Ratings Watch – S&P says Pakistan’s Credit Rating Could Get Upgraded Next Year

The Credit Rating Agency has said the positive outlook indicates that it could raise Pakistan's rating in 2016. While noting that Pakistan’s fiscal performance had improved and government deficit had declined to 5.10% of GDP with better revenue collection and restrained expenditure the agency believed that enacting the conditions of IMF’s Program under EFF will become increasingly difficult for the government. These conditions include broadening the tax base, reducing tax concessions, and improving compliance, while addressing expenditure-side rigidities (such as through lowering subsidies and public-sector salaries).

For the rating to be upgraded steady progress on the government's reform program remains a necessary condition. However, it warned that if the government's reform program stalls or if internal security worsens to the point of the turmoil seen earlier this decade it could revise the outlook to stable.