Key points:
- Imran Khan predicted to remain in detention, according to Fitch report.
- Fitch anticipates 18 months of stable governance under the PML-N.
- State Bank of Pakistan expected to lower interest rates to 14% by fiscal year-end.
- Economic challenges include IMF collaboration amid external payment pressures and agricultural risks from floods and droughts.
In its latest report on Pakistan, Fitch, the credit rating agency, predicts that Imran Khan, founder of Pakistan Tehreek-e-Insaf (PTI), will remain in detention in the foreseeable future.
The report also forecasts that the current government, led by the Pakistan Muslim League-Nawaz (PML-N), will maintain stability for the next 18 months. Additionally, Fitch anticipates a decrease in Pakistan’s inflation rate by the end of the fiscal year, with the State Bank of Pakistan expected to lower interest rates to 14%.
Pakistan’s government has set ambitious economic targets in its budget, aiming to reduce the fiscal deficit from 7.4% to 6.7%. Fitch highlights that challenging economic decisions are paving the way for an International Monetary Fund (IMF) program, with external payment pressures posing economic risks. Moreover, floods and droughts threaten Pakistan’s agriculture, further impacting the economy.
Regarding the February 8 elections, Fitch notes significant success for independent candidates, supported by the incarcerated PTI founder. The report also mentions that potential protests against election rigging could pose another threat to economic stability.
Looking ahead, Fitch predicts that Imran Khan will remain under detention in the near term, while the current PML-N government will sustain stability for 18 months. The agency suggests that the government will collaborate with the IMF to implement economic reforms, with a transition to a technocratic government expected once the current administration concludes.