Islamabad, August 24, 2026: Moody’s Ratings on Monday upgraded Pakistan’s sovereign credit rating to B3 from Caa1, citing an improved external position, stronger fiscal metrics, lower domestic financing costs and greater resilience to external shocks.
The global ratings agency maintained Pakistan’s outlook at “stable”, saying the country’s external vulnerabilities had eased as foreign exchange reserves steadily increased amid sustained macroeconomic stabilisation.
Moody’s said lower domestic financing costs resulting from monetary easing, combined with an improved fiscal position, had led to a “material improvement” in Pakistan’s debt affordability.
The agency said Pakistan’s strengthening credit profile was also demonstrating greater resilience to external shocks than in previous cycles, including the ongoing conflict in the Middle East.
The rating action comes as Pakistan continues efforts to rebuild its foreign exchange reserves and implement economic reforms following years of severe financial pressures.
The announcement was made after the close of trading at the Pakistan Stock Exchange on Monday. Pakistan’s dollar-denominated bonds subsequently gained, with the bond maturing in 2051 recording its strongest increase since August 20, according to Bloomberg data.
The upgrade follows a similar move by S&P Global Ratings, which raised Pakistan’s sovereign credit rating in July, citing improvements in the country’s economic and financial conditions.
Despite the upgrade, Pakistan’s sovereign debt remains in speculative-grade territory. Moody’s said the country’s risk assessment had improved from very high to high, noting that Argentina, Nigeria and Kyrgyzstan have similarly rated sovereign debt.
Moody’s, however, cautioned that Pakistan’s credit profile remained vulnerable because of fragile external finances, weak debt affordability and a relatively narrow revenue base.
The agency’s assessment comes as Islamabad seeks to strengthen its access to international capital markets and consolidate recent gains in macroeconomic stability.
In April, Pakistan returned to international debt markets after more than four years by selling a global bond through a private placement. In May, the country issued its first yuan-denominated notes in China’s onshore market, in what was described as its cheapest foreign-currency bond offering.
Pakistan’s foreign exchange reserves have also continued to improve, reaching $17.1 billion, according to the latest available data.
PM welcomes rating upgrade
Prime Minister Shehbaz Sharif welcomed Moody’s decision, describing the upgrade as a reflection of growing international confidence in Pakistan’s economic policies and reform agenda.
In a statement, the prime minister commended the government’s economic team, particularly Deputy Prime Minister and Foreign Minister Ishaq Dar, as well as Chief of Defence Forces and Chief of Army Staff Field Marshal Asim Munir, for their contributions to the country’s economic and overall stability.
Shehbaz said the recognition by international financial institutions and credit rating agencies reflected an improvement in Pakistan’s economic situation and indicated that the economy was moving towards stability.
He said the government had taken effective measures to stabilise the economy and strengthen the external sector.
“Global confidence in Pakistan is increasing as a result of continued efforts and reforms,” the prime minister said.
He pledged to accelerate structural reforms to place the economy on a sustainable footing and make Pakistan stronger, self-reliant and economically sustainable.
