ISLAMABAD: Global credit rating agency Moody’s has upgraded Pakistan’s credit rating by one notch, from Caa2 to Caa1, acknowledging improvements in the country’s external financial position. The outlook has also been revised from positive to stable, reflecting confidence in near-term stability. Moody’s attributed the upgrade to Pakistan’s progress in economic reforms under the IMF’s Extended Fund Facility (EFF) programme. The agency noted that while risks remain high, especially due to weak governance and political uncertainty, Islamabad’s external finances are on a more stable path. The Caa1 rating still places Pakistan in a high-risk category, but it is now one step closer to regaining access to global bond markets. Moody’s stated that foreign exchange reserves are expected to keep improving, though Pakistan remains reliant on timely support from official partners like the IMF, China, and Gulf countries. Finance Minister Muhammad Aurangzeb welcomed the decision, having earlier urged Moody’s to improve the rating in a July meeting. Speaking in Islamabad today, he said the upgrade reflects global recognition of Pakistan’s tough but necessary economic reforms. Pakistan has avoided issuing international bonds since July 2021 due to poor ratings and economic stress. The last upgrade by Moody’s came in August 2024, when Pakistan moved from Caa3 to Caa2. The latest improvement marks continued progress toward restoring investor confidence.

Moody's upgrades Pakistan's credit rating to Caa1

Global credit rating agency Moody's has upgraded Pakistan's credit rating from Caa2 to Caa1, reflecting improvements in its external financial position due to economic reforms under the IMF's Extended Fund Facility (EFF) programme. The outlook has been revised from positive to stable, indicating confidence in near-term stability despite ongoing risks related to weak governance and political uncertainty. The Caa1 rating still classifies Pakistan as high-risk but represents progress toward regaining access to global bond markets. Pakistan has not issued international bonds since July 2021 due to poor ratings and economic stress. The previous upgrade occurred in August 2024, when Pakistan moved from Caa3 to Caa2.