Election outcome, political uncertainty may complicate Pakistan’s new IMF deal: Fitch

Global ratings agency Fitch on Monday warned that the “close outcome” of the February 8 polls and the resulting “near-term political uncertainty” may complicate Pakistan’s efforts to secure a financing agreement with the International Monetary Fund (IMF). Nearly 60.6 million Pakistanis voted in the country’s 12th general elections earlier this month amid a day-long suspension of cellular services and rigging allegations. However, the outcome of the polls resulted in a split mandate as PTI-backed independent candidates emerged at the top in the National Assembly elections. Subsequently, the PPP and PML-N began efforts to hammer out some sort of power-sharing formula in the national and Punjab assemblies. On the other hand, the PTI has announced an alliance with the Sunni Ittehad Council in the Centre, Khyber Pakhtunkhwa and Punjab. In a report released today, US-based Fitch Ratings — one of three leading global rating agencies — said a new IMF deal, to succeed the Stand-By Arrangement (SBA) expiring in March 2024, was key to Pakistan’s credit profile. “[…] 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,” it said.