Fitch Upgrades Pakistan’s Credit Rating Amid Economic Stability

Pakistan’s economic recovery is gaining momentum as global rating agency Fitch upgraded the country’s credit rating. The report highlights Pakistan’s steady progress toward economic stability, supported by structural reforms and declining inflation.

According to Fitch, the State Bank’s decision to reduce the interest rate to twelve percent is a strong indicator of lower inflation, which dropped from an average of twenty-four percent to just over two percent in January. Economic growth is expected to reach three percent, driven by increasing workers’ remittances and agricultural exports.

Despite a one point two billion dollar current account surplus and improved foreign exchange reserves covering three months of imports, the report warned that financial requirements remain high. Pakistan is set to repay twenty-two billion dollars in the next fiscal year, with thirteen billion dollars in bilateral deposits expected to be rolled over.

Fitch acknowledged positive steps like a primary surplus exceeding IMF targets, but tax revenue in the first half of the fiscal year remained below expectations. Provincial governments have passed laws on agricultural income tax, a key structural reform.

The agency stated that if foreign exchange reserves continue to rise and external financing needs decrease, Pakistan’s rating could improve further in July. However, any delay in the IMF review process may result in a negative rating.