Fitch Ratings downgraded Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to “CCC+” from “B-” on Friday, which analysts say is bad news for the nation’s recovery from the super floods. The downgrade comes as the country’s fragile economy continues to face challenges from all directions.
The business claims that sovereign states with a grade of “CCC+” or lower do not normally receive outlooks.The primary factors that contributed to a downgrading, according to the agency, were increasing liquidity and policy concerns.According to Fitch Ratings, “The downgrade reflects continuing deterioration in Pakistan’s external liquidity and funding constraints, as well as the decrease of foreign exchange reserves.”
This is in part due to extensive flooding, which will make it harder for Pakistan to control its twin fiscal and current account deficits.The downgrade “also reflects our view of elevated risks of measures potentially weakening Pakistan’s IMF programme and official financial support,” according to the downgrading.
