Moody’s raises Pakistan’s sovereign rating to B3 from Caa1, citing improved governance, stronger external conditions and reduced vulnerability risks.
ISLAMABAD: Moody’s Ratings has upgraded Pakistan’s sovereign credit rating to B3 from Caa1, while maintaining a stable outlook, marking another significant improvement in the country’s international credit profile.
The upgrade reflects improvements in Pakistan’s governance and a reduction in external vulnerability risks, according to Moody’s. The move comes amid broader signs of macroeconomic stabilization and improved financing and external conditions.
The latest decision follows a similar move by S&P Global Ratings, which raised Pakistan’s long-term sovereign credit rating to B from B- in July 2026 and assigned a stable outlook.
Moody’s latest action indicates that the agency sees greater resilience in Pakistan’s external position and improvements in debt affordability and fiscal conditions. The rating remains below investment grade, but the upgrade represents a notable improvement from the severe credit pressures Pakistan faced in previous years.
The International Monetary Fund (IMF) has also reported progress in Pakistan’s economic stabilization efforts. In its latest review, the Fund said strong policy implementation had supported economic recovery, strengthened confidence and improved resilience to shocks.
The IMF said Pakistan’s policy efforts under its Extended Fund Facility program had delivered significant progress in stabilizing the economy and rebuilding confidence. It also highlighted improvements in fiscal performance and the rebuilding of foreign exchange reserves.
Taken together, the latest assessments from major international institutions point to an improving perception of Pakistan’s economic and external position. However, the country continues to face challenges, including the need to maintain fiscal discipline, strengthen reserves, improve public finances and advance structural reforms.
The Moody’s upgrade is therefore an important milestone for Pakistan’s credit standing, potentially supporting investor confidence and improving access to international financing over time.
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