Fitch Ratings has affirmed Pakistan’s long-term instruments at ‘B-’ and assigned an ‘RR4’ recovery rating. The agency has also removed Pakistan from Under Criteria Observation following changes to its sovereign rating framework.
In a statement issued on Wednesday, Fitch said the decision reflects the application of its revised Sovereign Rating Criteria. The updated framework took effect in September 2025 and now includes explicit recovery assumptions in sovereign debt ratings.
Fitch equalised the senior unsecured long-term debt ratings of Pakistan and The Pakistan Global Sukuk Programme Company Limited with the country’s long-term foreign-currency issuer default rating.
The agency expects average recovery prospects in a default scenario. It cited Pakistan’s high government debt and interest payments relative to revenue as key factors. Fitch added that no additional risks or strengths justified a rating notch above or below the issuer default rating.
Pakistan’s long term bond ratings affirmed by Fitch. pic.twitter.com/AMDUu1kHLC
— MJ 🥷 | TradeFlow (@MadihaJSk) January 21, 2026Fitch also recalled that it upgraded Pakistan’s long-term foreign-currency issuer default rating to ‘B-’ with a stable outlook on April 15, 2025, from ‘CCC+’.
On governance indicators, Fitch assigned Pakistan an ESG relevance score of 5 for political stability and rights. It gave the same score for rule of law, institutional quality, regulatory strength, and control of corruption. Pakistan ranks in the 22nd percentile on these measures, in line with peers.
The agency warned that risks to the rating remain. These include failure to reduce government debt and sustained debt-servicing pressures. Fitch also highlighted potential stress on external liquidity, especially if reviews under the International Monetary Fund programme face delays or economic policies loosen.
Read: Government Borrows Rs1.19 Trillion from Banks in First Half of FY2025-26
Fitch said several factors could support a future upgrade. These include a meaningful reduction in government debt and interest costs through fiscal consolidation aligned with IMF commitments. Structural improvements in tax revenue collection would also strengthen the credit profile.
A lasting improvement in external financing conditions could further support a positive rating action. Fitch noted that stronger access to external funding and a sustained rise in foreign-currency reserves beyond its forecasts would help ease financing risks.
