Pakistan and Turkey are expected to sign a currency swap agreement to boost trade, a media report said. The agreement may be signed during the visit of President Asif Ali Zardari to Turkey, Associated Press of Pakistan reported from Istanbul. Zardari arrived in Istanbul Sunday for the sixth trilateral summit being hosted by Turkey to find a peaceful solution of the Afghanistan issue. Pakistan's Ambassador to Turkey Muhammad Haroon Shaukat said the agreement would allow the two countries to move towards arrangements to do trade in local currencies which will ease pressure on their foreign exchange reserves. Shaukat said negotiations between Pakistan and Turkey are also progressing well for a Preferential Trade Agreement (PTA). He said bilateral trade between the two countries was growing and it had shown an increase of 50 percent last year reaching close to $1 billion. Meanwhile, Pakistan will be able to maintain an adequate level of foreign-exchange reserves because of funds provided by donor countries, Standard & Poor's said as it affirmed the South Asian nation's credit rating. "We expect donor commitments will ensure at least an adequate level of external liquidity in the next two years," S&P said in an e-mailed statement today. The rating company maintained its B- foreign- and local-currency rating for Pakistan. The rating is six levels below investment grade. The stable rating outlook "balances adequate external liquidity against vulnerability stemming from ongoing structural fiscal weaknesses and significant political and security risk," S&P said. The International Monetary Fund in May 2010 suspended disbursements to Pakistan after the country failed to meet conditions such as reducing the budget deficit that were attached to a $11.3 billion loan. Pakistan didn't seek a new program after the previous one expired on Sept. 30. Pakistan's foreign-exchange reserves stood at $17.2 billion as of Oct. 27, compared with a record $18.3 billion at the end of July, according to the central bank. While the "current level of external liquidity is likely to diminish somewhat" after the expiry of the IMF loan program, the pledge by donor nations will help boost Pakistan's "external liquidity," S&P said. Pakistan's high public and external indebtedness and sectarian strife are preventing S&P from upgrading Pakistan's credit rating, according to the statement.
