Skip to content
Search

Latest Stories

Fitch downgrades Pakistan's rating warns default a 'real possibility'

The downgrade reflected a sharp deterioration in external liquidity and funding conditions.

Fitch downgrades Pakistan's rating warns default a 'real possibility'

The beleaguered Pakistani economy faces substantial credit risks with "critically low levels” of foreign exchange reserves, New York-based global ratings agency Fitch said on Tuesday (14), warning that a default is a "real possibility."

Fitch downgraded Pakistan’s long-term foreign currency issuer default rating (IDR) to ‘CCC-’ from ‘CCC+’, citing further worsening in liquidity and policy risks.


The downgrade reflected a sharp deterioration in external liquidity and funding conditions, along with decline of foreign exchange (FX) reserves to “critically low levels," Fitch said.

“Falling reserves reflect large, albeit declining, current account deficits (CADs), external debt servicing and earlier FX intervention by the central bank, particularly in 4Q22, when an informal exchange-rate cap appears to have been in place.

“We expect reserves to remain at low levels, though we do forecast a modest recovery during the remainder of FY23, due to anticipated inflows and the recent removal of the exchange rate cap,” the agency said.

Fitch said it expects Pakistan to successfully conclude the ninth review of the International Monetary Fund (IMF) programme, and the downgrade is a reflection of the large risks to continued programme preformance and funding, in the run-up to this year's elections.

“Default or debt restructuring is an increasingly real possibility, in our view,” Fitch warned.

Pakistan is struggling with instability stemming from an economic crisis, last summer's devastating floods and a recent surge in terror attacks across the country.

A crucial $1.2 billion tranche of the 2019 bailout was stalled since December last year, with the IMF urging Pakistan to raise more cash.

Pakistan held intensive talks with an IMF delegation in Islamabad for ten days, but could not reach a deal.

Fitch also highlighted a challenging political context and funding contingent on the IMF programme as other factors for the rating downgrade.

The IMF and the Pakistan government resumed talks virtually on Monday (13), with Islamabad hoping that an agreement would be quickly reached that would provide a fillip to the country's ailing economy.

Pakistan's foreign exchange reserves stood at about $2.9bn on February 3, which was less than three weeks of imports, according to the country's central bank's estimates.

It was down from a peak of more than $20bn at the end of August 2021.

(PTI)

More For You

Man found guilty of rape and murder of Irish backpacker in India

McLaughlin, 28, from County Donegal, was found dead in a field in Goa in March 2017. (Photo credit: Twitter)

Man found guilty of rape and murder of Irish backpacker in India

A COURT in India has found Vikat Bhagat guilty of the rape and murder of Irish backpacker Danielle McLaughlin.

McLaughlin, 28, from County Donegal, was found dead in a field in Goa in March 2017.

Keep ReadingShow less
Alderman Alastair King

King, who serves as the global ambassador for the City of London, will be in Mumbai to discuss trade and investment under his mayoral theme, 'Growth Unleashed.'

Lord Mayor of London to visit India for trade talks

THE LORD MAYOR of London, Alderman Alastair King, is set to visit India for a week starting Saturday, aiming to promote free trade and capital flows between the two countries.

King, who serves as the global ambassador for the City of London, will be in Mumbai to discuss trade and investment under his mayoral theme, “Growth Unleashed.”

Keep ReadingShow less
trump-modi-washington-getty

The meeting came hours after Trump criticised India’s business environment and announced plans for reciprocal tariffs on countries that impose duties on US imports. (Photo: Getty Images)

Modi and Trump agree to resolve trade disputes, discuss tariff concerns

INDIA and the US have agreed to begin negotiations aimed at resolving trade and tariff disputes, following talks between Indian prime minister Narendra Modi and US president Donald Trump in Washington.

India has committed to increasing purchases of US oil, gas, and defence equipment, while both sides pledged to address trade barriers.

Keep ReadingShow less
Pablo-Escobar-merchandise-Getty

Escobar, killed by security forces in 1993, remains a figure of global interest, with his image appearing on souvenirs like T-shirts, mugs, and keychains. (Photo: Getty Images)

Colombia considers ban on Pablo Escobar merchandise

COLOMBIA’s Congress is considering a bill that would ban the sale of merchandise featuring drug lord Pablo Escobar and other convicted criminals.

The proposed law aims to curb the glorification of Escobar, who was responsible for thousands of deaths during his time leading the Medellín cartel, reported BBC.

Keep ReadingShow less
Assisted dying bill: Judge approval scrapped for expert panel safeguard

Polls show most Britons back assisted dying, with supporters calling for the law to reflect public opinion.

Assisted dying bill: Judge approval scrapped for expert panel safeguard

Eastern Eye

THE proposed new assisted dying law for terminally ill people will be amended to remove the requirement that a high court judge sign off on each case, Labour MP Kim Leadbeater said on Tuesday (11).

Opponents of assisted dying said the change would weaken the safeguards around protecting vulnerable people from being coerced or pressured into taking their own lives.

Keep ReadingShow less