ISLAMABAD: Global rating agency Moody’s has upgraded Pakistan’s sovereign credit rating from Caa1 to B3, maintaining a stable outlook and citing improvements in governance, the country’s external position and fiscal metrics.
The development has been welcomed by Prime Minister Shehbaz Sharif, who congratulated the nation on the latest improvement.
The upgrade represents a two-notch improvement on Moody’s rating scale and comes as Pakistan continues efforts to strengthen macroeconomic stability, rebuild foreign exchange reserves and implement economic reforms.
Prime Minister Shehbaz Sharif praised the government’s economic team for its efforts and specifically commended Deputy Prime Minister and Foreign Minister Ishaq Dar, Field Marshal Syed Asim Munir, Finance Minister Muhammad Aurangzeb and other ministers and officials.
The prime minister said the improvement in Pakistan’s credit rating reflected growing international confidence in the government’s economic policies and reform programme.
He said the recognition by international financial institutions and rating agencies was encouraging for the country’s economic recovery.
Moody’s said Pakistan’s external vulnerability risks had eased since its previous rating action in August 2025. Foreign exchange reserves rose to around $17 billion by the end of July 2026, compared with about $14 billion a year earlier.
The agency also noted that lower domestic financing costs following monetary easing, together with an improved fiscal position, had contributed to a significant improvement in Pakistan’s debt affordability.
The continued implementation of the IMF-supported reform programme has also strengthened policy credibility and supported access to official financing, according to Moody’s.
Economic Challenges Still Remain
Despite the upgrade, Moody’s cautioned that Pakistan’s credit profile remains vulnerable. The agency highlighted a structurally fragile external position, weak debt affordability, a narrow revenue base and constraints on investment and high-productivity economic growth.
The B3 rating remains within the speculative category, meaning Pakistan continues to face significant credit risks despite recent improvements.
He said the government’s objective was to build a strong, self-reliant and sustainable economy, while the latest rating improvement could help reinforce international confidence in Pakistan’s economic direction.
The Moody’s decision follows an earlier upgrade by S&P Global Ratings, which raised Pakistan’s long-term sovereign rating to B from B- in July, also maintaining a stable outlook.
