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Fitch Affirms Pakistan’s Rating at ‘B-’
Fitch Ratings on Monday affirmed Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B-’ with a Stable Outlook, citing progress on fiscal consolidation and macroeconomic stability under the country’s ongoing International Monetary Fund (IMF) programme .
The rating reflects improvements in fiscal management and external financing conditions. According to Fitch, the rebuilding of foreign exchange buffers over the past year has provided some cushion against global shocks, including the economic impact of the ongoing Middle East conflict .
“Pakistan’s rating affirmation reflects progress on fiscal consolidation and macro stability measures, broadly in line with its IMF programme and supporting its funding capacity,” the agency stated .
📈 Key Economic Projections for FY2026
Fitch released several key forecasts for Pakistan’s economy for the current fiscal year ending June 30, 2026 :
| Metric | FY2026 Forecast | Comparison |
|---|---|---|
| GDP Growth | 3.1% | Up from 3.0% in FY25 |
| Inflation (Average) | 7.9% | Down from 23.4% in FY24 |
| Fiscal Deficit | ~5.3% of GDP | Remaining stable |
| Current Account Deficit | ~1.1% of GDP | Reversal from FY25 surplus |
| External Debt Repayments | $12.8 billion | Up from ~$8 billion in FY25 |
The agency noted that higher world energy prices will raise inflation in the coming months, especially with the switch to more targeted subsidy support and base effects .
🛢️ Key Risk: Energy Exposure
Fitch highlighted Pakistan’s acute vulnerability to energy shocks as the most significant risk to its credit profile. The agency noted that Pakistan sources up to 90% of its 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 .
“The 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,” the agency said .
💰 IMF Programme and Financing
Fitch noted that a staff-level agreement was reached in March 2026 on the third review of the Extended Credit Facility (ECF) and the second review of the Resilience and Sustainability Facility. Approval by the IMF board could unlock approximately $1.2 billion, helping reinforce policy discipline and unlock further bilateral and multilateral funding .
The State Bank of Pakistan (SBP) cut the policy rate to 10.5% by the end of 2025, down from 22.0% at the end of May 2024. However, market interest rates have risen in early April on inflation concerns tied to tight energy supply .
🌍 External Financing Pressures
External debt amortisations are projected to rise to $12.8 billion (2.9% of GDP) in FY26, up from nearly $8 billion in FY25 . A $3.5 billion deposit was repaid to the United Arab Emirates in April, with an additional $9.2 billion in bilateral deposits and loans expected to be rolled over .
Fitch anticipates external financing will be sourced mainly from IMF and other multilateral and bilateral inflows, followed by commercial financing, including a planned Panda bond issuance this fiscal year .
🔮 Outlook and Diplomatic Dimension
Fitch noted that Pakistan’s role as a ceasefire broker between the US and Iran may provide tangible benefits and partly offset external pressures . However, governance indicators remain a key weakness, with Pakistan scoring poorly on political stability, rule of law, and corruption metrics—factors that continue to weigh on the country’s overall credit profile .
The agency warned that Pakistan’s rating could be downgraded if external liquidity weakens sharply or if fiscal consolidation stalls. Conversely, stronger external financing, sustained reserve accumulation, and durable fiscal reforms could support a future rating upgrade
Fitch Affirms Pakistan’s Rating at ‘B-’
Fitch Ratings on Monday affirmed Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B-’ with a Stable Outlook, citing progress on fiscal consolidation and macroeconomic stability under the country’s ongoing International Monetary Fund (IMF) programme .
The rating reflects improvements in fiscal management and external financing conditions. According to Fitch, the rebuilding of foreign exchange buffers over the past year has provided some cushion against global shocks, including the economic impact of the ongoing Middle East conflict .
“Pakistan’s rating affirmation reflects progress on fiscal consolidation and macro stability measures, broadly in line with its IMF programme and supporting its funding capacity,” the agency stated .
Key Economic Projections for FY2026
Fitch released several key forecasts for Pakistan’s economy for the current fiscal year ending June 30, 2026 :
| Metric | FY2026 Forecast | Comparison |
|---|---|---|
| GDP Growth | 3.1% | Up from 3.0% in FY25 |
| Inflation (Average) | 7.9% | Down from 23.4% in FY24 |
| Fiscal Deficit | ~5.3% of GDP | Remaining stable |
| Current Account Deficit | ~1.1% of GDP | Reversal from FY25 surplus |
| External Debt Repayments | $12.8 billion | Up from ~$8 billion in FY25 |
The agency noted that higher world energy prices will raise inflation in the coming months, especially with the switch to more targeted subsidy support and base effects .
Key Risk: Energy Exposure
Fitch highlighted Pakistan’s acute vulnerability to energy shocks as the most significant risk to its credit profile. The agency noted that Pakistan sources up to 90% of its 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 .
“The 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,” the agency said .
IMF Programme and Financing
Fitch noted that a staff-level agreement was reached in March 2026 on the third review of the Extended Credit Facility (ECF) and the second review of the Resilience and Sustainability Facility. Approval by the IMF board could unlock approximately $1.2 billion, helping reinforce policy discipline and unlock further bilateral and multilateral funding .
The State Bank of Pakistan (SBP) cut the policy rate to 10.5% by the end of 2025, down from 22.0% at the end of May 2024. However, market interest rates have risen in early April on inflation concerns tied to tight energy supply .
External Financing Pressures
External debt amortisations are projected to rise to $12.8 billion (2.9% of GDP) in FY26, up from nearly $8 billion in FY25 . A $3.5 billion deposit was repaid to the United Arab Emirates in April, with an additional $9.2 billion in bilateral deposits and loans expected to be rolled over .
Fitch anticipates external financing will be sourced mainly from IMF and other multilateral and bilateral inflows, followed by commercial financing, including a planned Panda bond issuance this fiscal year .
Outlook and Diplomatic Dimension
Fitch noted that Pakistan’s role as a ceasefire broker between the US and Iran may provide tangible benefits and partly offset external pressures . However, governance indicators remain a key weakness, with Pakistan scoring poorly on political stability, rule of law, and corruption metrics—factors that continue to weigh on the country’s overall credit profile .
The agency warned that Pakistan’s rating could be downgraded if external liquidity weakens sharply or if fiscal consolidation stalls. Conversely, stronger external financing, sustained reserve accumulation, and durable fiscal reforms could support a future rating upgrade
