Fitch lifts Pakistan rating to ‘B-’ on fiscal reforms, external stability

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Pakistan’s sovereign credit rating was extended by CCC+ through Fitch rating, which pointed to strong financial discipline, a more stable external account, and better economic rule. The agency assigned a stable outlook.

Fitch said in a statement on Monday that the move reflects the growing confidence in the ability to maintain tight budget control and enforce reforms under Pakistan’s ongoing International Monetary Fund (IMF) program.

The upgrade came when Islamabad wants to maintain pace after its contract with the IMF in March to review the $ 7 billion extended fund facility (EFF) and a new 3 1.3 billion flexibility and stability.

“We expect strict economic policies to support the recovery of international reserves and will consist of external funding requirements,” said Fach.

According to Geo, Finance Minister Senator Mohammad Aurangzeb has expressed satisfaction. “Upgrade is a strong vote of trust in our economic reforms and policies.”

According to brokerage firm Topline Securities, Pakistan was previously in Bumra in July 2022.

The Finance Minister says the move will “strengthen the government’s economic agenda”.

“After this development, the country is expected to see investment, trade, employment opportunities, industrial growth and access to additional financial resources,” he said.

“Moving forward, global ranking agencies, investors and financial institutions will have more confidence and confidence in Pakistan,” he said.

Pakistan’s financial point of view has improved, which is likely to decrease by 6.0 % of GDP in the fiscal year 25, which was about 7.0 7.0 % a year ago, which is driven by spending cuts and provincial spirals. The basic surplus is expected to exceed double, which is more than 2.0 % of GDP.

Fitch noted that the level of public debt was 67 % of GDP in the financial year 24, which was less than 75 % in the previous year, with the trend gradually down. However, interest costs are a burden, which is the proportion of interest from 59 % predictions in the financial year 25, which is much above 13 % KB Medin.

Inflation is likely to be easily reduced by 5.0 % in fiscal year 25, which is less than 20 % before staying behind 8.0 % in fiscal year 26. The State Bank of Pakistan (SBP) has not changed its policy rate by 12 % after aggressive financial relaxation in 2024. In fiscal year 25, growth will decrease 3.0 percent.

The country’s external position has stabilized, which has recorded an additional 700 million current account in the first eight months of fiscal year 25, which promotes rising remittances and import prices. In March, foreign exchange reserves reached about $ 18 billion, which was less than $ 8 billion in early 2023.

Nevertheless, Pakistan faces the maturity of external debt of about $ 9 billion in fiscal year 26, after more than $ 8 billion this year. The government is expected to receive additional financing of $ 10 billion in the second half of the financial year, mainly through multilateral and trade channels.

On the political front, Prime Minister Shahbaz Sharif has a parliamentary majority but he lacks a public mandate. The agency said that permanent political tensions, institutional fragility and security concerns in the areas adjacent to Afghanistan are a negative threat.

Fitch’s sovereign ranking model assigned a score of ‘CCC+’ to Pakistan, but the ranking committee applied an important upgrade to reflect the economic administration and inflation control.