KARACHI: Global ratings agency Fitch on Tuesday upgraded Pakistan’s foreign currency credit rating to ‘B-’ from ‘CCC+’ citing increased confidence in the country’s progress on narrowing its budget deficits, with Prime Minister Shehbaz Sharif hailing it as a sign of the world’s growing confidence in Pakistan’s economy. 

The upgrade reflects confidence that the country would implement structural reforms, supporting its International Monetary Fund (IMF) program performance and funding availability, Fitch said.

The agency said though ongoing global trade tensions could create external pressures on Pakistan, its low dependence on exports and market financing should mitigate risks.

“Prime Minister Shehbaz Sharif welcomes the improvement in Pakistan’s economic rating by global credit rating company Fitch,” a statement by the premier’s office said. 

“The improvement in the rating of Pakistan’s economy by international institutions is a manifestation of economic development and the confidence of the world community in Pakistan’s economy,” he added. 

Sharif said his government is working “tirelessly” to further improve Pakistan’s economy. 

Pakistan’s economy had been teetering on the brink of a sovereign default ever since inflation rose to a record high of 38 percent in May 2023 and reserves started declining rapidly. 

However, Pakistan’s economy was provided breathing space thanks in part to a $7 billion bailout program from the International Monetary Fund (IMF).

In March, the IMF reached a new deal with Pakistan which could unlock $1.3 billion in cash. 

Sharif’s government has vowed to implement the financial reforms, which include increasing the country’s tax base and privatizing loss-making entities to ensure sustainable growth.