Billions in jeopardy due to emergency in Pakistan: WSJ

November 14th, 2007 - 8:37 am ICT by admin  
The report noted that prior to 9/11, Pakistan was struggling to pay off its international loans.

The US is Pakistan’s largest investor, accounting for nearly a third of the country’s foreign direct investment from July to September this year, according to Pakistan’s Finance Ministry.

The report noted that on Monday, credit-ratings agency Moody’s Negative outlook: Investors Service changed the outlook to negative, from stable, on the B1 government foreign and local currency bond ratings and placed a negative outlook on Pakistan’s B2 foreign-currency country ceilings for bank deposits.

The outlook for Pakistan’s B3 foreign-currency country ceiling for bonds was unaffected and remains stable.

“From a credit perspective, the emergency rule, and more importantly, the factors behind such an action, could undermine Pakistan’s ability to sustain significant inflows of confidence-sensitive capital,” analyst Aninda Mitra noted.

The WSJ report said that another potential problem for the Pakistani economy is that foreign investors could be more cautious about pumping money into a country that is apparently becoming less stable and more authoritarian.

Last year, the report noted that Pakistan enjoyed record inflows of FDI, as banking, telecommunications and property markets boomed.

Partly because those investment numbers were so high and partly because of worries about the nation’s stability, foreign investment slipped in the July-September period from a year earlier by 10.8 per cent to 990.1 million dollars.

“Some now fear a steeper downturn after emergency rule and an escalating Islamic militancy that has targeted both soldiers and civilians with suicide attacks,” the report said. (ANI)

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