KARACHI: Successful negotiations for a new International Monetary Fund programme would reduce external financing risks for Pakistan, credit rating agency Moody’s said in its “Global Emerging Markets: Outlook” report issued on Thursday.
The government of Pakistan has recently secured $6 billion package from Saudi Arabia including $3bn in deferred payments on oil and $3bn to be deposited in Central Bank, the report said.
The government is seeking all sources to avert the imminent balance of payment crisis, the report observed.
The central bank foreign exchange reserves have fallen to their lowest levels in four years reaching $7.5bn, which could not meet the bill of two months’ imports, the report said.
The rating agency report has kept the outlook for global emerging markets (EM) “broadly stable” but warns of risks from “higher rates, politics and trade tensions”.
The report highlights that “although the share of [Pakistan’s] foreign currency debt is relatively low at around 35pc of total government debt, declining foreign reserves because of a current account deficit of around four to five percent of GDP, raise repayment risks.”
The agency expects the country’s external vulnerability indicator (EVI) ratio to rise to 153 per cent in 2019.
The EVI ratio indicates country’s immediately available foreign exchange resources sufficiency to allow it to make all external debt payments, even if there is a complete refusal of creditors to roll over debt due within a given year.