ISLAMABAD: Global credit rating agency S&P Global Ratings has upgraded Pakistan’s long-term sovereign credit rating from ‘B-’ to ‘B’, citing improved institutional stability, progress on economic reforms and gradual macroeconomic stabilisation. The agency has also maintained a stable outlook for Pakistan.
S&P said Pakistan’s improved political and institutional environment has strengthened the government’s ability to implement difficult economic reforms. The agency particularly highlighted the continued implementation of reforms under the International Monetary Fund (IMF) programme, which has helped ease fiscal and external pressures.
The rating agency also pointed to improvements in Pakistan’s fiscal position. Government efforts to broaden the tax base and improve revenue collection have supported fiscal consolidation and are expected to contribute to a gradual decline in the country’s debt burden.
According to S&P, IMF-backed reforms have helped restore macroeconomic stability, rebuild foreign exchange reserves and reduce pressure on Pakistan’s external financing position. The agency expects continued official financing to help Pakistan meet its external obligations and roll over commercial credit lines over the next 12 months.
The upgrade is significant because Pakistan had remained in the ‘B-’ category since 2019, after previously holding a ‘B’ rating during 2016–18. However, S&P has warned that any weakening of fiscal discipline or a reversal of reforms could create pressure on the rating in the future.
The improved rating could strengthen investor confidence and potentially make it easier for Pakistan to access international financing, although the country remains in the speculative or non-investment-grade category and continues to face significant economic challenges.
