Fitch affirms long-term foreign currency IDR at ‘B-‘ with a stable outlook

Fitch Ratings has affirmed Pakistan’s long term foreign currency Issuer Default Rating (IDR) at ‘B-‘ with a stable outlook. The rating reflects a challenging external position characterized by a high external financing requirement and low reserves, weak public finances including large fiscal deficits and a high govt. debt-to-GDP ratio, and weak governance indicators. External finances remain fragile with relatively low foreign-exchange reserves in context of an elevated external debt repayment schedule and subdued export performance, it stated. Pakistan’s liquidity ratio is 111.4%, much weaker than the historic ‘B’ median of 161.2%. Fitch forecasts a further narrowing of current account deficit to 2.1% of GDP in FY20 and 1.9% in FY21, from 4.9% in FY19.