Cynics' vantage point apart Pakistan's has gone     through massive growth with certain sectors     including information and communication     technologies, infrastructure, and banking outper     forming the others during the last few years or so. No doubt a prolonged political uncertainty has been constantly costing the economy in terms of sentimental deterioration. But downgrading of the rating by the international credit rating agencies seemed to be politically motivated decisions. Moody's Investors Service lowered Pakistan's sovereign ratings on Wednesday last due to concerns over its economy at a time of political uncertainty. It became the second rating agency to downgrade the country this month ahead its annual budget in June. The basis Moody's described for downgrading the rating was political uncertainties more than what it termed growing economic imbalances. Moody's cut its government bond ratings to B2 from B1, or five levels below investment-grade, citing its concerns over the country's fiscal position and economic policies in a volatile political environment. Either it was to bring Moody's ratings on Pakistan in line with its rival Standard & Poor's Ratings Services, which last week downgraded it by one notch to a B rating, or was it to reinforce the emerging Western view of the country's political economy. No matter that the Western analysts saw the credit rating agencies move as reflecting the economic and political turmoil in the country, it appears as an overstatement of the situation in the country especially from the domestic vantage point. That is why perhaps, unlike S&P, Moody's opted to raise its outlook on Pakistan to stable from negative indicating there was no further downside to the rating in the immediate futureon the prospects that the country could receive external financial support from multilateral organizations or creditors. However, the downgrading of the rating could have far more detrimental impact on the investment scenario in the country than being encouraged by the upgrading of the outlook from negative to stable. It clearly indicates that the international credit rating agencies are telling foreign investors to be cautious on Pakistan at the same time advising the multilateral moneylenders to sell their loans to the country. Understandable investment is preferred for any developing country instead of loans that too at the costly commercial rates. Secondly multilateral loans on the sovereign guarantee are bound to question the sovereign prerogative of the government to prioritise the development projects. Finance Minister Naveed Qamar has vowed to reprioritise the development projects initiated by the former government. On the other hand, the moves of the international credit rating agencies appeared to be in line with the international lenders lobbies to further squeeze Pakistan's economic independence by tightening the robes of loans around the country. According to the Moody's analysts "Substantial fiscal loosening and poor tax collection had led to a sharp erosion of the fiscal position in the run-up to the February elections which have not been adequately corrected. Furthermore, Pakistan's difficulties were compounded by a haphazard policy response to sharp supply-side shocks, amidst a prolonged period of intense turmoil that accompanied a difficult post-election political transition," they maintained. It is true that Pakistan has been through a rough year or so since President Pervez Musharraf tried to dismiss the country's top judge in March last year. That sparked a crisis that was followed by emergency rule and then general elections in February. But the newly formed four-party coalition government is facing the possibility of breaking up after former prime minister Nawaz Sharif, who heads the second biggest party in the group, said last Monday his members were quitting. However defence of Pakistan's case would not accept that the worsening political backdrop came amid a deteriorating economic and fiscal situation. Although the political scenario since the elections has remained tricky, it would be unfair to call it worsening. The President and the government are moving with required collaboration exempt some annoying statements for media consumption that appear to be a part of the grand script written for the PPP-Musharraf power sharing deal. Inflation highest in more than three decades at 17 percent, while the country's current account gap has widened and government spending has caused the budget deficit to balloon. Still it would be too early jump at the conclusion that the fiscal deficit would rise beyond seven per cent as Moody's observed. Moody's said Pakistan's fiscal and current account deficits could surpass 7 percent of gross domestic product this year, constraining the central bank's resources and increasing inflationary pressures. Meanwhile, the instability of the coalition is undermining the policy response needed to stabilise these imbalances, the agency said in its announcement downgrading Pakistan last week. It smells rate also because Moody's cut Pakistan's credit rating for the first time in nine years and that too citing "growing economic imbalances and renewed political difficulties. The immediate consequence was a downslide in stocks market.  Pakistan's market that has been maintaining its elated position even after the so-called political turmoil after killing of former Prime Minister plummeted like anything following the downgrading of the rating. The government, of less than a couple of months' age, is fractured after coalition partner Nawaz Sharif withdrew his nine ministers from the cabinet in a dispute for the judges' issue. The rating would also impact negatively on Pakistan's planned block sale of Habib Bank's shares in the international market. The government has been vying to conclude the deal before June 30, 2008 in order to appease the growing fiscal imbalance. Overseas investment in Pakistan, which reached a record $5.1 billion in the year to June 2007, has since fallen 17 percent, according to central bank data. Foreign direct investment declined to $3.48 billion in the 10 months ended April 30 from $4.18 billion a year ago. The rating cut may further deter overseas investors who have already retreated from the country, buying a net $119 million of Pakistani stocks in the 10 months ended April 30, compared with purchases of $1.76 billion a year ago. The rupee, which has declined 13 percent this year, slid to a record low of 70.15 against the dollar on May 19, a couple of day's earlier than the Moody's announcement and following the S&p's cut. The currency has dropped on concern the nation's trade deficit will widen on rising import costs. The trade deficit has widened by 50 percent to $16.8 billion in ten months up to April this year. The fiscal deficit in the first eight months of this year widened to 4.7 percent of the nation's $146 billion GDP, exceeding the full-year target of 4.5 percent. The PPP-led government is constrained by the highest inflation in 25 years and economic growth that is expected to slow to 6 percent this fiscal year ending June 30 from 7 percent last year. Almost half the population of Pakistan, the world's seventh-most-populous nation, faces difficulty gaining access to affordable food because of the soaring cost of cereals, according to the United Nations World Food Program. Therefore, the new government is supposed to restore political stability in the first place to be followed by the economic sustainability. Not only that the credit rating agencies have pointed to the political uncertainty leading to economic imbalances, a stable political environment is a pre-requisite to the investment growth both local and foreign. Second stock market that is said to be the reflector of the economy also needs sentimental support from the political front again to off set the negative impact of the credit rating cut. The restoration of the deposed judges, either in agreement with the President or otherwise, has to be done now at any cost in order to save the environment getting further precarious. Unless the judges are restored and irritant in the coherent working of the representative institutions of the state are removed the investors would hold their future decision on Pakistan. They say money is a bird that flies where it feels safe. Therefore, the safety of the foreign funds in terms of their long-term investments here ought to be ensured in order to attract more to follow them to minimize the need for costly international loans.