July 2, 2022
  • July 2, 2022

Moody rates the outlook for PNG as negative

By on April 23, 2021 0

MOODY’S Investors Service (“Moody’s”) changed the outlook for PNG’s government rating to negative from stable this week.

The decision to downgrade the outlook from stable to negative reflects the risks that have marked a weakening of PNG’s fiscal strength and debt position, high borrowing needs increase liquidity risks, notwithstanding the government’s strategy. government aimed at increasing the use of concessional external financing.

At the same time, the senior unsecured B2 long-term issuer ratings were confirmed.

The B2 rating assertion incorporates Moody’s assessments that, although PNG’s domestic public liquidity and external liquidity risks remain credit constraints, these are somewhat offset by the resulting credit strength. prospects for higher medium-term GDP growth potential as an investment in PNG’s natural resource wealth. is achieved, although some degree of execution risk in advancing large resource projects that materialize remains.

The rating is also supported by credit challenges related to weaknesses in government efficiency and moderate political risks.

PNG’s country limits in local and foreign currencies remain unchanged at Ba2 and B1 respectively.

The three notches wider than average spread between the local currency cap and the sovereign rating reflects poor predictability of government institutions as well as domestic political risks.

The two-notch gap between the foreign currency and the local currency takes into account relatively high external indebtedness, low efficiency of Marco’s policy and capital account restrictions, as there is always a foreign exchange backlog. .