22/10/2022
Fitch Ratings on Friday downgraded Pakistan's long-term foreign currency Issuer Default Rating (IDR) to 'CCC+' from 'B-', citing deterioration in the country’s external liquidity and funding conditions.
The rating agency stated that one of the key factors behind the decision is the decline of foreign exchange reserves due to devastating floods in the country.
“This is partly a result of widespread floods, which will undermine Pakistan's efforts to rein in twin fiscal and current account deficits. The downgrade also reflects our view of increased risks of policies potentially undermining Pakistan's IMF programme and official financial support,” the statement said.
According to Fitch, the liquid net foreign exchange reserves of the State Bank of Pakistan (SBP) were down from more than US $20 billion at end-August 2021 to about US $7.6 billion by October 14, 2022.
