Fitch Ratings, a big company that gives ratings to countries based on their credit, says that Pakistan will need to rely on the International Monetary Fund (IMF) and official support for the next few years. They believe that the outcomes of elections happening in many countries, including Pakistan on February 8, could influence how well these countries manage their money.
Fitch thinks that the chance of elections affecting credit profiles (how good a country is at managing its money) is higher in Pakistan and Sri Lanka. Both of these countries depend on successful implementation of IMF programs and official support.
The agency also says that before elections, progress in making changes has slowed down, and the plans of the new governments after the elections could impact their credit profiles. However, they expect that in most places, the new government will continue the policies of the previous one.
The report mentions that the Asia-Pacific region, where these countries are located, is expected to face challenges in 2024 like slower global growth, high interest rates, geopolitical issues, and problems in China’s property sector. Despite these challenges, Fitch believes that the region will stay strong.
In 2023, Fitch made some changes to its ratings for different countries. For Pakistan, they downgraded the rating in February but upgraded it in July, mainly because of changes in how the country gets money from outside. They expect that the GDP growth (how much the country’s economy is growing) will be higher for countries in the Asia-Pacific region compared to other regions.
They predict that a few countries like Japan, New Zealand, and Pakistan may have lower growth. Fitch also says that even though some countries will borrow a lot and not reduce their spending much, the debt ratios (how much a country owes compared to how much it makes) will go up for about half of the countries in the Asia-Pacific region.
Fitch points out that China is facing challenges because its government debt is increasing, and it has a lot of potential financial risks. Overall, they believe that the Asia-Pacific region will face challenges, but many countries will still do well because of improvements in technology and strong domestic demand.
