By Staff Reporter
ISLAMABAD: Pakistan has formally asked S&P Global Ratings for a further upgrade to its sovereign credit rating, seeking to raise around $2 billion this fiscal year through additional international bond sales, local media reported on Friday.
Finance Minister Muhammad Aurangzeb met a delegation from S&P Global Ratings in Islamabad on Thursday to press the case, telling the officials that Pakistan’s macroeconomic fundamentals had improved markedly and that the government’s reform program remained on track, the finance ministry said in a statement.
S&P raised Pakistan’s long-term foreign currency sovereign rating to B- from CCC+ in July 2025, with a stable outlook, citing improved external liquidity and progress on fiscal reform under a program backed by the International Monetary Fund. The upgrade lifted Pakistan out of the depths of a rating category associated with a high risk of default, though the country remains two notches below investment grade, which begins at BBB-.
The S&P delegation in Thursday’s meeting comprised YeeFarn Phua, director of sovereign ratings, and Giulia Filocca, associate director of sovereign ratings. Discussions covered Pakistan’s sovereign credit profile, its macroeconomic outlook and progress under the government’s economic reform agenda, according to the ministry statement.
Aurangzeb told the delegation that stronger economic growth, sustained fiscal consolidation, improved debt sustainability and greater external sector resilience had been underpinned by a “pro-growth and fiscally responsible” federal budget for the 2026-27 fiscal year, the statement said.
He said prudent economic management and disciplined policy implementation had brought down inflation, lifted foreign exchange reserves, strengthened the external position and renewed investor confidence, even as the country navigated a difficult regional and global backdrop.
The minister also pointed to a steady decline in Pakistan’s debt-to-GDP ratio and said central government debt was expanding at its slowest pace in roughly 15 years. He cited active debt management through liability management operations and buybacks, a lengthening of the maturity profile on domestic debt, historically low fiscal deficits and record primary surpluses, adding that these gains were being reinforced by stronger revenue collection and disciplined spending.
The S&P delegation acknowledged Pakistan’s progress in stabilizing its macroeconomic position and welcomed the government’s commitment to fiscal discipline, debt sustainability, external resilience and structural reform, the ministry said. The two sides also discussed Pakistan’s medium-term economic outlook, reform priorities and steps aimed at further strengthening its sovereign credit profile.
A higher rating would lower the cost of borrowing for Pakistan as it looks to diversify its financing sources through Panda bonds, Eurobonds and other forms of commercial debt, part of a broader strategy to reshape the composition of its external liabilities without adding to the overall debt stock. Pakistan completed its first sovereign Panda bond sale in May, raising $250 million in China’s domestic bond market, and has said it plans further Panda bond and Eurobond issuances as it works toward the roughly $2 billion target for the current fiscal year.
S&P Global Market Intelligence said earlier this year that it expected Pakistan’s economy to strengthen further in 2026, while warning that the country remains among the most exposed economies in the Asia-Pacific region to external shocks, including those stemming from the U.S.-Iran conflict, given its reliance on imported energy and external financing.
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