In view of the ongoing tension between India and Pakistan, S&P Global Ratings said on Thursday that this enmity could increase the risk for credit metrics of both countries. If there is any increase in the conflict, then the pressure on Sovereign Credit Support will be reduced. According to PTI news, S&P, who has rated India and Pakistan with a positive attitude, rated the ‘BBB’ and ‘CCC+’ (stable approach), said that in the current situation, he does not see any immediate effect on the Sovereign Credit rating. It is expected that stress will be more for the next two to three weeks, with which important military action is possible from both sides.
S&P is expecting to be temporary intense military action
According to the news, S&P Global Ratings said that the spread of enmity between India and Pakistan has increased regional credit risk. We mainly say that acute military action should be temporary, which will give way to limited and sporadic collisions for a long time. In response to Pahalgam massacre, India’s armed forces destroyed nine terrorist bases including Jaish-e-Mohammed and Lashkar-e-Taiba in Pakistan and Pakistan-occupied Kashmir (PoK) early Wednesday.
India’s development forecast reduced
S&P said it hopes India will maintain strong economic growth, which will gradually continue fiscal improvement and at the same time the government will focus on supporting the recovery and fiscal stability of its economy. It states that the two countries have no inspiration to continue the existing tension for a long time. Last week, S&P, citing uncertainty on the US trade policy, reduced India’s development forecast from 6.5 percent to 6.3 percent for FY 2026.
What problems will come before both countries
S&P says a long military conflict will derail the improvement in Pakistan’s external and fiscal metrics that would support the return of macro stability. For India, a long -lasting military conflict will also create difficulty in attracting foreign investors wishing to re -organize its international production activities amidst the uncertain global economic environment.
Important military action possible even further
S&P said that in view of the current situation, it seems that further important military action is possible from both sides. However, the condition is likely to improve after this, which will not have a constant negative effect on the Sovereign Credit Matrix. Earlier this week, Moody’s Ratings had estimated India’s growth rate to be 6.3 percent for the current financial year and said that geopolitical stresses such as tension between India and Pakistan were at risk of negatively impacting its basic development forecasts.
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