Fitch upgrade reflects Pakistan’s stabilising economy, says Finance Division 

ISLAMABAD: Pakistan’s economy is showing signs of improvement, with Fitch Ratings raising the country’s outlook due to better performance in key economic areas during the outgoing fiscal year, according to the Finance Division’s Monthly Economic Update. 

The report pointed to a stronger financial position, helped by a smaller budget deficit and a steady primary surplus.

Revenue grew faster than government spending, thanks to a 68 per cent increase in non-tax income from central bank profits, petroleum charges, and dividends. The current account recorded a $1.9 billion surplus, driven by a rise in exports and money sent home by overseas Pakistanis. 

Inflation dropped sharply, falling to just 0.3 per cent in April compared to 17.3 per cent in the same month last year. Lower prices of food, transport, and utilities gave room for the central bank to ease its policy, leading to a 100 basis point cut in the interest rate, bringing it down to 11 per cent in early May. 

While overall large-scale manufacturing remained weak, some industries showed improvement. Car production rose by 38.3 per cent, while output of trucks and buses increased by 95.8 per cent. Cement sales dropped slightly to 37.3 million tonnes, but exports rose by almost 29 per cent. 

In farming, wheat was grown on more than 22 million acres during the Rabi season, with an expected harvest of nearly 29 million tonnes. Lending to farmers went up by 15 per cent to Rs1.88 trillion, and fertiliser supply for the upcoming Kharif season is expected to meet demand. 

Pakistan also advanced its efforts in climate-friendly finance by issuing its first Green Sukuk and working with the IMF’s Resilience and Sustainability Facility. 

Financial data showed moderate growth in money supply and lending. Loans to the private sector reached Rs751.5 billion, more than three times the amount issued during the same period last year. Foreign exchange reserves stood at $16.6 billion as of May 16, including $11.4 billion held by the State Bank. 

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