Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (8394)	10/14/1999 1:12:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

Pak crisis not to affect India's sovereign rating-Moody's Source : MI Oct 14, 1999, 8:12:50 AM The coup in Pakistan is not likely to have any impact on Moody's rating outlook on India, Mr. David Levey, Managing Director & Co-head, Sovereign Risk Unit, Moody's investors Service, has said. Levey said: "We do not believe the events in Pakistan will reverse our positive rating outlook on India." Moody's had recently upgraded the country's rating outlook to positive from stable. Mr. Levey, however, said the developments in Pakistan could cause some concern to India indirectly. According to him, an escalation in Indo-Pak tension would lead to higher defence spending which would result in a rise in fiscal deficit. Mr. Levey said the upward revision in India's rating outlook was an indicator that there was now at least a 50 per cent chance that the country's rating could be upgraded in the next 12-18 months. However, this would be contingent on India being able to effectively carry out the financial sector reform process and also tackle the problem of infrastructure shortages, he said. Mr. Levey said the country's fiscal deficit position currently was not looking good and "the size of fiscal deficit is larger than was originally forecast". According to him, the Government would now have to tackle difficult issues such as reduction in subsidy. He said the large non-performing loans of the financial system still remained a concern area. Although the Verma Committee had come out with a report on restructuring weak banks, issues such as recapitalising the weak banks and reducing the employee strength would have to be tackled, he said. According to Moody's, the structural weaknesses of the Indian economy - including chronic fiscal imbalances and the consequent need to maintain tight monetary policy, public sector inefficiency, infrastructure shortages and low productivity remained big constraints on the country's ratings. However, the international credit rating agency felt that a stronger consensus had now emerged across the political spectrum concerning the necessity for structural economic reforms. Moody's believed the new government at the Centre was likely to stay in office longer than its recent predecessors and that a longer lasting Government would be able to undertake a more aggressive economic restructuring during its term. Mr. Levey, along with a couple of his colleagues who are on a visit to India, had a meeting with representatives of corporates and banks today.