Monday, December 10, 2007

The sovereign rating pertains to both local and foreign currency debt

Delving into Pakistan's `negative' rating

Pakistan is at `a turning point,' recognises a recent report from Standard & Poor's Ratings Services (S&P). "A rapid succession of events over the past eight months has led to considerable uncertainty about the fate of the Musharraf administration, which has governed Pakistan since October 1999," it begins, sombrely.

"The relative certainty of an authoritarian administration strongly focused on the economy and with a generally good policy mix will likely give way to an elected government whose policy orientation, cohesion, and efficiency have yet to be revealed and tested," continues the November 27-dated report.

About a month ago, soon after Pervez Musharraf declared a state of emergency in Pakistan, S&P revised the outlook on the sovereign rating to `negative', stating that the action would `prolong and exacerbate the uncertainties, potentially putting downward pressure on the ratings if fiscal and external balances deteriorate.'


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