KARACHI: Fitch, who recently upgraded Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘CCC+’ from ‘CCC’, in its detailed report also shed light several key challenges faced by Pakistan, including political and economic fronts, ARY News reported on Monday.
The Fitch report noted that the PML-N and allies received a weaker-than-expected mandate in the February elections.
It points out that the current government’s position weakened further following a Supreme Court verdict favoring the Pakistan Tehreek-e-Insaf (PTI), impacting the position of the ruling party and its allies.
READ: Fitch upgrades Pakistan rating to ‘CCC+’
The report further stated that despite being in jail since May 2023, the founder of PTI remains popular among the populace, indicating continued political volatility in Pakistan.
The Fitch report further indicated that Pakistan faces significant economic challenges with $22 billion of external debt maturing during the current financial year.
Fitch forecasts an increase in foreign exchange reserves to $22 billion by the next fiscal year 2025-26.
Meanwhile, the fiscal deficit is expected to be 6.9 percent of GDP for the current fiscal year, with a projected decrease to 6 percent in the next fiscal year.
However, the central bank’s profit is forecast to be 2 percent of GDP during the current financial year.
The Fitch report underscores the complex link between Pakistan’s political landscape and its economic performance, suggesting that political stability will be crucial for economic recovery and growth.
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