Global ratings agency Fitch on Monday warned that the “close outcome” of the February 8 polls in Pakistan and the resulting “near-term political uncertainty” may complicate the country’s efforts to secure a financing pact with the IMF.
The US-based Fitch Ratings said in its report that a new IMF deal to succeed the Stand-By Arrangement (SBA) expiring in March this year, was key to Pakistan’s credit profile, the Dawn newspaper reported.
Last month, the cash-strapped country received over $700 million second tranche from the Washington-based global lender under the existing $3 billion SBA agreed towards June last year when Pakistan was slowly drifting towards default.
“[…] We assume one will be reached within a few months, but an extended negotiation or failure to secure it would increase external liquidity stress and raise the probability of default,” the agency said.
It highlighted that while Pakistan’s external position had improved, “this is low relative to projected external funding needs” that are expected to exceed reserves for the next few years.
