In a significant development for Pakistan’s economic revival, global rating agency “Fitch” has upgraded the country’s long-term foreign-currency rating from IDR (Issuer Default Rating) to CCC.
This positive news comes as a welcome boost to the ongoing efforts towards economic recovery and has been met with celebrations and congratulations.
Federal Finance Minister Ishaq Dar accounted that in his twitter this afternoon. In his tweet he said its “another positive news towards current economic revival journey, AlhamdoLilah”. He also congratulated his team and Prime Minister Shehbaz Sharif leadership.
Global Rating Agency “Fitch”
Upgrades Pakistan’s Long Term Foreign-Currency rating to CCC from IDR(Issuer Default Rating).Another positive news towards current economic revival journey, AlhamdoLilah.
Congratulations to PM @CMShehbaz ,the Nation, Govt Allies & Economic Team 🌺
— Ishaq Dar (@MIshaqDar50) July 10, 2023
Prime Minister Shehbaz Sharif, along with the nation, government allies, and the economic team, has been praised for their dedication and commitment to improving the country’s financial outlook.
The upgrade in Pakistan’s long-term foreign-currency rating by Fitch reflects improved confidence in the nation’s economic prospects. It signifies a positive step forward in attracting foreign investments and fostering economic growth.
The upgrade to CCC is a testament to the collective efforts made by the government and economic stakeholders to address key challenges and implement necessary reforms. It highlights the progress made in stabilizing the economy and strengthening fiscal policies.
This positive development is expected to have far-reaching implications for Pakistan’s financial landscape, including increased investor confidence, reduced borrowing costs, and enhanced access to international markets. It opens up new opportunities for the country’s businesses, encourages job creation, and fosters sustainable economic growth.
While the upgraded rating is an encouraging sign, it is important for Pakistan to continue its efforts in improving the overall business environment, addressing structural issues, and ensuring policy consistency. Sustaining positive economic momentum will require continued focus and dedication from all stakeholders.
Fitch said in the article that “the upgrade reflects Pakistan’s improved external liquidity and funding conditions following its Staff-Level Agreement (SLA) with the IMF on a nine-month Stand-by Arrangement (SBA) in June”. We expect the SLA to be approved by the IMF board in July, catalyzing other funding and anchoring policies around parliamentary elections due by October. Nevertheless, programme implementation and external funding risks remain due to a volatile political climate and large external financing requirement.
IMF-Driven Reforms: Pakistan has recently taken measures to address shortfalls in government revenue collection, energy subsidies and policies inconsistent with a market-determined exchange rate, including import financing restrictions. These issues held up the last three reviews of Pakistan’s previous IMF programme, before its expiry in June, said Fitch.
It added “most recently, the government amended its proposed budget for the fiscal year ending June 2024 (FY24) to introduce new revenue measures and cut spending, following additional tax measures and subsidy reforms in February. The authorities appeared to abandon exchange-rate management in January 2023, although guidelines on prioritizing imports were only removed in June.”
