Islamabad: Fitch Ratings, the renowned American credit rating agency, on Monday reaffirmed that Pakistan’s rating would remain at the ‘B minus’ level; despite a steady economic outlook expected in the near future due to the reforms implemented by the government over the last year, according to a news source. As per the publication, the said rating is attributed to the country’s challenging external sector, weak governance indicators, weak fiscal and debt position, and a high debt-to-GDP ratio.
Fitch acknowledged the steps taken by Pakistan’s government to address these problems and implement the International Monetary Fund’s (IMF) latest programme. However, the agency estimated that the country would not match its annual economic growth target of 4%. In addition, they expected that the FBR would miss the PKR 5.5 trillion tax collection target and the government wouldn’t be able to meet the budget deficit target of 7.2%.
Fitch observed that even though the IMF’s programme had been implemented in the country, the risk that it is executed properly remains high, due to the politically difficult aspect of the government’s reform agenda. Pakistan’s debt-to-GDP ratio soared to 84.8% due to the fall in its currency’s value, weak fiscal position, and gradual increase in liquidity buffers, while the country’s debt-to-revenue ratio rocketed to 667%, well above the ‘B’ grade median of 252%.
Fitch considered that the revenue mark that the government aimed for in the fiscal year 2019-2020 was ambitious. Nonetheless, they believe that the country’s revenue figures will grow in the current fiscal year due to the removal of GST exemptions and the government’s determination to increase its tax base through tax-filer documentation.
Last year in June, Fitch had given the country a credit rating of ‘B minus’ and this is the second time since then that Pakistan’s rating remains unchanged, according to the global ratings agency.
