Moody’s Investors Service upgraded Pakistan’s local and foreign-currency issuer ratings and senior unsecured debt ratings to B3 from Caa1 on Monday, citing sustained improvements in the country’s external position and fiscal metrics.
The rating action also raised Pakistan’s local-currency country ceiling to B1 from B2 and its foreign-currency ceiling to B3 from Caa1. The upgrades apply to the foreign-currency senior unsecured guaranteed ratings of The Pakistan Global Sukuk Programme Co Ltd, whose obligations are direct obligations of the Pakistani government.
Moody’s maintained a stable outlook on both the sovereign and the sukuk programme, noting that reduced external vulnerability risks stem from steadily growing foreign exchange reserves and continued macroeconomic stabilization. The agency highlighted that domestic financing costs have declined during Pakistan’s monetary easing cycle, improving debt affordability.
The upgrade reflects greater resilience in Pakistan’s credit profile compared with past cycles, including resilience to external shocks amid the ongoing conflict in the Middle East. However, the B3 rating remains constrained by structural fragility in the external position, low debt-servicing capacity, a narrow revenue base, and limits on attracting investment and stimulating growth.
The previous rating action by Moody’s occurred in August 2025.
