Fitch predicts 18-month tenure for Pakistan’s current govt

ISLAMABAD: The economic rating agency Fitch has predicted that the current Pakistan’s government led by Prime Minister Shehbaz Sharif is expected to remain in power for the next 18 months before it is replaced by a technocrats’ government.

Fitch said that after the current government’s term, which includes undertaking all necessary economic reforms in collaboration with the International Monetary Fund (IMF), a technocratic government is likely to take over in Pakistan.

Fitch also predicted that former prime minister founder of Pakistan Tehreek-e-Insaaf (PTI) Imran Khan will remain in custody for the foreseeable future.

Fitch also noted that independent candidates, backed by the jailed PTI founder, performed strongly in Pakistan’s February election. The resulting protests in major cities could potentially disrupt economic activities.

According to Fitch, Pakistan’s inflation rate is anticipated to decrease by the end of this fiscal year. The State Bank of Pakistan is expected to lower interest rates, potentially bringing them down to 14 per cent by the fiscal year’s end. Fitch’s report noted that the Pakistani government has set some of the most challenging economic targets in its budget, aimed at stabilising the economy.

The report highlighted that the government’s difficult economic decisions are paving the way for a programme with the IMF.

This prediction aligns with a recent statement from the international rating agency Moody’s, which indicated that the new IMF programme would improve Pakistan’s funding possibilities. However, Moody’s cautioned that Pakistan’s external position remains fragile, with high external financing requirements posing policy challenges over the next three to five years.

“Weak governance and high social tensions could also affect the government’s ability to implement necessary reforms.”