Global ratings agency Moody’s lifted Pakistan’s sovereign rating to ‘B3’ from ‘Caa1’ on Monday, citing improvements in governance and easing “external vulnerability risks.”
The move comes just a month after peer S&P upgraded the nation on the back of “strong institutional stability” and effective implementation of reforms under an International Monetary Fund (IMF) program.
“We expect the recent improvement in Pakistan’s debt affordability to be durable, underpinned by sustained macroeconomic stability,” Moody’s said.
Finance Minister Muhammad Aurangzeb told Reuters in June that Pakistan could improve economic projections for 2027 after the end of the Iran war, but it is still too early to revise the budget.
The IMF in May approved about $1.32 billion in fresh funding for Pakistan under a $7 billion program, backing reforms that the Fund said had helped support economic recovery, rebuild foreign exchange reserves and strengthen resilience to external shocks.
The agency added that continued implementation of the IMF-supported reform program has strengthened policy credibility, maintained macroeconomic stabilization and underpinned financing from official creditors.
Pakistan has also sought a $10 billion exchange stabilization facility from the US, Reuters reported in July, citing two sources. The facility, if approved, could provide a lifeline for the cash-strapped South Asian economy.
Moody’s maintained Pakistan’s outlook at ‘stable’, while warning that the nation’s external position remains vulnerable to shocks, particularly given the still-large external financing requirements.
