Another big blow to Pakistan, this country is close to default, Fitch downgrades rating

Pakistan Economy Crisis: The International Monetary Fund (IMF) did not release the fund earlier and now Pakistan has got another blow. This country is not only standing on the brink of poverty, it has now reached the point of becoming a loan defaulter. Global rating agency Fitch has downgraded Pakistan’s credit rating, which means that Pakistan’s external liquidity has reduced and risk has increased.

Global rating agency Fitch has downgraded the rating from CCC+ to CCC-. It means the risk of policy policy and loan repayment, less money and going through a difficult situation. This is the second downgrade since October. Fitch rating agency had earlier done Pakistan’s rating from B- to CCC+ and now it has been CCC-.

Rating agency Fitch generally does not give an outlook to sovereigns with ratings of CCC+ and below. Earlier in December, CCC+ rating was given by S&P from B rating. This rating agency had also alerted to improve the economic condition of Pakistan and told that its external liquidity would decline further in the coming times.

Fitch alerted Pakistan

The rating agency said that the downgrade indicates that there has been a sharp deterioration in Pakistan’s liquidity, external position and funding position. Fitch said that the decrease in revenue collection, tax on electricity and increase in market items is due to the delay in the 9th meeting between Pakistan and the IMF, which should have been held in November 2022.

Other countries also pulled back

The agency said that countries like China, Saudi Arabia and the United Arab Emirates have also shown no interest in providing funds to Pakistan if the IMF does not provide relief. However, the agency said that Pakistan may be able to raise some funds from foreign institutions going forward. Pakistan is expected to get $3.5 billion in aid during this financial year. At the same time, the government debt is going to be high in the next financial year.

There was no agreement regarding the fund from the IMF

A few days ago, an agreement could not be reached between the IMF and Pakistan regarding the fund. IMF had advised Pakistan to increase income and impose new types of taxes. With the help of this tax, the Government of Pakistan is preparing to raise funds. Small and big things of food and every need are being sold in the markets of Pakistan at an expensive price.

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