In the framework of Pakistan’s staff-level agreement (SLA) with the IMF on a new 37-month USD7 billion Extended Fund Facility (EFF), the upgrade “reflects greater certainty over the continued availability of external funding,” the Fitch Company said in a statement on Monday.
Nonetheless, it issued a warning, saying that Pakistan would be exposed if it did not carry out difficult reforms that would jeopardise program funding and performance.
According to the current budget for the fiscal year ending in June 2025 (FY25), “We believe this will be achievable, given the strong past record of support and significant policy measures.”
Fitch reported that Pakistan has effectively concluded its nine-month Stand-by Arrangement with the global lender in April, according to the last IMF program.
The government “cut spending, increased taxes, and raised the price of petrol, electricity, and gas over the past year,” according to the statement.
The PML-N led coalition government in Pakistan is expected to hold onto power for the next 18 months, with no urgent preparations for new elections, according to a recent assessment by the global rating agency.
The current administration will keep putting the International Monetary Fund (IMF) reforms into practice, which will help the economy expand.
Even though former prime minister Imran Khan has received relief in a number of cases, the rating agency believes that his release from prison is improbable in the near future.
The current account deficit for Pakistan is expected to stay at 1% in FY2024–2025 on the economic front.
