Pakistan’s economic outlook Improves as Fitch boosts credit rating

In a significant boost for Pakistan’s economic image, international credit rating agency Fitch has upgraded the country’s sovereign credit rating from “CCC+” to “B-,” reflecting a growing confidence in Pakistan’s financial stability and reform efforts. The agency has also revised the outlook from negative to stable, pointing to improved economic management.

According to Fitch, the positive shift is a result of prudent fiscal policies, particularly efforts to curb the budget deficit and enhance macroeconomic discipline. The government’s move to keep the fiscal deficit around 6% and reduce the overall debt burden to 67% played a key role in this upgrade.

Fitch also highlighted encouraging economic indicators, including a predicted drop in inflation to 5% and an expected GDP growth of 3%. Increased remittance inflows and a transition to a current account surplus have strengthened Pakistan’s foreign exchange reserves, which now stand at a healthy $18 billion.

Despite the progress, Fitch cautioned that external debt obligations—amounting to $9 billion—still loom large, with a continued reliance on Chinese refinancing. The report also pointed out that political instability and security concerns remain potential roadblocks to sustained economic recovery.