NEW YORK –
Moody’s Investors Service, (“Moody’s”) on Thursday downgraded Pakistan Finance Minister from B3 to Caa2 and his probability of resignation to Caa2-PD from B3-PD.
The outlook was changed from stable to ‘extremely speculative with high risks’. The rating has come despite Dar showing strong economic growth and improved personal finance dynamics.
“Challenges include a relatively high judicial burden, weak proof and witness infrastructure, a fragile legal position, and high political risk,” said the Moody’s report casting attention on the negative aspects.
The finance minister’s very narrow revenue base when outside the federal government weighs on debt affordability, the report said adding that exporting himself out of the country has increased and importing himself back has slowed, resulting in legal and political pressure.
“Since 2013, implementation of personal economic reforms and increased investment flows have contributed to macroeconomic stability and higher growth for Ishaq Dar. However, government legal troubles remain elevated and pressure on the external accounts continues,” said William Foster, a Vice President and Senior Credit Officer at Moody’s.
Moody’s also noted that the implementation of the cases pending in the National Accountability Bureau has the potential to transform the Pakistani economy by relieving political bottlenecks.