S038;P rates Pakistan as B negative

Observing that Pakistan continues to have donor support and adequate external liquidity,Samp;P affirmed the 8216;B-8216; long-term and 8216;C8217; short-term foreign and local currency sovereign ratings on Pakistan.

8220;The stable outlook reflects adequate external liquidity,supported by donor commitments,8221; it said.

8220;The ratings affirmation take into account Pakistan8217;s low income level,high public and external leverage,political and security risks,and fiscal inflexibility due to an exceedingly narrow tax base,8221; Samp;P8217;s credit analyst Agost Benard said.

These constraints are balanced against an adequate external liquidity position 8212; largely due to the earlier IMF standby loan agreement and donor support,Benard said.

8220;In addition,we affirmed the 8216;B-8216; issue rating on the sovereign8217;s senior unsecured foreign-currency debt,as well as its recovery rating of 8216;38217;,which denotes the expectation of a meaningful recovery of 50-70 per cent in the event of a distressed debt exchange or payment default,8221; the credit rating agency said.

Noting that Pakistan8217;s high public and external indebtedness is a rating constraint,Samp;P said it estimates Pakistan8217;s net general government debt at 50 per cent of GDP in 2011,and about 40 per cent of it is external debt.

Although the debt-to-GDP ratio has fallen from 74 per cent a decade ago,this was mostly due to debt forgiveness and high nominal GDP growth due to double-digit inflation in the past four years,Benard said.