Political upheaval in Pak raises significant uncertainty over policy continuity: Moody's

Islamabad, April 13 (IANS) Moodys Investors Service has highlighted Pakistans "significant uncertainty over policy continuity" and falling foreign exchange reserves, Dawn reported.

However, the New York-based credit rating agency forecast a stable outlook for Pakistani banks and estimated the country's gross domestic product (GDP) growth rate to remain between 3 and 4 per cent.

Commenting on the ouster of Imran Khan through a no-confidence vote and the subsequent confirmation of Shehbaz Sharif as the new PM until August 2023, Moody's said that "the political upheaval reflects the volatility that besets Pakistan's political environment and raises significant uncertainty over policy continuity, at a time when Pakistan is encumbered with surging inflation, widening current account deficits and declining foreign-exchange reserves".

Moody's said it is unclear how the new government would approach the International Monetary Fund's (IMF) programme during this interim period before the next elections are called, prolonging the uncertainty around whether Pakistan would be able to secure financing from the IMF to bolster its foreign-exchange reserves, which have fallen to a level sufficient to cover only about two months of imports, Dawn reported.

Meanwhile, it said the banks' stable outlook is supported by an expanding economy and their sound finances and hence maintained a stable outlook for the banking sector (B3 stable).

Moody's expects real GDP growth of between 3 and 4 per cent for the ongoing fiscal year and between 4 and 5 per cent for the 2023 fiscal year, with credit growth surpassing 12 per cent.