General Knowledge

What Moody’s Investor Ranking Means for Pakistan

Dec 09, 2019

At the start of December, Moody’s published a report in which they elevated Pakistan’s standing from negative to stable – restoring the country’s B3 status. Now, what is Moody’s and why should their ranking affect the overall mood of Pakistanis? Read on.

If you are a financial geek, then you might definitely know about them. But if you’re not, then allow us to enlighten you. Moody’s Corporation is one of the leading financial entities in the world; that lends its expertise of credit rating worldwide, among other services. In layman terms, the organization analyzes and ranks the creditworthiness of borrowers using meticulous protocols. Their rating scales help investors in making decisions.

Pakistan Climbs the Ladder in Moody’s Investors Service Ratings

Moody’s Corporation assigns an investors service rating – ranging from Aaa to C. The company announced on Monday that Pakistan has jumped from negative to a positive B3. The improvement of ranking comes on the back of bold economic initiatives taken by the government to reduce the deficit in balance of payments as well as repayments of loans.

The organization’s key people visited Pakistan last month and acknowledged Pakistan’s stabilizing economy and the capacity to avert serious event risks. The game changer here is the country’s policy on imports.

Import Policies – The Game Changer

Since the appointment of Abdul Hafeez Shaikh as chief economist and aide to Prime Minister on financial matters, it appears the present government has changed its outlook on the nation’s economic matters. Strict monetary terms and the slap of import tariff on luxury goods has vastly helped the local economy to grow.

No wonder Pakistan Stock Exchange is on an upward trajectory since the last two months. The reason is plain simple, the current economic situation is satisfactory to investors. Also, there happens to be no impending fines or sanctions from the IMF, so investors are keeping a close eye on the economic developments in Pakistan.

Takeaways from Recent Improvements in the Economic Landscape

Pakistan looks set to reduce inflation by the end of the current fiscal year. Foreign reserves are at a stable $8-9 billion dollars; henceforth, the scenario is tailor made for medium to big sized investors to lay out money on the most risk-free industries – such as real estate, hotels, restaurants and leisure or possibly digital advertising; given the exposure IT is getting in Pakistan.

Nevertheless, the signs look good, Pakistan is finally on the track of economic stability. Macroeconomic steadfastness with less vulnerabilities on the external account are the drivers to an economically prosperous Pakistan.

Join our newsletter today!