Fitch, a global credit rating agency, has suggested the possibility of a technocrat government in Pakistan if the current Pakistan Muslim League-Nawaz (PML-N) administration is removed. The agency forecasts that the existing coalition, led by PML-N, will hold power for the next 18 months without immediate election plans.
The government is expected to continue with reforms required by the International Monetary Fund (IMF), which are anticipated to spur economic growth. However, Fitch noted potential disruptions to economic activity from political instability and environmental challenges such as floods and drought.
Fitch also indicated that former Prime Minister Imran Khan is unlikely to be released from jail soon despite some legal victories.
The agency predicts Pakistan’s next general elections will occur in 2029 and projects the current account deficit to stay at 1% in FY2024/25. Additionally, it anticipates reducing the State Bank of Pakistan’s key policy rate from 22% to 16% by 2024.
Meanwhile, Moody commented on Pakistan’s recent preliminary agreement with the IMF, which is expected to boost the nation’s funding. This comes as part of a three-year, $7 billion aid package to stabilize the economically strained country. Moody’s recognizes that sustained reform implementation is vital for accessing continuous financing under the IMF’s program, which would alleviate government liquidity risks.
However, Moody’s also pointed out potential difficulties, such as social unrest due to rising living costs, which could hinder reform efforts, especially regarding tax increases and future adjustments to energy tariffs. The agency further cautioned about the coalition government’s electoral strength to enforce challenging reforms consistently.
