Lahore (Web Desk): Global rating agency Fitch on Monday upgraded Pakistan’s long-term foreign currency issuer default rating (IDR) to ‘CCC’ from ‘CCC-’, citing the country’s improved external liquidity and funding conditions following a short-term stand-by agreement with the International Monetary Fund (IMF).
Pakistan had secured the badly-needed $3bn short-term financial package from the IMF last month, giving the economy a much-awaited respite as it teeters on the brink of default.
The global rating agency, in a statement, said 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, catalysing other funding and anchoring policies around parliamentary elections due by October,” it added.
However, the rating agency said the IMF programme implementation and external funding risks remain due to a volatile political climate and large external financing requirements.
Fitch Ratings also highlighted measures taken by Pakistan 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.”