Islamabad: The closely-contested outcome of the February 8 general elections in Pakistan and the ensuing political ambiguity may pose challenges to the nation’s efforts to secure a financing agreement with the International Monetary Fund (IMF), according to Fitch Ratings, according to a media report.
Fitch warned on Monday that the uncertain political landscape in Pakistan could potentially complicate negotiations for a new financing deal, crucial for the country’s credit profile, The Express Tribune reported.
While Fitch assumes that an agreement will likely be reached in the coming months, it underscored that prolonged negotiations or a failure to secure the deal could heighten external liquidity stress and increase the risk of default, the report said.
Despite recent improvements in Pakistan’s external position, with the State Bank of Pakistan reporting net foreign reserves of $8 billion as of February 9, 2024, up from a low of $2.9 billion in February 2023, Fitch noted that these reserves remain low compared to projected external funding needs, The Express Tribune reported.
The agency estimates that Pakistan met less than half of its $18 billion funding plan in the first two quarters of the fiscal year ending June 2024, excluding routine rollovers of bilateral debt, the report said.
–IANS