Sukuk ratings are sensitive to any changes in Pakistan’s Long-Term Foreign-Currency IDR, which could change with sensitivities.
It notes that factors that could individually or collectively lead to a negative rating for downgrade include failure to keep government debt and debt-servicing metrics on a firm downward path, renewed deterioration in external liquidity conditions, for example, from delays in IMF programme reviews or insufficiently tight economic policy settings.
On the other hand, factors that could rating upgrade include significant declines in government debt and debt-servicing burdens, for example due to the implementation of fiscal consolidation plans in line with IMF programme commitments, leading to structural improvements in tax revenue generation and further significant easing of external financing risks, including evidence of greater ability to source external funding and a sustained recovery in foreign-currency reserves beyond Fitch’s forecasts.
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