Pakistan budget to have no rating impact, says S&P
submitted 9 hours 48 minutes ago

STANDARD & Poor's Ratings Services said Pakistan's 2009 fiscal year budget is broadly in line with expectations and has no impact on the country's 'B' long-term foreign currency and 'BB-' long-term local currency sovereign credit ratings and negative outlook, reports forbes.com
The 2008-2009 fiscal year budget, published Wednesday, aimed to curtail the fiscal deficit to a planned 4.7 percent of GDP from about 7 percent this year, with an envisaged GDP growth rate of 5.5 percent.
Notably on the expenditure side, there is some effort at reducing the subsidy burden, which had been one of the main causes of this year's large fiscal slippage. On the revenue side, the government has proposed a relatively modest step toward expanding its narrow revenue base by eliminating several tax exemptions.
However, S&P said both the revenue generation and expenditure curtailment measures face significant implementation risks, given the ongoing political instability, in an inherently fragile coalition.
'Revenue goals face additional risk from a slowing economy, as the official GDP growth forecast of 5.5 percent could turn out to be overoptimistic in light of monetary tightening and slowing foreign direct investment inflows,' the rating agency said. Overall, S&P said the budget is consistent with its subdued expectations, but added that the ratings would be lowered if fiscal and current account deficits do not improve.