Global credit ratings agency S&P Global has upgraded Pakistan’s long-term sovereign credit rating to ‘B’ from ‘B-‘, pointing to stronger institutional stability and continued implementation of economic reforms supported by the International Monetary Fund (IMF).
The agency also maintained Pakistan’s “stable” outlook, indicating that it expects the country’s economic conditions and financing position to remain broadly steady over the next 12 months.
IMF Reforms Help Stabilise Economy
According to S&P, reforms undertaken under Pakistan’s IMF programme have played a significant role in restoring macroeconomic stability.
The agency said these measures have helped rebuild foreign exchange reserves, strengthen fiscal discipline, and reduce pressure on the country’s external financing position.
S&P also noted that efforts to broaden the tax base have improved government revenue collection and accelerated fiscal consolidation, which is expected to contribute to a gradual decline in Pakistan’s debt burden over time.
Stable Outlook Reflects Continued External Support
The ratings agency said its stable outlook reflects expectations that Pakistan will continue to receive sufficient external financing to meet its international payment obligations.
S&P believes continued support from official lenders and friendly countries will enable Pakistan to roll over commercial credit lines while maintaining adequate foreign exchange liquidity during the coming year.
The agency added that ongoing tax reforms and continued inflows of foreign financing have strengthened the country’s fiscal and external buffers against potential global economic shocks.
Upgrade Comes Amid Search for New Financing
The rating upgrade comes as Pakistan seeks additional external financing to strengthen its economy.
Earlier on Wednesday, Reuters reported that Pakistan had requested a $10 billion exchange stabilisation facility from the United States to help boost foreign exchange reserves, ease pressure on the Pakistani rupee, and reduce reliance on multilateral lenders.
Neither the US Treasury nor Pakistan’s Finance Ministry has officially confirmed the reported request.
Economic Growth Forecast
S&P expects Pakistan’s economy to grow by 3.5% in fiscal year 2027, reflecting continued economic recovery under the IMF-backed reform programme.
The agency also projected that any inflationary impact from higher global energy prices resulting from ongoing tensions in the Middle East is likely to remain limited, with only modest pressure on domestic prices.
Positive Signal for Investors
A sovereign credit rating upgrade is generally viewed as a positive signal for international investors, as it reflects improved confidence in a country’s ability to meet its financial obligations.
While Pakistan remains in the speculative-grade category, the latest upgrade suggests that international credit agencies see progress in the country’s fiscal management, economic reforms, and external financing position.
The improved rating could support Pakistan’s efforts to access international capital markets and attract foreign investment as the government continues implementing reforms aimed at strengthening long-term economic stability.
