Global credit rating agency Fitch has elevated Pakistan’s foreign currency credit rating from ‘CCC+’ to ‘B-‘ this Tuesday, signaling a boost in confidence regarding the country’s efforts to reduce its budget deficits.
This upgrade is also indicative of optimism that Pakistan will carry out essential structural reforms, thus enhancing its alignment with the International Monetary Fund (IMF) programme and improving access to funding, according to Fitch analysts.
While the agency noted that the ongoing global trade conflicts could impose external challenges on Pakistan, it emphasized that the country’s minimal reliance on exports and market financing will help alleviate those risks.
Pakistan’s economy had been on the brink of default, particularly after experiencing record inflation in May 2023 and a decline in reserves. However, the situation has improved somewhat, partially due to a $7 billion bailout agreement with the IMF.
In March, a new agreement with the IMF was established, potentially unlocking an additional $1.3 billion in financial aid.