Pakistan's economy downgraded to junk status by agencies

Pakistan's economy has been downgraded to junk status by credit agencies Moody's and S&P Global due to a weak tax base, trade imbalance, and rising debt. This rating limits the country's access to affordable credit. The government struggles with low tax collection, forcing it to borrow for daily expenses. Additionally, import costs exceed export earnings by about $30 billion annually, putting pressure on foreign reserves, which can only cover two months of imports. Recent efforts to improve tax collection and boost exports have seen limited success. While exports increased by 11% in 2023-24, concerns remain about the sustainability of this growth and the need for a shift in the elite's approach to economic development.