Fitch lauds improvements in business climate – Newspaper

KARACHI: Pakistan is one of the 10 economies where the business climate has improved most over the past year, Fitch Ratings said in a report issued Friday.

The rating agency also recognized the policy measures taken by the government to reduce the current account deficit and reduce the trajectory of gross external financing needs.

Fitch's report comes after Pakistan jumped 28 places at the World Bank's 2020 Business Facility, securing a place on the list of the top 10 countries with the most improvements in the area of ​​doing business.

The agency said the country could meet financing needs by improving export performance, although it is still unclear to what extent it will be able to improve competitiveness and attract foreign direct investment.

In addition, he said the country faces annual external debt obligations of around $ 8-9 billion for the next few years partially related to loan repayments under the China-Pakistan Economic Corridor.

Pakistan paid $ 11.588 billion in external debt service costs during the last fiscal year. The increase in financial costs has limited the government's ability to focus on poverty alleviation and has limited its space to spend on development initiatives.

Fitch also said the country has faced external vulnerabilities over the past year, but has benefited from the International Monetary Fund (IMF) program approved in July.

Qualified as "B-negative" by the agency, Pakistan entered a $ 6 billion 39-month fund with the IMF to carry out an economic reform program.

But some of the reforms, including the impulse towards the documentation of the economy, the increase in fiscal revenue targets have been unpopular and faced resistance from local sectors.

The agency warned that the implementation of "additional reforms could be a political challenge."

He also speculated on the success of the ongoing program citing unequal adherence to previous similar packages.

The rating agency's warning is guaranteed by the country's verified track record with the IMF, as it has not fulfilled its commitment to structural reforms.

Posted on Dawn, November 2, 2019