- WEB DESK
- August 24, 2026
Moody’s upgrades Pakistan’s credit rating to B3 from Caa1
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- WEB DESK
- August 24, 2026
ISLAMABAD: Global ratings agency Moody’s on Monday upgraded Pakistan’s sovereign credit rating to B3 from Caa1, citing improvements in governance, the country’s external position and fiscal metrics, while maintaining a stable outlook.
The upgrade marks another positive assessment of Pakistan’s improving macroeconomic stability and debt affordability after a period of severe external and fiscal pressures.
Moody’s said improvements in governance were expected to help the government sustain recent gains in the country’s external position and strengthen fiscal metrics. The agency also said Pakistan’s external vulnerability risks had eased since its previous rating action in August 2025.
The rating agency noted that foreign exchange reserves had been growing steadily amid sustained macroeconomic stabilisation, while lower domestic financing costs following monetary easing and an improved fiscal position had materially strengthened Pakistan’s debt affordability.
Moody’s also upgraded Pakistan’s senior unsecured debt ratings and its senior unsecured medium-term note programme rating to (P)B3 from (P)Caa1.
The stable outlook indicates that Moody’s sees a low likelihood of a rating change over the medium term.
The latest decision follows S&P Global Ratings’ upgrade of Pakistan’s long-term sovereign credit rating to B from B- in July, with a stable outlook, reflecting an improving external position and gradual macroeconomic stabilisation.
A sovereign credit rating is an assessment of a country’s ability and willingness to meet its debt obligations and is closely watched by international investors and lenders. A higher rating can improve investor confidence and potentially help reduce borrowing costs and widen access to international capital markets.
However, Moody’s continued to flag vulnerabilities in Pakistan’s credit profile, particularly the country’s structurally fragile external position.
The upgrade from Caa1 to B3 represents a two-notch improvement on Moody’s rating scale and places Pakistan in a stronger, although still speculative, credit category. Moody’s rating scale classifies B-rated obligations as speculative and subject to high credit risk.
The latest upgrade is expected to strengthen Pakistan’s standing among international investors and support efforts to restore sustainable access to external financing as the government continues its broader economic stabilisation programme.
PM welcomes Moody’s upgrade of Pakistan’s credit rating
Meanwhile, Prime Minister Shehbaz Sharif welcomed Moody’s decision to upgrade Pakistan’s sovereign credit rating from Caa1 to B3, congratulating the nation and praising the government’s economic team for its efforts to stabilise the economy.
The prime minister said the improvement in Pakistan’s credit rating reflected growing international confidence in the government’s economic policies and reforms.
He also welcomed what he described as the recognition by international financial institutions and rating agencies of the improvement in Pakistan’s economic situation.
“Pakistan’s economy is moving towards stability, and the improvement in its rating by international institutions is clear evidence of this,” the prime minister said.
Shehbaz said that the government had taken effective measures to stabilise the economy and improve the external sector, adding that continued efforts and reforms were increasing international confidence in Pakistan.
The prime minister praised Deputy Prime Minister and Foreign Minister Ishaq Dar, Chief of Defence Forces Field Marshal Syed Asim Munir, Finance Minister Muhammad Aurangzeb and other ministers and officials for their contributions towards improving the country’s economic position.
He said that the government would further accelerate the reform process to place Pakistan’s economy on sustainable foundations.
“Our destination is to build Pakistan into a strong, self-reliant and sustainable economy,” the prime minister said.
