Rating agency Fitch on Monday revised its outlook on Pakistan from ‘CCC-’ to ‘CCC’ as Pakistan managed to secure a last-minute bailout deal.

In the latest update, the American credit rating agency said the upgrade depicts improved external liquidity and funding conditions in light of SLA with the IMF on a nine-month Stand-by Arrangement (SBA).

A statement issued by Fitch said “We expect the SLA to be approved by the IMF board in July, catalysing other funding and anchoring policies around parliamentary elections due by October. Nevertheless, programme implementation and external funding risks remain due to a volatile political climate and large external financing requirement.”

It said Pakistan took measures to address shortfalls in government revenue collection, energy subsidies and policies inconsistent with a market-determined exchange rate, including import financing restrictions.

Fitch said these issues held up the last three reviews of Pakistan’s previous IMF programme, before its expiry in June, however, it flagged concerns over the risk of implementation on the commitments agreed by the IMF.

The statement further reads that “Pakistan has an extensive record of going off-track on its commitments to the IMF. We understand the government has already made all the required policy actions under the SBA. Nevertheless, there is still scope for delays and challenges to implementation as well as new policy missteps ahead of the October elections and uncertainty over the post-election commitment to the programme,” it said.