India by helicopter.
The 182-meter (597-foot) long container ship — the Panama-flagged Yuan Xiang Fa Zhan — had sailed from Pakistan’s Karachi to Bangladesh’s Chittagong.
Top Chittagong port official Omar Faruq confirmed to AFP on Sunday that the ship had unloaded its cargo on November 11 before departing.
Pakistan’s envoy to Dhaka, Syed Ahmed Maroof, sparked widespread discussion on social media in Bangladesh when he said after the docking that the direct shipping route was “a major step” in boosting trade across the region.
The route will “promote new opportunities for businesses on both sides,” Maroof wrote on Facebook.
Chittagong port authorities said the ship brought goods from Pakistan and the United Arab Emirates, including raw materials for Bangladesh’s key garment industry and basic foodstuffs.
In September, Bangladesh eased import restrictions on Pakistani goods, which previously required a mandatory physical inspection on arrival which resulted in long delays.
Pakistani goods previously had to be off-loaded onto feeder vessels — usually in Sri Lanka, Malaysia or Singapore — before traveling to Bangladesh.
Pakistan unveils first Carbon Market Policy to attract green investment, curb pollution
- Pakistan wants to transition toward a low-carbon economy, says PM’s coordinator on climate change
- Carbon markets refer to systems that reduce greenhouse gas emissions by offering financial incentives
ISLAMABAD: Pakistan’s Coordinator to the Prime Minister on Climate Change Romina Khurshid Alam on Sunday unveiled the country’s first National Carbon Market Policy, saying that the government wanted to attract investments in green initiatives and transition toward a low-carbon economy.
Carbon markets refer to systems that aim to reduce greenhouse gas emissions by allowing companies or organizations to buy and sell “carbon credits.” This is achieved by offering financial incentives to these entities to cut emissions.
Pakistan is ranked the 5th most vulnerable country to climate change, according to the Global Climate Risk Index. In 2022, devastating floods killed over 1,700 people and affected over 33 million, with economic losses exceeding $30 billion. International donors pledged over $9 billion last January to aid Pakistan’s flood recovery but officials say little of the promised funds have been received so far.
“Let me say this confidently that Pakistan is now ready to lead, innovate and collaborate with local private sector as well as international partners for the development of carbon markets to attract investments in green initiatives for achieving climate goals under the Paris climate pact,” Alam said in a statement.
Alam was attending an event held at the Pakistan Pavilion in Baku, during the sidelines of the global COP29 climate conference, to launch the country’s first carbon market policy. The event was attended by members of international civil society organizations, delegation members of different countries, academia, researchers, policymakers and journalists.
“By participating in such markets, Pakistan can incentivize businesses and industries to adopt cleaner technologies and practices,” she said.
Alam said the success of Pakistan’s carbon markets will depend on its ability to collaborate with international partners.
“We welcome partnerships with international investors, organizations, and governments to ensure that this market becomes a regional and global success story,” she said.
Pakistani Prime Minister Shehbaz Sharif, who spoke at a number of events at COP29 earlier this week, used the forum to highlight the need to restore confidence in the pledging process and increase climate finance for vulnerable, developing countries.
The main task for nearly 200 countries at the COP29 summit from Nov. 11-22 is to broker a deal that ensures up to trillions of dollars in financing for climate projects worldwide.
No indication from Pakistan on trying Imran Khan in military court — UK foreign secretary
- UK Foreign Secretary David Lammy says Khan, like other Pakistani prisoners, has right to fair trial and due process
- Pakistan’s military has initiated trials of at least 103 Khan supporters accused of attacking military installations last year
ISLAMABAD: UK Foreign Secretary David Lammy recently assured a fellow parliamentarian that there have been “no recent indications” from Pakistani authorities that they intend to try former prime minister Imran Khan in a military court, reiterating that he had the right to a fair trial and due process.
Protesters linked to Khan’s Pakistan Tehreek-e-Insaf (PTI) party attacked and damaged government and military buildings on May 9, 2023, after his brief arrest that day in a land graft case. Hundreds of PTI followers and leaders were arrested following the riots. The military has also initiated trials of at least 103 people accused of involvement in the violence.
The development raised fears among Khan supporters of his possible trial by a military court, prompting the former prime minister to file a petition in the Islamabad High Court against it. The petition was dismissed by the court in September after the government said it had not decided whether or not it wanted to try the former premier.
Pakistan’s military spokesperson in September hinted at Khan’s possible military trial, saying that though the matter was sub judice, using military personnel for personal or political gains invites legal action.
In response to an Oct. 16 letter penned by Labour legislator Kim Johnson, Lammy assured him that the UK government engages regularly “at a senior level” with Pakistan on the country’s political situation.
“We have no recent indications from the Pakistani authorities that they intend to try Imran Khan in a military court, but my officials continue to monitor the situation closely,” Lammy wrote in a letter to Johnson dated Nov. 11.
The UK official said he has raised concerns about the potential use of military courts to try civilians, including Khan. Lammy added that such courts can lack transparency and independent scrutiny, making it difficult to assess their compliance with international standards.
“While Pakistan’s judicial processes are a domestic matter, we have been very clear that the Pakistani authorities need to act in line with their international obligations and with respect for fundamental freedoms, including the right to a fair trial, due process and humane detention,” he wrote.
“This applies to Imran Khan as it does to all Pakistan’s citizens.”
Lammy said he remains concerned by restrictions on freedom of expression and assembly in Pakistan, including those in relation to political opposition.
“In our engagements with the authorities, we continue to underline that the freedom to hold and express views without censorship, intimidation or unnecessary restriction is a cornerstone of democracy,” he said.
Khan’s close aide, Sayed Zulfikar Bukhari shared Lammy’s letter on social media platform X.
“Respect for free and fair elections, and the rule of law, underpinned by an independent judiciary, are the bedrock of a democracy,” Bukhari wrote. “Pakistanis continue to struggle for theirs.”
Khan, arguably Pakistan’s most popular politician, was ousted from office after a parliamentary no-trust vote in April 2022 and has since waged an unprecedented campaign of defiance against the country’s powerful military and Prime Minister Shehbaz Sharif-led government.
Khan’s party says the military and his political rivals rigged the Feb. 8 general election to form the Sharif-led government. Both deny the charge.
Pakistan says over 20,000 companies and freelancers have registered for VPNs
- Pakistan’s interior ministry this week ordered a ban on VPNs, citing their use by militant groups
- Pakistan Telecommunication Authority says VPN registration can be completed on its website
ISLAMABAD: The Pakistan Telecommunication Authority (PTA) this week disclosed that over 20,000 companies and freelancers have so far registered for Virtual Private Networks (VPNs) through its official website, days after it announced banning illegal ones.
Pakistan’s Ministry of Interior sent a letter to the PTA on Friday asking it to block illegal VPNs across the country, citing their use by militant groups for financial transactions and violent activities.
This directive follows international criticism of Pakistan’s Internet restrictions, notably after the February general elections, where allegations of electoral manipulation led to the blocking of social media platform X. Media reports also suggested the government was setting up a national firewall, which had led to the slowdown of Internet speed across Pakistan.
“To date, more than 20,000 companies and freelancers have successfully registered their VPNs through this efficient process,” the PTA said in a statement on Saturday.
The PTA said it had streamlined the VPN registration process for organizations and freelancers, saying that entities such as software houses, call centers, banks, embassies, and freelancers can now easily register their VPNs online through the PTA’s official website: www.pta.gov.pk.
It said the registration process involves completing an online form and providing basic details, including the national identity card number, company registration details and taxpayer status.
Meanwhile, it said freelancers must submit documentation, such as a letter or email, verifying their project or company association. Additionally, it said applicants must provide the IP address for VPN connectivity. If a fixed IP address is required, it can be acquired from an Internet Service Provider (ISP).
“The registration process is free, and approvals are typically granted within 8–10 hours of submission,” the PTA said.
After the interior ministry circulated its letter calling for a ban on VPNs on Friday, the Council of Islamic Ideology, a constitutional advisory body that reviews laws to ensure they align with Islamic principles, also declared VPNs usage “un-Islamic” in a statement the same day.
“The government and the state have the authority, from an Islamic perspective, to prevent all actions that lead to wrongdoing or facilitate it,” the council’s chairman, Raghib Hussain Naeemi, was quoted as saying in the statement.
“Therefore, measures to block or restrict access to immoral and offensive content, including the banning of VPNs, are in accordance with Shariah.”
VPN users in Pakistan have already reported significant disruptions to services since last weekend, with issues relating to connectivity and restricted access.
Pakistan’s decision to impose online restrictions have been questioned by free speech activists and businesses alike.
PREDA, Pakistan’s first membership-based organization dedicated to promoting and protecting the interests of professionals, also wrote a letter to the government earlier in the day, appealing for the adoption of stable digital policies to support growth and build an eco system for global competitiveness.
