On August 13, 2025, Moody’s Ratings upgraded Pakistan’s local and foreign currency issuer ratings, as well as its senior unsecured debt ratings, from Caa2 to Caa1, maintaining a stable outlook. The upgrade was attributed to an improved financial position supported by an International Monetary Fund (IMF) loan.
Earlier this year, S&P Global Ratings and Fitch Ratings upgraded Pakistan’s rating, reflecting Prime Minister Shehbaz Sharif’s commitment to implementing fiscal reforms.
Moody’s has acknowledged Pakistan’s progress under the IMF Extended Fund Facility (EFF), particularly its improved foreign exchange reserves. However, the country still depends heavily on timely external financing. The agency also recognised fiscal improvements resulting from an expanded tax base, despite ongoing challenges related to debt affordability and governance. Additionally, the upgrade includes the Pakistan Global Sukuk Programme Co Ltd, which is considered a direct government obligation.
Moody’s upgraded Pakistan’s credit rating, citing its improved financial position supported by a loan from the International Monetary Fund https://t.co/3yTfIlbhtY
— Bloomberg (@business) August 13, 2025The stable outlook indicates balanced risks: while there is potential for improved debt service and an enhanced external position, there are also risks associated with delayed reforms that could weaken financing. Moody’s upgraded Pakistan’s local and foreign currency ratings to B2 and Caa1, respectively, citing the government’s economic influence, institutional weaknesses, and external vulnerabilities.
Read: Pakistan Plans Debt Maturity Extension to Meet IMF Requirements
The upgrade reflects increasing international confidence in Pakistan’s economic reforms, following a $7 billion bailout from the IMF in July 2025. However, concerns about high political uncertainty and governance issues persist. The Caa1 rating has the potential to attract investment, but it is crucial that sustained reforms are implemented to maintain progress and prevent setbacks in external financing.
