Fitch Ratings has improved the rating of breach of the long-term foreign currency issuer of Pakistan to ‘B-‘ of ‘CCC+’, citing stronger fiscal consolidation efforts and improving external stability.
This marks the first update of Pakistan in almost six years. The perspective has been reviewed to the stable, last seen in 2018.
The qualification agency indicated greater confidence in Islamabad’s ability to reduce budget deficits and seek structural reforms under its international monetary fund program (IMF).
Fitch stressed that, although close economic policies should help reconstruct international reserves, financing needs remain significant.
Global commercial risks and security challenges, particularly near the Afghan border and Baluchistan, also weigh on perspectives.
In March, Pakistan assured an agreement at the personnel with the IMF in its installation of extended funds of $ 7 billion and a new installation of resilience and sustainability of $ 1.3 billion, both that extend until mid -2017.
The country met key objectives in primary reservations and surpluses, although tax revenues had a lower yield.
The agency predicts that the Pakistan budget deficit is reduced to 6% of GDP in the fiscal year that ends in June 2025, below 7% of the previous year.
The primary surplus is expected to be more than double more than 2% of GDP.
The government debt fell to 67% of GDP in the fiscal year24, from 75% of the previous year, and is expected to gradually decrease in the medium term.
However, Fitch said the debt index would increase in fiscal year 200
It is forecast that consumer inflation will average 5% in fiscal year 2015, of more than 20% in the previous two years, in the back of the base effects of fading of energy prices reforms.
External accounts showed an improvement, with a current account surplus of $ 700 million in the first eight months of fiscal year 2015, backed by strong remittances and lower import costs.
Brutated reserves increased to almost $ 18 billion in March 2025, which covered about three months of imports, compared to $ 8 billion in early 2023.
Despite the positive perspective, Pakistan faces $ 8 billion for reimbursements of external debt in fiscal year 2015 and $ 9 billion the following year, excluding routinely rolled bilateral loans.
The Government obtained $ 4 billion in external financing in the first half of the 2015 fiscal year and aims to raise $ 10 billion more by the end of the year.
Fitch maintained concerns about the weak governance of Pakistan, assigning the lowest ESG governance score, citing fragile institutional quality and the rule of law.
