Moody's Investors Service cut Pakistan's credit rating by one level to B3 on Tuesday, and warned of further cuts, given the depletion of the country's foreign exchange reserves.The country is scrambling to borrow funds to provide it with some breathing room, although many analysts expect it will have to seek support from the International Monetary Fund (IMF) to overcome economic problems that stemmed from high oil and food prices.
Moody's retained a negative outlook, which it had imposed last month after Pakistan's rapidly deteriorating external liquidity position accompanied a stalling of economic reforms and mayhem in its domestic politics.
Aninda Mitra, Moody's sovereign analyst for Pakistan, said recent policy moves were not sufficient to stanch the decline in its foreign currency pile, which was further hastened by delays in assistance from key bilateral and multilateral creditors.