ISLAMABAD: Fitch Ratings has reaffirmed Pakistan’s long-term foreign currency rating at ‘B-’ with a stable outlook, pointing to progress in fiscal discipline and economic stability.
The agency said Pakistan’s performance remains broadly aligned with its programme with the International Monetary Fund, which continues to support funding and policy direction. It noted that foreign exchange reserves have improved over the past year, providing some cushion against external shocks.
Fitch also highlighted Pakistan’s diplomatic role in easing regional tensions as a positive factor that could help offset some economic pressures.
However, the report warned that Pakistan remains highly vulnerable to rising global energy prices, as the country depends heavily on oil imports from the Gulf and has limited storage capacity.
The agency said a recent IMF staff-level agreement unlocked about $1.2 billion, which will help stabilise the economy and attract additional international support.
Inflation is expected to rise slightly due to higher energy costs, averaging around 7.9% in FY26, though still much lower than previous highs. Economic growth is projected at 3.1%, supported by lower interest rates and improving confidence.
Fitch cautioned that external debt repayments will increase, while foreign exchange reserves may decline to around $21 billion by the end of FY26, covering less than three months of imports.
Despite these challenges, the agency expects fiscal deficits to remain manageable, though Pakistan’s debt levels and reliance on external financing will continue to pose risks.
