Moody’s Investor Services said today that a credit downgrade for Pakistan was more or less imminent. The reasons given were exactly what one would expect; fiscal mis-management combined with inflation equals lower credit-worthiness.
Pakistan, of course, listens to these scoldings all the time, from a wide variety of outside sources. It always promises to reform. It never does.
The reason it doesn’t have to is that Pakistan has nuclear weapons. Western and some Arab governments worry that those weapons will fall into the hands of Al Qaeda. Whenever things get tight on the money side, Pakistan goes to the western and Arab governments and their various lending agencies and says: “give us some money or the weapons will fall into the hands of Al Qaeda.” The western and Arab governments (and their various lending agencies) fork over more dough.
So Moody’s warning is, on one level, meaningless. But on another level, it’s important. It’s further confirmation of the incompetence and corruption of the nation’s leadership. And it’s fair warning that things continue to get worse, not better, in Pakistan.
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