Fitch Ratings, an American credit rating agency, maintained that Pakistan will remain dependent on the successful International Monetary Fund (IMF) programme implementation and its official support for the next few years, The News reported on Thursday.
With elections taking place in almost half of Finch’s rated portfolio of Asia Pacific (APAC) sovereigns in 2024, including Pakistan where general polls are scheduled for February 8, the agency on Wednesday shared the possibility in its forecast report, mentioning the chance of election outcomes influencing credit profiles as being higher in both Pakistan and Sri Lanka, which also gets its funds from the IMF.
Other countries where elections are slated to be conducted include in India, Sri Lanka, Indonesia and Korea.
“We view the chance of election outcomes influencing credit profiles as being higher in Pakistan and Sri Lanka, which both will remain dependent in the next few years on successful IMF programme implementation and official support,” the forecast stated.
Reform momentum, it added, has slowed in the run-up to elections and the policy agendas of the next governments could affect credit profiles. However, the agency generally expects policy continuity to be the main theme in most places.
Fitch also stated that the situation during elections will lead to some uncertainty. In its report, the agency said that the Asia-Pacific region should largely remain resilient in 2024 to the several challenges it will face, including slowing global growth, high yields, geopolitics and lingering property-sector issues in China.
Meanwhile, rating actions in 2023 were mostly on frontier markets and included a downgrade of Pakistan to ‘CCC-’ in February and a subsequent upgrade to ‘CCC’ in July, both related to changes in its external financing outlook, the agency said.
GDP growth will mostly be higher for APAC sovereigns than for their peers in other regions.
It forecast growth below the peer median for only a few APAC sovereigns, namely Japan, New Zealand and Pakistan.
The agency stated that growth should be supported by a gradual upturn in the global tech cycle and relatively robust domestic demand in some places.
“Weak global growth will likely weigh on demand for Asia’s electronics production and exports, but some high-frequency data, for instance from Singapore and Korea, are pointing to the start of an upward trend in the generally short tech cycle, helped by technological developments, such as 5G and AI.”