ISLAMABAD: Moody’s does not expect Pakistan’s inclusion in the Financial Action Task Force (FATF) grey list to have a material impact on its external financing.
Pakistan had previously been included in the list between 2012 and 2015 but managed to negotiate when its entered into an IMF program
Moody’s does not anticipate any disruptions to borrowing from the multilateral sources. The credit ratings service noted that a strong domestic demand was increasing pressure on Pakistan’s external account while external borrowing accounted for a significant portion of Pakistan’s debts.
Pakistan’s current account deficit has widened driven by a large increase in the good deficit, which is higher due to China-Pakistan Economic Corridor-related (CPEC) capital goods imports.
Moody’s noted that brighter prospects were expected from exports and remittances, where rising oil prices were likely to translate into a higher remittance inflow from GCC countries.
Exports are expected to rise considering most energy-related projects under CPEC were nearing completion and the resulting energy supply would play a role in boosting the production activity.
Given that foreign reserves dipped to a 34-month low of $12.1 billion, the State Bank of Pakistan had 2.5 months of import cover on a three month rolling basis, below the IMF’s minimum adequacy guideline.