Islamabad(Business Reporter);Fitch Upgrades Pakistan’s Credit Rating Following IMF Deal,Fitch Ratings has upgraded Pakistan’s credit rating to CCC+ after nearly seven months. In December 2023, Fitch had rated Pakistan at triple C. The improvement follows Pakistan’s loan agreement with the IMF.
Fitch’s report highlighted that the current government received a weaker-than-expected mandate in the February elections, weakening the position of PML-N and its allies, especially after the Supreme Court ruling in favor of PTI. Despite PTI’s founder being imprisoned since May 2023, he remains popular among the public.
According to the report, the improved credit rating will restore confidence in Pakistan within the global market, encouraging international financial institutions to extend loans to the country. The enhanced rating will also facilitate the issuance of global market bonds.
Fitch indicated that before the IMF executive board meeting’s approval, Pakistan needs to roll over bilateral loans. During the current fiscal year, Pakistan faces $22 billion in maturing external debt.
The report stated that Pakistan must roll over bilateral loans from China, Saudi Arabia, and the UAE. The recent federal budget included policy measures to improve the economy, but Pakistan still needs to increase its tax-to-GDP ratio by an additional 3%.
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The report also mentioned that Pakistan assured the IMF of structural reforms in the energy sector and state-owned enterprises, and committed to legislating agricultural income tax. Under the Stand-By Arrangement agreement, Pakistan has shown improved performance
