S&P Global Ratings has upgraded Pakistan’s credit rating to ‘B’ from ‘B-’, maintaining a stable outlook, citing improvements in institutional capacity that have helped strengthen foreign exchange reserves and reduce pressure on the country’s external balance position.
The ratings agency said the upgrade reflects greater economic resilience and improved management of external vulnerabilities. The credit rating agency stated that Pakistan’s rating upgrade was driven by its assessment that the country’s institutional capacity had improved, enabling it to effectively implement reforms under the International Monetary Fund (IMF) programme.
The agency said the upgrade was based on greater institutional stability, which supported the execution of key IMF reforms. These measures, it noted, have accelerated fiscal consolidation and helped rebuild the country’s external financial buffers.
It further highlighted that Pakistan’s institutional framework had strengthened over the past two years, particularly following the approval of the IMF’s $7 billion Extended Fund Facility (EFF) programme in September 2024. The agency described the programme as a crucial step toward restoring macroeconomic stability and rebuilding foreign exchange reserves.
On the other hand, analysts have welcomed S&P Global Ratings’ decision to upgrade Pakistan’s credit rating, describing it as a significant positive development despite ongoing risks linked to the Iran conflict.
Mohammed Sohail, CEO of Topline Securities Ltd, said the upgrade could help attract foreign investors toward Pakistan’s international bonds and upcoming privatisation initiatives.
Sohail noted that Pakistan had last held a ‘B’ category rating between October 2016 and February 2019. The latest upgrade comes as the country has successfully raised funds through panda bonds and a eurobond issuance, while continuing efforts to strengthen foreign exchange reserves and rebuild investor confidence following the 2023 sovereign default concerns.
S&P said Pakistan’s improved fiscal position was supported by government measures to broaden the revenue base, which have accelerated fiscal consolidation and contributed to a gradual reduction in the net general government debt-to-GDP ratio.
The ratings agency added that the stable outlook reflects expectations that stronger institutional frameworks will support ongoing economic reforms, helping Pakistan achieve sustained growth and continued fiscal improvement.
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