Moody’s upgrades Pakistan’s credit outlook to ‘stable’ after new IMF tranche

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The leading credit rating agency said Islamabad’s financial situation is on a path of improvement and expressed hope that the help from the International Monetary Fund (IMF) mitigates the risks to its economy.

The New York-based agency changed Pakistan’s credit ratings outlook from ‘negative’ to ‘stable’ on Monday, expecting that the “balance of payments dynamics will continue to improve, supported by policy adjustment and currency flexibility.”

The experts at Moody’s noted that the country’s economic recovery reduces “external vulnerability risks,” but warned that “foreign exchange reserve buffers remain low and will take time to rebuild.”

Abdul Hafeez Shaikh, financial adviser to Prime Minister Imran Khan, celebrated the news as proof of the government’s success in stabilizing the economy and paving the way for “robust long term growth.”

The firm downgraded Pakistan’s ratings outlook to negative in June of last year, citing risks stemming from depleted foreign exchange reserves. Last month, Islamabad secured another tranche from the IMF as part of a $450-million loan package. Moody’s said that the help from the IMF will “mitigate” the risks to the economy.

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