ISLAMABAD: Moody’s Investor Services warned on Thursday that Pakistan’s ability to get loans from bilateral and multilateral partners would be seriously constrained until a new loan programme is agreed with the International Monetary Fund.
Moody’s said in an issuer comment whether the country would join another IMF programme may only become clear after general polls, which are due in October this year.
Moody’s said that talks for any future programme would also take some time.
Finance Minister Ishaq Dar said last week that it would be up to a newly elected government to sign a fresh IMF programme.
Dar had said that vthe government was looking at rescheduling bilateral loans, but it did not plan to approach the multilateral partners or Paris Club to reschedule their loans.
However, State Bank of Pakistan Governor Jameel Ahmed said that Pakistan had no plan to enter any loan restructuring.
According to Moody’s, a suspension of loan service obligations only to official creditors would not have direct rating implications. Surely, such relief would increase the government’s available financial resources for essential health, infrastructure, and social and spending.
Moody’s on Pakistan’s budget
On Pakistan’s budget for fiscal year 2023-24, Moody’s said it lacked major revenue-raising or spending-containment steps to alleviate the grave government liquidity pressures.
Moody’s said that it considered the deficit estimates and projections of growth to be optimistic, given the pressure the economy was facing, especially government liquidity and external vulnerability stresses, exacerbated by the severe intense floods of last year, that would continue to affect financial activity over next fiscal year.
Under the newly announced Budget, the deficit was estimated at 6.5 percent of GDP, narrowing from an estimated deficit of 7.0 percent in fiscal 2023.
Meanwhile, Moody noted that despite providing a wide range of relief steps for businesses and households, the budget does not contain considerable revenue raising or spending-containment steps.
