Violent demonstrations demanding the resignation of Prime Minister Nawaz Sharif are "credit negative" for Pakistan and threaten the country's stable sovereign rating, analysts said.
"[The protests] threaten progress on structural reforms since a weakened government will be less able to implement meaningful policies to address pressing domestic challenges," Moody's analyst Anushka Shah said in a report.
Most importantly, Moody's said the political turmoil could prevent the country from delivering on economic reforms that were part of an International Monetary Fund (IMF) bailout program.
Last September, the IMF agreed to lend the struggling Southeast Asian nation $6.7 billion over a three-year period on the condition that Karachi would implement structural reforms, such as privatizing loss-making state companies.
"Disbursements from this [IMF] program and linked multilateral funding are crucial to maintaining the country's external liquidity position, a key factor driving its creditworthiness," Moody's Shah continued.
Apart from the IMF bailout, Pakistan has also received funds from the World Bank and the Asian Development Bank, which helped buoy Pakistan's financial account, resulting in Moody's rating revision to stable from negative in July.