Fitch upgrades Pakistan rating to 'CCC+' after 7 months

In a significant development, Global credit rating agency Fitch has upgraded Pakistan’s long-term foreign-currency issuer default rating to CCC+ from CCC.

Fitch, in its report, said the rating was upgraded after greater certainty over the continued availability of external funding, such as staff-level agreements with the International Monetary Fund (IMF).

It added that $7 billion from the global lender under the Extended Fund Facility (EFF) would help the country to narrow its fiscal deficit.

“Nevertheless, Pakistan’s large funding needs leave it vulnerable if it fails to implement challenging reforms, which could undermine programme performance and funding,” it warned.

Fitch Ratings upgrades Pakistan's rating to 'CCC+'.@StateBank_Pak @FitchRatings#SBP #MOF #Pakistan #Economy #AHL pic.twitter.com/HZos19zBDI

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“Over the past year, the government raised taxes, cut spending and raised electricity, gas and petrol prices. The government also eliminated the gap between the interbank and parallel market exchange rates through a crackdown on the black market and regulation of exchange houses,” the report read.

It is pertinent to mention here that Fitch does not assign outlook to sovereigns with a rating of CCC+ and blow.

In December 2023, Fitch maintained Pakistan’s rating to CCC, saying that the rating reflects “high external funding risks amid high medium-term financing requirements”.

Following the development, Finance Minister Muhammad Aurangzeb termed the rating upgrade a positive shift in the country’s economic situation.