Says ‘nothing to worry about’.
Finance Minister Ishaq Dar warned Moody’s Investor Service on Friday that he would give a “befitting” reply in a meeting with its officials next week if the agency did not reverse the downgrade of Pakistan’s sovereign credit rating.
“They (Moody’s officials) have to meet me. I told them if you don’t [reverse] this, I will give you a befitting response in our meeting next week,” he said.
A day earlier, Moody’s cut Pakistan’s sovereign credit rating by one notch to Caa1 from B3, citing increased government liquidity and external vulnerability risks, following the devastating floods that hit the country.
Talking outside an accountability court in Islamabad, Dar said he had spoken to the agency’s officials and told them that they “should not have done it”.
Moody’s should have consulted Pakistan prior to the downgrade, the finance minister said, adding that there was “no cause for worry” as rating agency Fitch had also downgraded the United Kingdom earlier this week.
“The main work of these rating agencies is related to bonds. We floated $500 million bonds in April 2014 and we had 14 times oversubscription.
“We have given our response. I have worked in international organisations too. It was impossible for them (Moody’s) to undo [the downgrade],” he acknowledged, but reiterated that he would give a “befitting response” to the agency.
The government said Moody’s carried out rating action “unilaterally without prior consultations and meetings with teams from the Ministry of Finance and State Bank of Pakistan”.
Following Moody’s action, the finance ministry held two meetings with the agency’s team over the past 24 hours, sharing data and information which clearly show a picture contradicting Moody’s rating action.
The ministry said the “government policies over the last few months have helped in fiscal consolidation” and the government had adequate liquidity and financing arrangements to meet its external liabilities. The continuation of the IMF programme was based on the confirmation and confidence in country’s ability to maintain the fiscal discipline, debt sustainability and its ability to discharge all its domestic and external liabilities, it said.