Pakistan's debt rating remains on review for a downgrade as a "narrow avoidance" of default was not a vast improvement of its creditworthiness, Moody's Investors Service said, Bloomberg reported. Moody's "will not take any immediate rating actions" based on the weekend announcement of a $7.6 billion bailout from the International Monetary Fund, said Aninda Mitra, a sovereign analyst at the ratings company in Singapore. Pakistan still needs to show it can meet debt payments due in the first half of 2009 and secure additional assistance from other donors, he said. Officials from Pakistan and a group of potential donor countries are meeting in Abu Dhabi to set an agenda and date for a ministerial-level meeting later. South Asia's second-biggest economy needs external aid after its foreign-exchange reserves shrank 75 percent in the past year to $3.5 billion, threatening its ability to repay debt. Pakistan's credit rating was lowered by Moody's on Oct. 28 to B3 from B2, six rankings below investment grade. The so-called 'Friends of Pakistan' group meeting today includes the US, UK, China and Saudi Arabia. "We would like to see whether the IMF agreement results in unlocking assistance flows from other bilateral creditors who were approached by the government, but were reluctant in providing assistance," Mitra said today. The IMF loan may help the nation overcome a "crisis of confidence" and improve its debt rating, Rajat Nag, Managing Director at the Manila-based Asian Development Bank, said in an interview in New Delhi yesterday. There is no reason why it should not lead to an upgrade in Pakistan's credit rating, Nag said. The IMF programme will bolster confidence and I am optimistic Pakistan will be able to undertake the reforms required for the bailout package. The Friends of Pakistan group wanted us to get an IMF endorsement for our economic programme, Shaukat Tarin, the de facto Finance Minister, said in Karachi November 15. The IMF loan will give confidence to investors, and it will help us in seeking more aid. Government debt from Pakistan is perceived by investors as the second-riskiest in the world after Argentina. Credit-default swaps on Pakistan's $2.7 billion of dollar-denominated bonds outstanding are trading at 2,521.5 basis points, according to CMA Datavision. That means it costs $2.5 million annually to protect $10 million of the country's debt from default for five years. The State Bank of Pakistan increased its benchmark interest rate by 2 percentage points, the most in more than a decade, on Nov. 12, citing inflation that reached a 30-year high of 25 percent in October. "The IMF counselled us to increase the key interest rate to curb inflation," Tarin said. "The IMF didn't give us any conditions different from our economic stabilisation programme." The government of President Asif Ali Zardari aims to reduce the budget deficit to 4.3 percent of gross domestic product in the fiscal year that ends June 2009, from 7.4 percent last year. It has also pledged there will be no net borrowing by the central bank in the fiscal year. "We would also like to see how Pakistan manages its relationship with the IMF, reduces its macro-economic imbalances and establishes a credible medium-term framework," Moody's Mitra said.