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Islamabad, London-based Fitch Ratings has indicated that recent federal budget initiatives by Pakistan have bolstered the chances of securing an agreement with the International Monetary Fund (IMF).
According to Ministry of Information and Broadcasting, Fitch Ratings released a report suggesting improvements in Pakistan’s fiscal management are likely to narrow the fiscal deficit and alleviate external financial pressures. The agency predicts a growth rate of three to three point five percent in the short-term economic indicators.
Fitch’s updated fiscal forecasts envision a primary surplus of 0.8 percent, despite an overshoot in current spending which is partly balanced by under-execution in development spending. Since the elections in February, Pakistan’s external financial position has reportedly continued to improve.
The current account deficit is expected to narrow to 0.3 percent of GDP in the current fiscal year, down from 1.0 percent in the last fiscal year. This improvement is attributed to subdued domestic demand which has reduced import volumes, while recent exchange rate reforms have channeled remittance inflows back into the official banking system. Additionally, strong agricultural exports have contributed positively to the economic outlook.
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