Fitch Ratings, a US-based credit rating agency, has maintained Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘CCC’ with concerns over high external funding risks.
Despite some stabilization and positive performance under the current Stand-by Arrangement with the IMF, Fitch emphasizes the challenges posed by Pakistan’s significant medium-term financing requirements.
The agency anticipates upcoming general elections in February and a swift negotiation for a follow-up IMF program after the current arrangement concludes in March 2024. However, Fitch notes potential delays and uncertainties surrounding Pakistan’s ability to proceed.
The article highlights the risks associated with policy implementation, potential political volatility, and the ambitious government funding targets. Fitch expresses caution regarding Pakistan’s external account, predicting a current account deficit of about $2 billion in FY24. While foreign exchange reserves have improved, fiscal deficits persist, and debt dynamics remain a concern, with high debt/revenue and interest/revenue ratios compared to peers.
