Fitch Ratings Forecasts Improved Economic Outlook for Pakistan Following Federal Budget Initiatives

London, Fitch Ratings has identified Pakistan’s recent federal budget measures as pivotal for strengthening the country’s prospects for securing an International Monetary Fund (IMF) deal. The agency predicts a narrowing fiscal deficit which could alleviate external financial pressures and spur economic growth.

According to Ministry of Information and Broadcasting, Fitch Ratings’ latest report suggests that Pakistan’s external position has shown signs of improvement following the elections in February. The report projects a growth rate between three and 3.5 percent in the short term, with a primary surplus of 0.8 percent anticipated. However, the report also notes an overshoot in current spending, which is partly mitigated by under-execution in development spending. The current account deficit is expected to narrow to 0.3 percent of GDP this fiscal year, down from 1.0 percent the previous year, thanks to subdued domestic demand that has compressed imports and exchange rate reforms boosting remittance inflows through the official banking system. The report also credits strong agricultural exports for contributing to the improved economic outlook.

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