islamabad
\nFitch Ratings on Monday affirmed Pakistan\u2019s long-term foreign currency issuer default rating at \u2018B-\u2019 with a \u201cstable outlook\u201d.
\n\u201cPakistan\u2019s rating affirmation reflects progress on fiscal consolidation and macro stability measures, broadly in line with its International Monetary Fund (IMF) programme and supporting its funding capacity. Foreign exchange buffers rebuilt over the past year provide a cushion against the economic impact of the war in the Middle East, while Pakistan\u2019s role as a ceasefire broker may provide tangible benefits and partly offset external pressures,\u201d the agency said in a statement.
\nThe US-based agency highlighted that the country\u2019s high exposure to the global energy price shock remained a key risk, particularly if it led to a sharp drop in foreign exchange reserves.
\nHighlighting key rating drivers, Fitch said the authorities reached a staff-level agreement with the IMF on its loan programmes in March, unlocking a combined $1.2 billion.
\nThe programme will continue to provide a key policy anchor, particularly for the fiscal framework, and will help mobilise additional multilateral and bilateral support, it added.
\n\u201cPakistan sources up to 90% of oil from the Gulf and has limited storage capacity, creating high exposure to the Middle East conflict and constricted energy supply via the Strait of Hormuz,\u201d it said, adding the fuel subsidies since early March had been funded by reallocating expenditure from other areas of the budget, while costs had been reduced by large pump-price hikes and the switch to a more targeted support scheme from April.
\n\u201cWe expect the overall impact on the fiscal deficit to be contained, as the government is likely to cut other spending,\u201d the rating agency added.
\nOn inflation, the rating agency said that higher world energy prices will raise inflation in the coming months, especially with the switch to more targeted subsidy support and base effects.
\n\u201cWe expect inflation to average 7.9% in FY26 (ending 30 June 2026), above the FY25 level but well below the 23.4% in FY24,\u201d it added.
\nThe State Bank of Pakistan (SBP) cut the policy rate to 10.5% by the end of 2025, from 22.0% at the end of May 2024, and market interest rates fell in tandem. However, the term interbank rate had risen to about 100bp above the policy rate by early April, on inflation concerns tied to the tight energy supply.
\n\u201cThe shock will detract from GDP growth, but we still expect growth of 3.1% in FY26, up slightly from 3.0% in FY25, due to improved confidence from lower borrowing costs,\u201d the agency said.
\nThe rating agency anticipated external debt amortisations to rise to $12.8bn (2.9pc of GDP) in FY26, from almost $8bn in FY25.<\/p>\n","protected":false},"excerpt":{"rendered":"
islamabad Fitch Ratings on Monday affirmed Pakistan\u2019s long-term foreign currency issuer default rating at \u2018B-\u2019 with a \u201cstable outlook\u201d. \u201cPakistan\u2019s rating affirmation reflects progress on fiscal consolidation and macro stability measures, broadly in line with its International Monetary Fund (IMF) programme and supporting its funding capacity. Foreign exchange buffers rebuilt over the past year provide …<\/p>\n","protected":false},"author":4,"featured_media":96281,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-96263","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/96263","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/comments?post=96263"}],"version-history":[{"count":1,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/96263\/revisions"}],"predecessor-version":[{"id":96294,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/posts\/96263\/revisions\/96294"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/media\/96281"}],"wp:attachment":[{"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/media?parent=96263"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/categories?post=96263"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nabanews.pk\/en\/wp-json\/wp\/v2\/tags?post=96263"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}