In a positive development, Fitch Ratings has upgraded Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘CCC+’ from ‘CCC’.

“The upgrade reflects greater certainty over the continued availability of external funding, in the context of Pakistan’s staff-level agreement (SLA) with the IMF on a new 37-month USD7 billion Extended Fund Facility (EFF),” Fitch company said in a statement on Monday.

“Nevertheless, Pakistan’s large funding needs leave it vulnerable if it fails to implement challenging reforms, which could undermine programme performance and funding,” it warned.

“We believe this will be achievable, given the strong past record of support and significant policy measures in the recent budget for the fiscal year ending June 2025 (FY25),” it said. On the previous IMF programme, Fitch said that Pakistan successfully completed its nine-month Stand-by Arrangement with the global lender in April. “Over the past year, the government raised taxes, cut spending and raised electricity, gas and petrol prices,” it said.

In its ealier report on Pakistan, the global rating agency predicted that the PML-N led coalition government will remain in power for the next 18 months with no immediate plans for fresh elections. The incumbent government will continue to implement the reforms mandated by the International Monetary Fund (IMF) that will enable the economy to grow.

According to the rating agency, former prime minister Imran Khan is unlikely to get released from jail in the foreseeable future despite getting relief in a number of cases. On the economic front, Pakistan’s current account deficit is projected to remained 1% in FY2024/25.