A higher likelihood of default and a higher level of investment risk are indicated by the grade in the context of weak debt affordability. Due to the liquidity crisis and issues with external vulnerability, international rating agencies have long placed the nation’s economy in the category of “speculative grade,” meaning that there is a very high credit risk. As a result, Pakistan’s foreign exchange reserves fell, raising worries about the nation’s declining capacity to repay its international debt. This is necessary to draw in more funding from bilateral and multilateral partners and lower the chances of default. This indicates that for the current fiscal year, the new setup will probably be able to pay off its remaining foreign debt.

Source: The Patriot March 01, 2024 08:29 UTC