Lenders' help lowers Pakistan's financing risks: Moody's.

Byline: Khaleeq Kiani

ISLAMABAD -- The financial support from the International Monetary Fund (IMF) and other multilaterals has lowered Pakistan's financing risks from the coronavirus-related economic shock even though its fiscal deficit may touch double digits.

'The substantial financial support from official-sector creditors reduces Pakistan's financing risks,' said the Moody's investors service on Thursday, adding that the fiscal stimulus announced by the government could widen the country's budget deficit to 9.5-10 per cent of GDP.

The IMF approved disbursement of $1.4 billion (0.5pc of GDP) to Pakistan under its Rapid Financing Instrument (RFI) and it was supplemented by $588 million (0.2pc of GDP) assistance committed by the Asian Development Bank and the International Development Association to support Pakistan's response to the coronavirus outbreak. Additionally, G20 creditors have offered bilateral debt relief to Pakistan.

'The substantial financial support from official-sector creditors reduces Pakistan's financing risks,' said the New York-based rating agency. It expected Pakistan's financing needs to rise because of coronavirus-related economic effects and the government's Rs1.2 trillion ($7bn, 2.7pc of GDP) stimulus package.

Rating agency says stimulus package may widen fiscal deficit to 9.5-10pc of GDP

'Consequently, we expect the stimulus to widen the government deficit to 9.5pc-10pc of GDP in fiscal 2020 (ending June 2020) from 8.9pc in fiscal 2019, despite strong revenue growth narrowing the deficit in the first half of...