Global rating agency S&P Global has raised Pakistan’s credit rating from B-minus to B, highlighting advancements in the implementation of the IMF program and enhanced institutional stability. The outlook remains stable, as consistent official financing is expected to enable Pakistan to fulfill its external obligations and continue rolling over commercial credit lines over the coming 12 months.
The agency noted that government initiatives to broaden the tax base have boosted revenue collection and accelerated fiscal consolidation, contributing to a gradual reduction in the country’s debt burden. Reforms supported by the IMF have played a crucial role in restoring macroeconomic stability, rebuilding foreign exchange reserves, and alleviating pressures on Pakistan’s fiscal and external accounts.
Additionally, tax reforms combined with sustained foreign inflows have fortified Pakistan’s fiscal and external buffers, providing resilience against potential external shocks. This upgrade coincides with Pakistan’s reported efforts to secure additional external financing, including a proposed $10 billion exchange stabilization facility from the United States. If approved, this facility would strengthen foreign exchange reserves, ease currency pressures, and reduce dependence on multilateral funding, even as Islamabad maintains tighter fiscal and monetary policies aligned with the IMF program.
S&P projects Pakistan’s economy to grow by 3.5% in the fiscal year 2027 and anticipates only limited inflationary impact from an energy price shock linked to the Middle East conflict. Earlier this year, in April, Fitch Ratings reaffirmed Pakistan’s long-term foreign currency Issuer Default Rating at B-minus with a stable outlook, while warning that the country remains vulnerable to global energy price fluctuations, which could strain foreign exchange reserves if import costs rise significantly.
Separately, last year S&P Global Ratings upgraded Pakistan’s sovereign credit rating from CCC+ to B-minus and assigned a stable outlook, reflecting an improved credit profile. This latest upgrade to B further underscores the positive trajectory of Pakistan’s economic and fiscal reforms.
