Singapore February 6 2024: Pakistan’s road to securing higher credit ratings will depend on whether the elections this week will bring about a government that can push for tough reforms, according to S&P Global Ratings.
A government with popular support and is able to work with key institutions will have a better chance of securing financing from the International Monetary Fund, S&P analysts including Kim Eng Tan wrote in a Feb. 4 report. Pakistan has a CCC+ rating, one step below the B category and signifies the nation is vulnerable to a default.
“Together with new policy moves to improve investor confidence and bring down inflation, this could lift fiscal and external metrics sufficiently for the sovereign ratings to move to the ‘B’ rating category,” S&P said.
Pakistan’s elections on Thursday come at a crucial time as the nation’s $3 billion IMF bailout is set to end in March, putting pressure on the new government to quickly secure another round of financing to avert a sovereign default. Political instability has also been weighing on Pakistan since Imran Khan, who remains a popular leader, was ousted in April 2022 after a no- confidence parliamentary vote.
Khan is barred from taking part in the elections and has been convicted in three cases in the past week. While others in the fray include former foreign minister Bilawal Bhutto Zardari and sugar magnate Jahangir Tareen, Khan’s rival and three-time prime minister Nawaz Sharif has been gaining ground.
