Fitch forecasts 18-month rule for coalition govt in Pakistan amid Political turmoil

Fitch, the top ratings agency, shared new projections for Pakistan in which technocrats would take power after the end of this regime.

It said the current administration is expected to remain in office for next 18 months, amidst recent legal and political developments, especially after the recent verdict of the Supreme Court.

The verdict of the country’s top court said overturning of Imran Khan’s Iddat Case and awarding additional parliamentary seats to his party, have dealt a significant blow to Prime Minister Shehbaz Sharif’s coalition government, potentially jeopardizing its majority in Parliament.

PML-N government them considering a ban on Imran Khan’s party, with decisions pending consultation with coalition partners. The government is also looking to file treason cases against Imran Khan, former President Arif Alvi, and former NA Deputy Speaker Qasim Suri.

Fitch Report Pakistan

After recent developments, Fitch cautioned that Pakistan’s political volatility could disrupt its economic recovery. The agency noted risks from external payment pressures and agricultural challenges like floods and droughts. Economic reforms in collaboration with the IMF are anticipated, with efforts underway to address Pakistan’s economic decisions through an IMF program.

Fitch predicts a decline in Pakistan’s inflation rate by the end of the fiscal year, with expectations that the State Bank of Pakistan will reduce interest rates to 14%. The government aims to trim the fiscal deficit from 7.4% to 6.7% under ambitious fiscal targets set in its budget. Fitch also forecasts the US dollar to rise to Rs290 by year-end and Rs310 by 2025, highlighting the complexities in achieving budget targets under the IMF program.