Credit rating agency Fitch has cautioned that Pakistan's ongoing compression of capital expenditure, while supporting short-term deficit reduction under its IMF programme, risks undermining medium-term economic growth and future revenue generation. In its review of Pakistan's federal budget for 2026–27, Fitch acknowledged the government's fiscal discipline — including a projected primary surplus of 2.5% of GDP in FY26 — but warned that persistently low infrastructure and capital spending could complicate the country's debt outlook. Fitch also flagged Pakistan's FY27 tax revenue target of 10.6% of GDP as a record-high that will be difficult to achieve given structural weaknesses in tax administration, while noting that the country's interest-to-revenue ratio of 39.1% remains far above the 12.1% median for similarly rated peers, limiting fiscal flexibility.