London-based Fitch Ratings says Pakistan’s federal budget initiatives have strengthened prospects for an IMF deal.

In a report, Fitch Ratings said it forecasts that the fiscal deficit will narrow and this should reduce external pressures.

The report has forecast growth rate three percent to three point five percent in short-term indicators of economic activity.

Fitch said our updated fiscal forecasts project a primary surplus of 0.8 percent and an overshoot in current spending, partly offset by under-execution in development spending.

The report said Pakistan’s external position continued to improve since February’s election.

The current account deficit is on track to narrow to 0.3 percent of GDP in current fiscal year from 1.0 percent in last fiscal year.

Subdued domestic demand has compressed imports, while exchange rate reforms have attracted remittance inflows back to the official banking system.

Strong agricultural exports have also helped.