Fitch Ratings has lifted Pakistan’s credit rating from CCC to CCC+, citing reduced external funding risks following the country’s new bailout agreement with the International Monetary Fund (IMF).
The upgrade, though still below investment grade, indicates a decreased likelihood of default. “The rating boost reflects increased confidence in Pakistan’s external funding situation,” Krisjanis Krustins, a Fitch analyst, said in a recent report. He noted that the previous IMF support helped Pakistan narrow fiscal deficits and rebuild foreign exchange reserves, with further improvements anticipated.
Pakistan is poised to secure final approval for a $7 billion IMF loan by the end of August. The country has also received financial backing from key creditors, including China, Saudi Arabia, and the UAE, aiding in the management of its foreign debt. The coalition government is enacting strict reforms, such as broadening the tax base and reducing energy subsidies, to stabilize the economy.
The note also highlighted that Pakistan’s external public debt for this fiscal year totals $22 billion, with approximately $13 billion in bilateral loans expected to be rolled over. The central bank is gradually boosting reserves, supported by manageable current-account deficits and steady investment inflows.
Following the rating upgrade, Pakistani dollar bonds saw gains, with notes maturing in 2026, 2029, and 2031 all increasing by at least half a cent. The 2031 bond rose to 79.7 cents on the dollar, according to Bloomberg data.
