S&P downgrades Pak currency rating

Earlier, Pakistan had received the first instalment of 500 million dollars from the Asian Development Bank last week. The ADB had made commitment with the govt to provide 1.50 billion dollars worth economic support to Pakistan in 2008-09.

The foreign investors still hold 2.3 billion dollars worth stake in the capital market (free float) which they can off-load once the Karachi Stock Exchange lifts cap on prices, expected this month.

Pakistani capital market needs at least Rs 20-30 billion to stabilise the market and recently the KSE board members are seeking 20 billion dollars Equity Opportunity Fund and provide security to the foreign investors to endure their losses on case of facing shares Rs 30 billion shares at a fixed price within one year period.

‘The negative outlook reflects our expectation that multilateral and bilateral aid, including deferred oil payment schemes, may not be timely enough, or sufficient in magnitude to stem the loss of external liquidity’, S&P said.

The nation is running short of money to repay State debt.

Standard & Poor’s estimated that Pakistan’s foreign-exchange reserves have dropped 67 per cent in the past year to about $4.7 billion.

Pakistan’s next interest payment on its dollar-denominated bonds is due in December and the govt is scheduled to repay $500 million in February for a 6.75 per cent note.