Global rating agency Moody’s has upgraded Pakistan’s long-term credit rating from Caa1 to B3, while maintaining a stable outlook for the country.
According to Moody’s, the upgrade reflects improvements in governance, continued economic stabilisation, stronger foreign exchange reserves and lower domestic borrowing costs.
The rating agency said Pakistan’s foreign exchange reserves reached around $17 billion by the end of July 2026, compared with more than $14 billion a year earlier.
Moody’s also noted an improvement in Pakistan’s debt repayment capacity. Lower policy rates have helped contain domestic borrowing costs, while interest expenses fell to around 35% of government revenue in fiscal year 2026.
The issuance of a $750 million Eurobond in April was also seen as an indication of improved access to international financial markets.
However, Moody’s warned that Pakistan continues to face challenges including a weak revenue base, low foreign direct investment and external financing risks.
The stable outlook indicates that Moody’s sees limited immediate risk of a significant deterioration in Pakistan’s economic stability and external financial position.
