Finance Minister Senator Mohammad Ishaq Dar has welcomed reaffirmation of Pakistan credit rating by Fitch Ratings and said that it was an acknowledgment of government’s economic policies.
Fitch Ratings is one of the three leading credit rating agencies; other two are Moody’s and Standard & Poor’s. It is one of the three internationally recognized statistical rating organization designated by the US Securities and Exchange Commission in 1975.
Fitch Ratings has affirmed Pakistan’s rating at ‘B’ with a ‘Stable’ outlook confirming the progress achieved by the present Government under its economic reform agenda. Fitch has recognized that the country’s foreign exchange reserves have strengthened, fiscal deficit reduced and significant progress has been made on structural reforms.
Fitch further acknowledges that the country’s economic outlook has brightened and looks promising in the current fiscal year on the back of agricultural recovery and an influx of investments under the China Pakistan Economic Corridor (CPEC).
Fitch has forecast continued strong domestic demand, with private consumption and faster credit growth. Fitch also appreciates the performance of the banking sector and the improvements shown across IMF’s Financial Soundness Indicators wherein the percentage of non-performing loans has also fallen considerably.
Fitch forecasts Pakistan’s debt-to-GDP ratio to gradually fall in the medium term as a result of continued fiscal consolidation. The report also highlights the reduction in general government budget, with revenues boosted by structural reforms, including the withdrawal of a number of tax concessions.
The budget deficit has also been projected to continue narrowing gradually as the Government remains committed to policy reforms. Fitch does not expect Pakistan to face external liquidity difficulties as Pakistan demonstrated market access in October 2016.
It is pertinent to note here that Fitch Ratings is dual-headquartered in New York, USA, and London, UK. Hearst owns 80% of the company following its acquisition of an additional 30% interest in global ratings agency Fitch Group on December 12, 2014.
The transaction was valued at $1.965 billion. Hearst’s previous equity interest was 50% following expansions on an original acquisition on 2006. The remaining 20% of Fitch is owned by FIMALAC SA. Fimalac will hold 50% of votes within that Board until 2020.