According to Moody’s (a globally recognised credit rating agency) Pakistani economy has strengthened after the completion of a 3-year programme under IMF (International Monetary Fund).
The financial deficit has narrowed and growth has been observed in the foreign exchange and structural reforms planned out earlier, the agency explained. Fueled mainly by the CPEC (China-Pakistan Economic Corridor) Pakistan’s economy is forecasted to register a 5% expansion rate over the next 2 years, according to the agency. It also stated that CPEC is set to lessen infrastructural gaps through higher investment in transportation services and power supply.
As gauged by the debt-to-GDP ratio, Pakistan’s general debt level is not up to its standards, the agency mentioned and said that it came in at 67% against the 50% benchmark.
Among factors that hinder curbing the fiscal deficits, it is the country’s limited tax base and low savings, together with the shallow capital market, lead to instability in the domestic financing, it noted. But successful efforts to resolve these problems if put in place may help the country in securing a much stronger credit profile.
Moody’s underscored that Pakistan’s account deficit at present is widening mainly because of the interest payments, though the level of debt incurred is likely to perk up finance imports.