US-based credit rating agency Fitch upgraded Pakistan’s long-term foreign currency issuer default rating (IDR) to ‘CCC+ as the South Asian nation clinched $7 billion deal from International Monetary Fund (IMF).
The shift depicts increased certainty over external funding, bolstered by Pakistan’s new Extended Fund Facility (EFF) agreement with IMF. Fitch highlighted that Islamabad’s strong performance under the previous IMF arrangement has helped reduce fiscal deficits and rebuild foreign exchange reserves.
Fitch Solutions’ BMI report projects Pakistan’s GDP growth to reach 3.2% in FY25. Despite the positive outlook, substantial funding requirements pose risks if challenging reforms are not implemented.
FITCH Rating Pakistan
The agency expects IMF Board approval for the new program by the end of August, contingent on securing new funding commitments from Saudi Arabia, the UAE, and China, totaling $4-5 billion.
Ministry of Finance called rating upgrade a positive shift for Pakistan’s economy, with market experts noting its potential to attract foreign investment. Saad Hanif from Ismail Iqbal Securities emphasized that improved ratings are crucial for attracting foreign investment and reducing external funding risks.
Fitch forecasts Pakistan’s current account deficit (CAD) to remain around $4 billion (1% of GDP) in FY25, down from $700 million in FY24, due to tight financing conditions and subdued domestic demand. Additionally, Fitch Solutions’ BMI report suggests a high likelihood of a government change in Pakistan before the 2029 elections.
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