Tough reforms needed to improve ratings: S&P

Pakistan’s road to securing high credit ratings will depend on whether the elections this week will bring about a government that can push for tough reforms, according to S&P Global Ratings. Almost all top rating agencies have downgraded the country’s ratings due to prolonged political and economic crisis. The economic situation has apparently improved, but the uncertainty over fair elections remains a significant concern among Pakistanis. The global news agency Bloomberg quoted a survey showing that 70 per cent of Pakistanis believed the economy was worsening while half said it was hard to get by on present income. The news agency said Pakistanis were not confident that the Feb 8 elections would be fair. However, S&P said that a government with popular support can work with key institutions and will have a better chance of securing financing from the IMF. According to the rating agency, Pakistan has a CCC+ rating, one step below the B category and signifies the nation is vulnerable to a default. If the new policy moves to improve investor confidence and steps to cut inflation, this could lift fiscal and external metrics to improve the ratings. The IMF bailout package ending in March would put pressure on the new government to quickly secure another round of financing.