Key Points
- Barclays upgrades Pakistan’s sovereign debt rating to “overweight”.
- Strong external position and stable foreign reserves boost investor confidence.
- Global lenders expect Pakistan’s economic fundamentals to continue improving.
ISLAMABAD: British banking giant Barclays has upgraded its assessment of Pakistan’s sovereign dollar-denominated debt to “overweight”, signalling renewed confidence in the country’s economic outlook and external financial position.
The upgrade marks a reversal from the lender’s more cautious stance adopted last month and reflects improving conditions in global oil markets, alongside strengthening economic indicators within Pakistan.
According to a report cited by Bloomberg, Barclays analysts highlighted the resilience of Pakistan’s external sector as a key factor behind the revised outlook. The bank noted that the country has continued to maintain relative macroeconomic stability despite global uncertainties and regional challenges.
𝗕𝗔𝗥𝗖𝗟𝗔𝗬𝗦 𝗥𝗘𝗔𝗙𝗙𝗜𝗥𝗠𝗦 𝗧𝗛𝗘 𝗣𝗔𝗞𝗜𝗦𝗧𝗔𝗡 𝗦𝗧𝗢𝗥𝗬
Key Takeaways:
– Upgrades Pakistan sovereign debt to Overweight
– Cites stronger external and fiscal position
– Highlights strategic importance linking the Middle East and Central Asia
– Sees potential for… pic.twitter.com/c29fSVaVtS— Khurram Schehzad (@kschehzad) June 24, 2026
Analysts pointed to several positive developments, including an improved fiscal position, steady foreign exchange reserves, stronger external buffers and a more balanced growth and inflation environment. These factors, they said, support a more constructive view of Pakistan’s economic trajectory over the coming years.
Under Barclays’ investment rating framework, an “overweight” recommendation indicates an expectation that an asset will outperform the average return of comparable investments over a 12-month period. The rating upgrade suggests the bank sees greater value in Pakistan’s sovereign debt than in many of its regional peers.
The report also emphasised that multilateral and bilateral financial support mechanisms remain in place, providing an important safety net for the economy. Barclays further observed that Pakistan’s strategic geopolitical position, linking South Asia, Central Asia and the Middle East, could offer additional advantages in attracting international support and investment.
As part of its investment recommendations, Barclays advised investors to consider Pakistan’s sovereign dollar bonds maturing in 2031, 2036 and 2051. The bank also expressed a favourable view on the 2031 bond issued by the Water and Power Development Authority (Wapda) and recommended selling five-year Pakistan credit default swaps.
While acknowledging that international credit rating upgrades have been slower than expected, Barclays said it anticipates that rating agencies may reassess Pakistan’s position positively during the second half of 2026 if current economic trends continue.
Reacting to the development, Adviser to the Finance Minister Khurram Schehzad said the upgrade reflected growing international recognition of Pakistan’s improving economic fundamentals and increasing investor confidence in the country’s reform trajectory.
Pakistan’s economic outlook has shown signs of recovery over the past year, supported by fiscal consolidation measures and reforms implemented under the International Monetary Fund (IMF) programme.
Earlier this year, Fitch Ratings reaffirmed Pakistan’s long-term foreign-currency issuer default rating at ‘B-’ with a stable outlook. In 2025, Moody’s upgraded the country’s credit rating to ‘Caa1’ from ‘Caa2’ and revised its outlook to stable, citing improvements in external financing conditions and reform progress. Likewise, S&P Global upgraded Pakistan’s sovereign credit rating to ‘B-’ from ‘CCC+’ and assigned a stable outlook.
The latest assessment from Barclays is expected to strengthen investor sentiment and reinforce confidence in Pakistan’s ongoing efforts to stabilise its economy and improve access to international capital markets.
