ISLAMABAD: Moody’s Ratings upgraded Pakistan’s sovereign credit rating to B3 from Caa1 on Monday, citing improved governance prospects, stronger foreign exchange reserves and easing external vulnerabilities.
The agency maintained a stable outlook and also upgraded Pakistan’s local- and foreign-currency issuer and senior unsecured debt ratings. Its senior unsecured medium-term note programme was raised to (P)B3 from (P)Caa1.
Moody’s said Pakistan’s foreign exchange reserves had risen to about $17 billion by the end of July 2026, up from around $14 billion a year earlier. The level covers nearly three months of imports.
State Bank of Pakistan data separately showed SBP-held reserves at $17.26 billion on July 17, compared with total liquid foreign reserves of about $22.67 billion, including those of commercial banks.
Debt affordability also improved materially. Moody’s said government interest payments fell to about 35% of revenue in FY2026 from 49% in FY2025, helped by lower domestic borrowing costs following monetary easing.
Read: Moody’s Upgrades Pakistan’s Credit Rating
Pakistan also regained access to international capital markets, issuing a three-year $750 million Eurobond in April 2026 and a CNY1.75 billion ($250 million) Panda bond in May. Moody’s said these developments, alongside the continued implementation of the IMF-supported programme, helped Pakistan meet its external obligations and rebuild its reserves.
The agency nevertheless warned that Pakistan remains exposed to a structurally weak external position, limited debt affordability, a narrow revenue base, low investment and constraints on stronger productivity-led growth.
The upgrade follows S&P Global Ratings’ July decision to raise Pakistan’s rating to B from B-, with a stable outlook.
