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Rating agency Moody's terms Pakistan mini-budget positive for export sector
Last Updated: 2019-02-03 09:29 | Xinhua
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A U.S. rating agency Moody termed the Pakistani government's recently presented mini-budget as "positive" for manufacturing and export-oriented sectors, local media reported Saturday.

Moody's said that the mini-budget will lend much-needed support to enhancing the country's foreign income and curb the current account deficit, Express News reported.

The agency also said that the new budgetary measures weakened the government's income generation side as tax incentives awarded to industries and the agriculture sector further toughened the challenge of achieving the tax revenue collection target, and the budget deficit is feared to remain high.

"While the mini-budget will bolster the export sector, there is a greater risk of fiscal slippage and slower fiscal consolidation in the absence of additional revenue-raising measures," the rating agency said.

Last year in June, the agency downgraded Pakistan's credit rating to "B3 negative" from stable after it found that the country's foreign currency reserves were insufficient to pay back foreign debt.

The latest commentary suggested that foreign currency reserves were inclined to improve, which might lead the credit rating body to consider revising upwards the country's credit rating going forward.

It said that if the new measures were effective, they will help improve Pakistan's manufacturing sector, fostering export and import substitution, and help narrow the current account deficit.

However, in the absence of new spending cuts or revenue-raising measures, the steps may not sufficient to narrow the country's budget deficit.

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