ISLAMABAD- Moody’s Investors Service has upgraded Pakistan’s credit rating from Caa2 to Caa1 for both local and foreign currency issuer and senior unsecured debt. The agency also raised the rating for Pakistan’s senior unsecured MTN programme from (P)Caa2 to (P)Caa1.
Moody’s cited Pakistan’s improving external position, supported by its progress in implementing reforms under the International Monetary Fund’s (IMF) Extended Fund Facility (EFF). Despite the improvement, the rating agency noted Pakistan’s fiscal position remains weak, though it is improving due to stronger tax collection and rising government revenues.
The agency stated that while Pakistan’s foreign exchange reserves are expected to improve, the country remains reliant on timely financing from international partners. The outlook for Pakistan’s rating was revised to stable from positive.
The upgrade follows similar moves from Fitch Ratings and S&P Global in recent days. Moody’s pointed out that despite challenges such as weak governance and high political uncertainty, the rating reflects the country’s progress in economic reforms.
In addition, the rating agency highlighted Pakistan’s external financing needs, estimated at $24-25 billion for FY2026, and the need for continued IMF support to maintain financial stability.
