Financial services agency says outlook stable, but warns many structural weaknesses remain.
Standard and Poor’s revised Pakistan’s long-term credit rating from B- to B on Monday, saying better policymaking had improved the economy’s performance and raised the country’s growth prospects.
The agency said Pakistan continued to benefit under its democratically elected government and that a reform program had helped to restore economic stability. It affirmed the ‘B’ short-term rating and said the outlook on the long-term rating was stable.
However, it warned that many of Pakistan’s structural weaknesses remained, including a narrow tax base and security risks, which have weakened the government’s effectiveness and weighed on the business climate. “Notwithstanding the recent terrorist attacks in Quetta, however, we see even these structural weaknesses as having improved over the past few years. Combined, these factors motivated the upgrade,” it said in a statement.
The agency forecasts average annual GDP growth to 5.5 percent in the next three years from the current growth rate of 4.7 percent. “This revision reflects improved construction and services sector activity, low-cost oil and finance, and high investment associated with the China-Pakistan Economic Corridor (CPEC).”
Pakistan was last week praised by IMF chief Christine Lagarde for emerging from an economic crisis. The IMF released the final installment of a $6.6 billion three-year economic bailout package to Pakistan last month.