Pakistan seeks Moody’s upgrade to support return to global debt markets

ISLAMABAD: Finance Minister Muhammad Aurangzeb on Tuesday urged Moody’s to upgrade Pakistan’s credit rating further, saying recent economic reforms and improving indicators make a strong case for the country’s return to global debt markets.

The minister, along with senior officials including Minister of State for Finance Bilal Azhar Kayani and State Bank Governor Jameel Ahmed, held a virtual meeting with Moody’s representatives. The engagement focused on Pakistan’s macroeconomic outlook, reform measures, and plans for re-entering international capital markets.

Pakistan has stayed away from global bond issuances since mid-2021, instead relying on deposits from friendly countries due to downgraded credit ratings and economic uncertainty. Moody’s had upgraded Pakistan’s rating one notch to Caa2 from Caa3 in March and revised its outlook to ‘positive’ after the revival of the IMF programme and signs of economic stabilisation.

Aurangzeb briefed Moody’s on recent milestones, including the successful completion of the final IMF review under the Stand-By Arrangement, progress under the Resilience and Sustainability Facility (RSF), and a $1 billion financing arrangement from the Middle East. He also mentioned upcoming plans to issue a Panda bond and re-enter the Eurobond market.

He pointed to reforms in fiscal policy, tax administration, and trade liberalisation aimed at long-term growth. The government is targeting a tax-to-GDP ratio of 13 to 13.5 per cent within a few years, driven by technology-led enforcement and broader compliance.

The minister said improvements in inflation, exchange rate stability, foreign reserves, and remittance inflows reflected growing investor confidence. He reiterated Pakistan’s commitment to structural reforms, including privatisation and SOE restructuring, expressing hope for a further ratings upgrade.

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