New govt will have to introduce long-term financing plan: Moody’s

ISLAMABAD: The newly-elected government will have to put in place a long-term financing plan to meet its very large external debt obligations for the next few years, says Moody’s Investors Services (Moody’s).

Grace Lim, analyst Moody’s Investors Service commenting on general elections in Pakistan stated that Pakistan held its national elections on 8 February.

Counting is underway. A timely announcement of the results, leading to a smooth formation of a new government will reduce policy and political uncertainty. This is crucial for the country that is facing very challenging macroeconomic conditions, with fragile balance of payments, weak growth and high inflation.

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The newly elected government will also have to put in place a longer-term financing plan to meet its very large external debt obligations for the next few years. “We think that the government will need to negotiate for another International Monetary Fund (IMF) programme, after the current one expires in April 2024.

Until a new program is agreed to, Pakistan’s ability to secure loans from other bilateral and multilateral partners will be severely constrained”, Lim added.

Even under a new IMF programme, the new government will be tested on its willingness and ability to implement and sustain reforms, particularly revenue-raising measures, that may be politically unpopular, but required to improve macroeconomic conditions, the analyst added.