Moody's Investors Service has upgraded Pakistan's credit rating, citing improved economic conditions and strengthened government liquidity. The international rating agency raised the country's rating from Caa3 to Caa2, indicating a lower risk of default.

This positive assessment follows a staff-level agreement with the International Monetary Fund (IMF) for a $7 billion loan. The IMF's support has provided greater certainty regarding Pakistan's external financing sources.

Previously, Moody's had maintained a lower rating for Pakistan due to concerns about debt affordability and investment risks. However, the recent upgrade reflects a more optimistic outlook for the country's economic prospects. see Moody's page

Fitch Upgrades Pakistan to 'CCC+'

Fitch Ratings has upgraded Pakistan's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC+' from 'CCC'.

Pakistan's upgrade reflects improved certainty over external funding, thanks to a new USD 7 billion Extended Fund Facility (EFF) agreement with the IMF and strong performance on a previous IMF arrangement.

The IMF agreement, reached on 12 July, requires Pakistan to secure additional funding from Saudi Arabia, the UAE, and China before IMF Board approval, expected by end-August.

The new EFF aims to address structural weaknesses in the tax system, energy sector, and state-owned enterprises, with significant increases in tax revenues planned.

Pakistan successfully completed a nine-month Stand-by Arrangement with the IMF, implementing significant fiscal and economic measures, including raising taxes and prices.

The current account deficit is expected to remain contained due to tight financing conditions, subdued demand, and lower commodity prices.

Pakistan faces over USD 22 billion in external public debt maturities in FY25, with identified funding mostly from bilateral and multilateral sources.

The State Bank of Pakistan is rebuilding foreign exchange reserves, which are expected to rise significantly by FY26.

The FY25 budget targets a primary surplus, with significant revenue efforts and expenditure controls.

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