ISLAMABAD – Global rating agency Moody’s has upgraded Pakistan’s credit rating by one notch, from Caa2 to Caa1, citing an improvement in the country’s external position and economic reforms under the International Monetary Fund (IMF) programme. The agency also changed Pakistan’s rating outlook from “positive” to “stable.”
Moody’s is one of the world’s top three rating firms. It grades the creditworthiness of governments, companies, and financial products using letter rankings, with Aaa being the highest and C the lowest. Ratings in the “Caa” category indicate very high credit risk, with Caa1 being the best within the group, followed by Caa2 and Caa3.
In its statement, Moody’s said the upgrade reflects Pakistan’s stronger external position, backed by progress in IMF reforms, improved foreign exchange reserves, and an expanding tax base.
The agency noted that debt affordability has also improved, but governance weaknesses, high political uncertainty, and dependence on timely official financing remain major risks.
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The “stable” outlook, Moody’s explained, means the risk of a rating change in the medium term is low. It said Pakistan’s fiscal position is strengthening from weak levels, but challenges such as delays in reforms could again hurt the external position.
Moody’s also upgraded Pakistan’s backed foreign currency senior unsecured ratings for the Pakistan Global Sukuk Programme Co Ltd to Caa1 from Caa2 and changed its outlook to stable. The country’s local and foreign currency ceilings were raised to B2 and Caa1, respectively, from B3 and Caa2.
Prime Minister Shehbaz Sharif welcomed the development, calling it proof that the government’s economic policies are moving in the right direction. He praised his economic team and vowed to work on further improving the country’s rating.
Adviser to Finance Minister Khurram Schehzad said the move confirms that Pakistan is on the path to greater macroeconomic stability. He noted that with this upgrade, all three major global rating agencies – Moody’s, Fitch, and S&P Global Ratings – now rate Pakistan with a stable outlook.
