Moody’s Ratings upgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings on Monday, lifting the sovereign rating to B3 from Caa1. The upgrade follows a prior action in August 2025 and reflects expectations that governance improvements will help sustain recent gains in the country’s external position and fiscal metrics.
The ratings firm also raised the senior unsecured medium-term note programme rating to (P)B3 from (P)Caa1 and lifted local and foreign currency country ceilings to B1 and B3, respectively, from B2 and Caa1. A stable outlook was maintained for the government and for The Pakistan Global Sukuk Programme Co Ltd.
Moody’s cited Pakistan’s steady growth in foreign exchange reserves and macroeconomic stabilization as key drivers behind the upgrade. The country has benefited from lower domestic financing costs amid monetary easing and an improved fiscal position, which has materially enhanced debt affordability. The credit profile now appears more resilient to external shocks compared with previous cycles, including the ongoing Middle East conflict.
Despite the upgrade, Pakistan’s credit profile remains constrained by a structurally fragile external position, weak debt affordability, a relatively narrow revenue base, and persistent constraints on attracting investment and stimulating economic growth.
