ISLAMABAD: In a positive development, Moody’s Investors Service has upgraded Pakistan’s long-term issuer rating from “Caa3” to “Caa2” with a stable outlook. This upgrade reflects improvements in Pakistan’s macroeconomic conditions and a moderately better external government position.
Moody’s also raised the rating for the senior unsecured MTN programme from (P)Caa3 to (P)Caa2. Concurrently, the outlook for the Government of Pakistan has been changed from stable to positive.
This upgrade follows Fitch Ratings’ decision in July to increase Pakistan’s credit rating from “CCC” to “CCC+”.
According to Fitch, the upgrade was influenced by greater certainty regarding external funding, particularly in light of Pakistan’s staff-level agreement with the IMF for a new 37-month USD 7 billion Extended Fund Facility (EFF).
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However, Fitch cautioned that Pakistan’s substantial funding needs make it vulnerable if the country fails to implement the necessary reforms, which could impact the performance and continuation of the programme.
Despite this, Fitch expressed confidence in Pakistan’s ability to achieve its goals, citing a strong history of support and significant policy measures outlined in the recent budget for the fiscal year ending June 2025 (FY25).
