Moody’s Ratings has upgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa2 from Caa3 due to improvements in macroeconomic conditions.
The agency also upgraded the senior unsecured MTN program to (P)Caa2, shifting the government’s outlook from stable to positive. This rating reflects better government liquidity and external positions.
Moody’s now assesses Pakistan’s default risk at a level that aligns with a Caa2 rating, noting increased certainty in the country’s external financing sources. This follows a staff-level agreement with the IMF for a $7 billion Extended Fund Facility (EFF) over 37 months, secured on July 12, 2024.
Despite doubled foreign exchange reserves since June 2023, Pakistan remains dependent on timely financing from official partners to meet its external financing needs. The positive outlook acknowledges potential improvements in fiscal positions, supported by an IMF program.
Concurrently, Moody’s raised Pakistan’s local and foreign currency country ceilings to B3 and Caa2, respectively, citing the government’s economic influence and external risks.
