...Many of the credit stresses which led to the downgrade of Pakistan s sovereign credit ratings to B# from B# in May ### # are still present. In the intervening months, however, the rapid depletion of the country s foreign exchange reserves has emerged as the most imminent risk facing its sovereign ratings and country ceiling. At the same time, delays in the ability of its fiscal authorities to wean themselves away from central bank financing of the budget deficit also represent a formidable medium-term obstacle for improving inflationary expectations and reducing pressure on the Pakistani Rupee. In this environment, the critical ingred ient for ensuring the success of ongoing policy adjustments and structural reforms as well as negotiations for external assistance and assuaging foreign invest or sentiment is an improvement in domestic political stability. In this respect, President Musharraf s re cent resignation could limit domestic political polarization and policy...

Report Type: Special Comment
Free Sample: Click Here to Download

Enter the keyword(s) which you would like to search for within this document and click "Search"

 

 Moody's Global Credit Research
Moody's Investors Service, a leading global credit rating, research and risk analysis firm, publishes credit opinions, research, and ratings on fixed-income securities, issuers of securities and other credit obligations. Credit ratings and research help investors analyze the credit risks associated with fixed-income securities. Ratings also create efficiencies in fixed-income markets and similar obligations, such as insurance and derivatives, by providing reliable, credible, and independent assessments of credit risk. For issuers, Moody's services increase market liquidity and may reduce transaction costs.