International credit rating agency Fitch on Monday upgraded Pakistan's long-term foreign currency issuer default rating (IDR) from CCC to CCC+. The upgrade signifies an improvement in Pakistan's external liquidity and funding conditions, strengthened by the recent IMF agreement. Fitch highlighted the strong performance under the previous IMF arrangement, which helped Pakistan narrow its fiscal deficits and rebuild foreign exchange reserves. However, the agency warned that Pakistan's large funding needs could leave it vulnerable if challenging reforms are not implemented, potentially undermining program performance and funding. On the external front, Fitch noted that Pakistan's foreign exchange reserves have recovered but remain low.
