Experts predict that the country’s reputation would recover and it would get a credit rating upgrade from international agencies as Pakistan was taken off the Financial Action Task Force (FATF) list of nations under increased monitoring.
According to Geo, the removal will allow Pakistan to smoothly complete the forthcoming review of the IMF’s Extended Fund Facility since the International Monetary Fund (IMF) used the execution of FATF action plans as a structural benchmark.
Pakistan has been removed off the FATF’s “grey list,” as was to be expected, but the nation will continue to cooperate with the organisation and the Asia Pacific Group to strengthen its anti-money laundering (AML) and counter-terrorist financing (CFT) framework. FATF made this announcement following the conclusion of its two-day meeting in Paris on Friday.
Fitch downgrades Pakistan’s rating to CCC+
Yet on the other side, Fitch Ratings lowered Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to “CCC+” from “B-” on Friday, which experts believe is bad news for the nation’s recovery from the mega floods. The reversal comes as the country’s fragile economy continues to face challenges from all directions.
The company 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.
“The downgrade reflects further deterioration in Pakistan’s external liquidity and funding conditions, and the decline of foreign exchange reserves,” Fitch Ratings said. “This is partly a result of widespread floods, which will undermine Pakistan’s efforts to rein in twin fiscal and current account deficits.”
