S&P Global Ratings, a prominent credit rating agency, has suggested the possibility of an upgrade in Pakistan’s credit rating following the emergence of a new political government after the general elections on February 8. The credit rating agency emphasized that the key to securing higher credit ratings for Pakistan lies in the potential of the incoming government to advocate for and implement substantial reforms.
The Bloomberg report, citing S&P’s recent analysis, highlighted the significance of a government enjoying widespread support and the ability to collaborate effectively with key institutions. Such a government, according to S&P analysts, would enhance the prospects of securing financing from the International Monetary Fund (IMF). The agency stated that coupled with new policy initiatives aimed at bolstering investor confidence and reducing inflation, these factors could lead to improvements in fiscal and external metrics, potentially moving the sovereign ratings to the ‘B’ category.
Presently, Pakistan holds a ‘CCC+’ credit rating by S&P, reflecting the nation’s capacity to meet foreign debt obligations but acknowledging a certain level of uncertainty that could pose challenges in fulfilling repayment obligations. The awaited upgrade hinges on the new government’s commitment to securing the next IMF loan program, following the conclusion of the ongoing $3 billion program in March 2024.
The general elections on February 8 are crucial in determining the country’s political landscape, and the global rating agency will closely monitor the government’s actions, particularly its economic roadmap and efforts to secure international financial support. Many top rating agencies had previously downgraded Pakistan’s ratings due to prolonged political and economic challenges.
With preparations in place for the upcoming elections, over 128 million voters are expected to exercise their voting rights. The Election Commission of Pakistan has reported a significant number of candidates vying for National Assembly and provincial assembly seats, reflecting the keen interest and participation in the democratic process. The outcome of the elections will likely play a pivotal role in shaping the economic and political trajectory of Pakistan, influencing its credit rating prospects.
