Fitch Predicts Political and Economic Outlook for Pakistan
The international credit rating agency, Fitch, has forecasted that the current Pakistan Muslim League (PML) government will remain in power for the next 18 months. Additionally, they predict that Imran Khan, the founder of Pakistan Tehreek-e-Insaf (PTI), will remain in custody for the foreseeable future.
Economic Projections and Challenges
Fitch’s report outlines several key economic forecasts for Pakistan:
- Inflation Rate: Expected to decrease by the end of the fiscal year.
- Economic Growth: Projected to reach a growth rate of 3.2% this fiscal year.
- Interest Rates: The State Bank of Pakistan (SBP) is anticipated to reduce the interest rate to 14% by the end of the financial year.
- Fiscal Deficit: The government aims to reduce the fiscal deficit from 7.4% to 6.7%, indicating tough economic targets set in the budget.
- IMF Program: The government’s stringent economic measures are seen as steps towards securing a program with the International Monetary Fund (IMF).
Economic Risks and Sectoral Impacts
Fitch highlights several risks and challenges for Pakistan’s economy:
- External Payment Pressure: Identified as a significant economic risk.
- Agricultural Risks: Floods and droughts pose risks to Pakistan’s agriculture sector.
- Economic Activity: Demonstrations in Pakistan’s cities may negatively impact economic activity.
Political Developments and Election Outcomes
According to the report, independent candidates, supported by the imprisoned PTI founder, made significant gains in Pakistan’s February elections. Fitch suggests that the demonstrations and political unrest could influence economic activities.
Future Governance Scenarios
The report predicts that if the current government ends, a technocrat government might take over to continue economic reforms in collaboration with the IMF.
Overall, Fitch’s analysis presents a complex picture of Pakistan’s immediate political and economic future, emphasizing both the challenges and potential reforms ahead.