Moody’s Ratings upgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to B3 from Caa1 on Monday, citing sustained gains in the country’s external position and stronger fiscal metrics.
The rating action also raised the senior unsecured medium-term note programme rating to (P)B3 from (P)Caa1 and lifted the local and foreign currency country ceilings to B1 and B3, respectively, from B2 and Caa1. The upgrade applies to The Pakistan Global Sukuk Programme Co Ltd, whose obligations are backed by the Pakistani government and carry a stable outlook.
The move follows a previous rating action in August 2025 and is driven by expectations that governance improvements will help preserve recent gains in foreign exchange reserves and fiscal consolidation. Moody’s noted a material reduction in external vulnerability risks since last year, supported by steadily growing FX reserves amid macroeconomic stabilization.
Debt affordability has also improved, reflecting lower domestic financing costs amid monetary easing and an improved fiscal position. The agency highlighted greater resilience to external shocks compared with past cycles, including the ongoing Middle East conflict. The stable outlook was maintained for the government and related entities.
Despite the upgrade, Pakistan’s B3 rating remains constrained by a structurally fragile external position, weak debt affordability, a narrow revenue base and challenges in attracting investment to stimulate growth.
