Fitch Ratings has improved the long-term long-term transmitter of Pakistan in the long term “B-” of “CCC +”, citing improved budgetary consolidation, stabilizing external account and stronger macroeconomic policies. The perspectives are stable.
Fitch said in a statement on Monday that this decision reflects growing confidence in Pakistan’s ability to maintain stricter budget controls and implement reforms as part of its current monetary fund (IMF) program.
The upgrade comes while Islamabad seeks to maintain the momentum following its agreement with the IMF in March to examine a prolonged funding of $ 7 billion and a new resilience and sustainability installation of $ 1.3 billion.
“We expect close economic policies to continue to support the resumption of international reserves and contain external financing needs,” said Fitch while warning that funding requirements remain high and that the risks of implementation persist.
The Minister of Finance, Senator Muhammad Aurangzeb, said his satisfaction, Geo reported. “Upgrading is a strong vote of trust in our economic reforms and policies.”
Pakistan was previously in category B in July 2022, according to the Topline Securities brokerage company.
The Minister of Finance says that this decision “will further strengthen the government’s economic agenda”.
“Following this development, the country should see increased investments, exchanges, employment opportunities, industrial growth and access to additional financial resources,” he said.
“In the future, global rating agencies, investors and financial institutions will have greater confidence in Pakistan,” he concluded.
Pakistan’s tax prospects have improved, the budget deficit planned to reach 6% of GDP during fiscal year 25, against almost 7% a year earlier, driven by provincial expenditure and surpluses. The main surplus should double, exceeding 2% of GDP.
Fitch noted that public debt levels had decreased to 67% of GDP during the 2010 financial year by 75% the previous year, a gradual decrease trend that should continue. However, the costs of interest remain forced, with an interest / income ratio of 59% expected from financial year 25, well above the median B by 13%.
Inflation is expected to lie down at 5% in financial year 25, compared to 20% above 20% in the previous two years, before going up to 8% in financial year 26. The State Bank of Pakistan (SBP) maintained its 12% unchanged policy rate after an aggressive monetary relaxation in 2024. Growth should bounce at 3% in the year 25.
The country’s external position has stabilized, with a current account surplus of $ 700 million recorded in the first eight months of fiscal year 25, stimulated by the increase in funds and moderate import prices. The gross exchange reserves reached nearly $ 18 billion in March, against a hollow of less than $ 8 billion at the start of 2023.
However, Pakistan faces deadlines of external debt of around $ 9 billion in FY6, after more than $ 8 billion this year. The government plans to obtain $ 10 billion in additional funding in the second half of the 2010 financial year, mainly through multilateral and commercial channels.
On the political level, the coalition of Prime Minister Shehbaz Sharif has a parliamentary majority but does not have a strong public mandate. Persistent political tensions, institutional fragility and security problems in the bordering Afghanistan regions remain rising risks, said the agency.
The sovereign notation model of Fitch awarded Pakistan a score equivalent to “CCC +”, but the rating committee applied an upgrade to a single wire to reflect improvements in macroeconomic management and inflation control.