US ratings agency Standard & Poor’s (S&P) has assigned its B+ foreign currency credit rating to Pakistan, and has also assigned a B+ rating to Pakistan’s $150 million Euro floating-rate notes. S&P described the rating outlook as stable, saying that the assessment is supported by economic reforms and commitment to further liberalisation and fiscal adjustment contained in the recently announced 1996/97 budget.

The agency added that credit quality is limited by heavy public finance obligations, vulnerable external payments, heavy external debt and political restraints on further reform.

S&P welcomed the extension of the general sales tax and the lower budget deficit target contained in the 1996/97 budget. The agency says that an expected good cotton crop combined with the discipline to implement current economic policies is expected to boost growth and slow inflation.