Moody’s Investors Service has upgraded Pakistan’s credit rating from ‘Caa2’ to ‘Caa1’ and assigned it a ‘Stable’ outlook, citing improvements in the country’s external financial position and the successful implementation of reforms under the International Monetary Fund’s Extended Fund Facility (EFF) program.
The ratings agency said the upgrade reflects anticipated growth in Pakistan’s foreign exchange reserves, though the country remains dependent on timely external financial support.
It noted that while the government’s fiscal position is strengthening, debt repayment capacity remains weak.Moody’s also highlighted ongoing challenges, including political uncertainty and weak governance, which could pose risks to the credit profile.However, the Stable outlook signals a balanced current financial position and suggests further improvement is possible if reform momentum accelerates.
The upgrade is seen as a reflection of Pakistan’s improving financial stability and stronger engagement with international financial institutions, marking a positive sign for the country’s economy.
