S&P Global upgrades Pakistan’s credit rating with ‘stable’ outlook

S&P Global has upgraded Pakistan’s sovereign credit rating from ‘CCC+’ to ‘B-’ with a ‘stable’ outlook, citing improved financial stability supported by the International Monetary Fund (IMF).

In its statement on Thursday, the ratings agency said the stable outlook reflects expectations of a continued economic recovery and the government's ongoing efforts to boost revenue, which are likely to help stabilize fiscal and debt indicators.

S&P also noted that sustained official financing is expected to support Pakistan in meeting its external debt obligations, with the country likely to continue rolling over its commercial credit lines over the next year.

Following the announcement, Pakistan’s longer-term international bonds saw a boost, with the 2051 maturity bond rising 1.6 cents to 84.85 cents on the dollar, according to Tradeweb data.

The 2031 and 2036 bonds also rose by approximately 1 cent, while shorter-dated maturities recorded more modest gains.

Just last week, Finance Minister Muhammad Aurangzeb called on the major U.S. credit rating agency Moody’s to further improve Pakistan’s rating to support the country's re-entry into international capital markets under more favorable terms.

In August 2024, Moody’s had upgraded Pakistan’s credit rating by one notch to Caa2 from Caa3—reversing its February 2023 downgrade prompted by the suspension of the IMF programme. The outlook was also revised from stable to positive, reflecting an improvement in macroeconomic indicators, including liquidity and external balances.

Meanwhile, global ratings agency Fitch upgraded Pakistan’s foreign currency credit rating in April, raising it to ‘B-’ from ‘CCC+’, citing increased confidence in the government's efforts to reduce fiscal deficits.

A clear indicator of economic stability: PM Shehbaz

Prime Minister Shehbaz Sharif expressed satisfaction with S&P Global Ratings' decision to upgrade Pakistan's credit rating and described it as a clear indicator of the country’s accelerating economic stability.

According to the Prime Minister, the upgrade from CCC+ to B- demonstrates growing confidence in Pakistan’s macroeconomic trajectory. “This improvement reflects that Pakistan's economy is rapidly heading toward stability,” he remarked.

The Prime Minister emphasized that the enhanced credit rating will facilitate better access to international capital markets and ease pressure on external debt repayments. He noted that Pakistan’s macroeconomic indicators are steadily improving and that this development will also boost foreign investor confidence in the country’s economic outlook.

Shehbaz Sharif added that international financial institutions and rating agencies are acknowledging the success of the government’s economic policies. He praised the efforts of the government’s economic team, describing their performance as commendable and instrumental in achieving this milestone.