Moody’s Investors Service has published its 2010 sovereign report on Pakistan, which provides a methodological assessment of the country’s B3 foreign-and local-currency issuer rating and stable outlook.

The main considerations for the rating rationale are:

1. Pakistan’s modest, but, low-income and savings-constrained economy is buffeted by large supply-side shocks;

2. Weakening governance and rising internal violence has limited policy effectiveness;

3. Tax collection is inadequate and foreign investment is decelerating;

4. Volatile politics and prolonged economic underperformance pose considerable event risk; however, external financial assistance coupled with buoyant remittances has bolstered the external payments position, reducing the risk of a balance of crisis in the near term.