Islamabad, August 13, 2025: Moody’s Ratings on Wednesday upgraded Pakistan’s credit rating from Caa2 to Caa1 with a stable outlook, citing an improved external position and progress on reforms under the International Monetary Fund’s (IMF) Extended Fund Facility (EFF).
The upgrade follows similar rating improvements by S&P Global Ratings and Fitch Ratings in recent months, reflecting the government’s commitment to fiscal consolidation and structural reforms.
In a statement, Moody’s said it had raised Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa1 from Caa2, along with the senior unsecured MTN programme rating to (P)Caa1 from (P)Caa2. The outlook was revised to stable from positive.
The agency noted that foreign exchange reserves are expected to continue improving, supported by timely official financing, while the fiscal position is strengthening through an expanding tax base. Debt affordability has improved but remains among the weakest of rated sovereigns.
“Pakistan’s Caa1 rating also reflects weak governance and high political uncertainty,” Moody’s said, adding that balanced risks underpin the stable outlook. On the upside, faster-than-expected improvements in debt servicing and the external profile could strengthen credit metrics, while delays in reforms could erode gains.
The upgrade also applies to the backed foreign currency senior unsecured ratings for The Pakistan Global Sukuk Programme Co Ltd, which Moody’s considers direct obligations of the government. Corresponding outlooks were also revised to stable.
Additionally, Moody’s raised Pakistan’s local and foreign currency country ceilings to B2 and Caa1 from B3 and Caa2, respectively. The two-notch gap between the sovereign rating and ceilings reflects the government’s large economic footprint, institutional weaknesses, and high vulnerability to political and external shocks, as well as incomplete capital account convertibility.
