Islamabad: Pakistan Finance Minister Ishaq Dar warned Moody’s Investor Service on Friday that he would give a “befitting” reply in a meeting with its officials next week if the agency did not reverse the downgrade of the countrys sovereign credit rating
“They (Moody’s officials) have to meet me. I told them if you don’t (reverse) this, I will give you a befitting response in our meeting next week,” Dawn news quoted the Minister as saying.
On Thursday, Moody’s cut Pakistan’s sovereign credit rating by one notch to Caa1 from B3, citing increased government liquidity and external vulnerability risks, following the devastating floods that hit the country earlier this year.
“The outlook remains negative,” said the New York-based rating agency, adding that the floods had exacerbated Pakistan’s liquidity and external credit weaknesses and vastly increased social spending needs, while government revenue is severely hit.
Debt affordability, a long-standing credit weakness for Pakistan, will remain extremely weak for the foreseeable future, Dawn news reported.
The downgrade has pushed the country into the C-category after seven years, i.e. March 2015.
Talking outside an accountability court in Islamabad today, Dar said he had spoken to the agency’s officials and told them that they “should not have done it”.
Moody’s should have consulted Pakistan prior to the downgrade, the Finance Minister said, adding that there was “no cause for worry” as rating agency Fitch had also downgraded the UK earlier this week.
Moody’s said Pakistan’s weak institutions and governance strength added to the uncertainty whether the country will maintain a credible policy path that supports further financing, Dawn reported.
The negative outlook also captures risks that, should a debt restructuring be needed, it may extend to private sector creditors.