Fitch Ratings, a global credit rating agency, upgraded Pakistan’s long-term foreign-currency issuer default rating (IDR) from CCC to CCC+. The upgraded rating is seen as a vote of confidence in Pakistan’s economic management and reform efforts.
Fitch Ratings has upgraded Pakistan’s credit rating from ‘CCC’ to ‘CCC+’. This positive change is largely due to a new agreement with the International Monetary Fund (IMF), which has provided Pakistan with $7 billion in funding for the next 37 months.
The IMF agreement has helped improve Pakistan’s financial situation by increasing its foreign exchange reserves and reducing fiscal deficits. The deal also aims to address issues in Pakistan’s tax system, energy sector, and state-owned enterprises.
In the past year, Pakistan has shown strong financial discipline by raising taxes, cutting spending, and regulating currency exchange. This has helped contain the country’s current account deficit and rebuild foreign exchange reserves.
Given that Fitch usually does not provide outlooks to countries with a CCC+ rating and below, even after the upgrade, the agency’s rating still reflects the dire condition of the country’s external, fiscal, and economic metrics over the last 18 months. Last year, S&P Global reduced its long-term rating for Pakistan from B to CCC+, and Moody’s, earlier this year, downgraded Pakistan’s rating to Caa3.
Fitch predicts further economic stability for Pakistan but notes that the country still faces challenges, such as implementing necessary reforms and managing large funding needs.
PM Welcomes The Ratings
Prime Minister Shehbaz Sharif hailed the upgrade and appreciated the efforts of Finance Minister Muhammad Aurangzeb and his team. The prime minister said the country and the nation had begun receiving the fruits of the government’s policy of sacrificing politics for the sake of the state in the shape of improvement in the country’s economy.
In a statement, he said the upgrade was the international recognition of the government’s right economic policies. PM Shehbaz emphasized that the government was working hard on the economic reforms agenda, the fruits of which would reach the people soon.
“The reports of Fitch and other international financial institutions are important for the economic improvement of Pakistan,” PM Shehbaz said adding that “we will move forward with more effort and passion on the path of economic improvement of the country.”
Despite these challenges, the IMF’s support and Pakistan’s recent economic measures have created a more stable financial outlook for the country.