Moody’s Investors Services has “threatened” Pakistan’s local and foreign currency issuer and senior unsecured debt ratings, according to Finance Minister Ishaq Dar.
In a press conference on Friday, the country’s Finance Minister warned that if Moody’s did not reverse its decision, he would reply in a “befitting” way in his meeting with the agency’s executives next week.
“They [Moody’s officials] should meet with me.” “I warned them that if you don’t [reverse] this, I would respond appropriately at our meeting next week,” he added.
“There is no reason to be alarmed,” he continued. I contacted with Moody’s yesterday and informed them they made a mistake. They should have spoken to us first.”
This comes after the Ministry of Finance questioned the agency’s rating action on Thursday, in which it cut Pakistan’s sovereign credit ratings.
The ministry said in a statement that Moody’s “worsening near- and medium-term economic forecast” does not portray the real picture owing to gaps in Moody’s information, and its use of estimates is not anchored in fundamentals.
It further said that Pakistan’s rating downgrade is not fully reflective of the country’s macroeconomic fundamentals.
The rating agency noted that its decision to reduce Pakistan’s sovereign credit ratings was primarily motivated by heightened government liquidity and external vulnerability concerns, as well as greater debt sustainability risks, as a result of the country’s severe floods since June 2022.
Moody’s lowered Pakistan’s local and foreign currency nation limits to B2 and Caa1 from B1 and B3 in light of the downgrade, as the outlook remained negative.
The government’s relatively broad footprint in the economy, poor institutions, and relatively significant political and external vulnerability risk account for the two-notch disparity between the local currency ceiling and sovereign rating.
