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Pakistan is currently going through a period of economic and political crisis. Meanwhile, global rating agency Moody's has reduced the credit rating of Pakistan. Moody's report says that due to the ongoing political crisis in Pakistan, it may have to face a serious financial crisis. Also, the incoming government will have a big challenge to save the country from a serious economic crisis. Moody's claimed that political uncertainty will make it difficult for Pakistan's new government to approach the International Monetary Fund (IMF) for a new loan in April as it already owes $49.5 billion.
IMF had given a loan of 3 billion dollars to Pakistan in June last year, the period of nine months of which is ending. On the other hand, Pakistan once again needs a big loan for financial help. Moody's has sounded the alarm bell for Pakistan and said that Pakistan's treasury may be exhausted by April. This will cause further damage to Pakistan's economy, which will become very difficult for it to handle.
Pakistan's credit rating reduced
Moody's has reduced Pakistan's credit rating. Its rating has been reduced from CAA1 to CAA3, which is just 2 notches above the default. This claim of Moody's is an alarm bell for Pakistan because the country's economy is running only with the help of IMF loan. Pakistan got the loan from IMF only in 2023, but it will need the loan again in early 2024.
There has also been a decline in the value of Pakistani rupee, which is equivalent to 30 paise of India.
The condition of Pakistan's rupee has also deteriorated. Its price is decreasing day by day. One rupee of Pakistan is equal to 30 paise of India and the value of one US dollar has reached 277 paise of Pakistan. Islamabad based think tank Tab Ad Lab has also prepared a report on the situation in Pakistan and has said that in such a situation the country's economy will sink badly and Pakistan will move towards default. It will be difficult for Pakistan to get out of this cycle. Its economy is surrounded from all sides.
Moody's report on Pakistan
The report said that unless there are major reforms and dramatic changes in the current situation, Pakistan will continue to sink in debt. This situation has arisen because of the political parties of Pakistan. These leaders have left no stone unturned in looting the country. Pakistan has so much debt that it has to appeal to other countries to waive its interest.
Pakistan has to repay a debt of 49.5 billion dollars in the year 2024.
Pakistan's external debt has almost doubled since 2011. Whereas domestic debt has increased six times. Last year, IMF had helped Pakistan with three billion dollars. Which is ending now. According to information received from Pakistan, Moody's assessment of the situation after the Pakistan elections is a sign of concern for the new government. Moody's has said that whichever government is formed, there will be political instability. Moody's said that Pakistan has to repay about $49.5 billion of debt by 2024. 30 percent of the total amount is interest on Pakistan's loan.
There is not only economic but also political crisis in Pakistan. General elections were held here on 8 February. But the government has not been formed yet. However, late on Tuesday 20 February 2024, Pakistan Peoples Party and Pakistan Muslim League Nawaz have agreed to form a coalition government.