Fitch affirms Pakistan at ‘B-’ rating with stable outlook amid IMF-backed reforms
Fitch Ratings on Monday reaffirmed Pakistan’s long-term foreign currency issuer default rating at ‘B-’ with a stable outlook, citing improvements in fiscal consolidation and macroeconomic stability supported by the country’s IMF programme.
In its latest assessment, the agency said Pakistan’s progress on economic reforms remained broadly aligned with the International Monetary Fund (IMF) framework, helping strengthen funding capacity and external buffers.
Fitch noted that foreign exchange reserves had improved over the past year, providing some cushion against external shocks, including rising global energy prices and geopolitical tensions in the Middle East.
The agency, however, warned that Pakistan remains highly exposed to global oil price volatility, particularly due to its reliance on imports and limited storage capacity. It said disruptions linked to the Strait of Hormuz could pose additional pressure on external accounts.
Pakistan recently reached a staff-level agreement with the IMF, unlocking around $1.2 billion in financing, which Fitch said will continue to serve as a key anchor for fiscal and macroeconomic policy.
The report highlighted that fuel subsidies introduced earlier this year were being managed through budget reallocations and higher domestic fuel prices, helping contain fiscal pressure.
On inflation, Fitch projected an average rate of 7.9% in FY26, higher than the previous year but significantly lower than the FY24 peak of 23.4%, reflecting gradual stabilisation.
The State Bank of Pakistan’s monetary easing cycle, which reduced the policy rate to 10.5%, has supported economic activity, though rising inflation expectations have recently pushed interbank rates higher.
Fitch projected GDP growth of 3.1% in FY26, slightly above FY25 levels, driven by improved confidence and lower borrowing costs.
The agency also flagged rising external debt repayments, expected to reach $12.8 billion in FY26, while noting that significant rollovers from bilateral partners and multilateral institutions will remain crucial for financing needs.
It added that Pakistan plans to issue a panda bond during the fiscal year as part of efforts to diversify funding sources.
Overall, Fitch said Pakistan’s rating is supported by reform progress but constrained by external vulnerabilities and exposure to global energy market shocks.
