Credit rating agency S&P Global on Wednesday upgraded Pakistan’s long-term sovereign credit rating from ‘B-‘ to ‘B’, citing greater institutional stability and effective implementation of reforms under an IMF programme.
Pakistan’s rating outlook was maintained at ‘stable’ as sustained public financing is expected to help the country meet its external obligations while allowing it to continue refinancing its commercial credit lines over the next 12 months.
The agency said the government’s efforts to broaden the tax base have improved revenue collection and accelerated fiscal consolidation, supporting a gradual decline in the country’s debt burden.
IMF-backed reforms helped restore macroeconomic stability, replenish foreign exchange reserves and ease strains on Pakistan’s fiscal and external situation, S&P said.
Tax reforms and continued flows of foreign inflows have also strengthened the country’s fiscal and external buffers against possible external shocks, the rating agency said.
The upgrade comes as Pakistan seeks additional external financing, including a proposed $10 billion foreign exchange stabilization facility from the United States, Reuters reported earlier on Wednesday, citing a source.
If accepted, the facility would strengthen Pakistan’s foreign exchange reserves, ease pressure on the currency and reduce its dependence on multilateral financing, even as Islamabad pursues tighter fiscal and monetary policies in line with its IMF program.
S&P projects Pakistan’s economy to grow 3.5% in fiscal year 2027 and expects only marginal price pressures due to an energy price shock resulting from the Middle East conflict.
