By Staff Reporter
KARACHI: Ratings agency S&P Global raised Pakistan’s sovereign credit rating to ‘B-’ from ‘CCC+’ and assigned a stable outlook on Thursday, signaling growing confidence in the country’s financial stability bolstered by International Monetary Fund (IMF) support.
The upgrade marks a significant step for Pakistan as it seeks to strengthen its footing in global markets.
“The stable outlook reflects our expectations that continued economic recovery and government efforts to enhance revenue will stabilise fiscal and debt metrics,” S&P said in a statement. The agency pointed to IMF backing as a cornerstone of Pakistan’s improved finances and reserves. “We also expect that sustained official financing will support Pakistan in meeting its external obligations, and that the country will continue to roll over its commercial credit lines over the next 12 months.”
Pakistan’s international bonds rallied in the wake of the upgrade, with longer-dated maturities leading the gains. The 2051 maturity surged 1.6 cents to 84.85 cents on the dollar, according to Tradeweb data. The 2031 and 2036 maturities each advanced about 1 cent, while shorter-dated bonds posted more modest increases. The uptick reflects investor optimism about Pakistan’s ability to manage its debt load and access capital markets.
The S&P move follows a concerted effort by Pakistani officials to secure better credit assessments. Just last week, Finance Minister Muhammad Aurangzeb pressed Moody’s to raise Pakistan’s rating, underscoring the need for improved borrowing terms. Moody’s had already lifted Pakistan’s rating to Caa2 from Caa3 in August 2024, shifting its outlook to positive from stable. That upgrade, reversing a February 2023 downgrade tied to a stalled IMF program, came as macroeconomic conditions, liquidity, and external positions showed signs of recovery.
Fitch Ratings also upgraded Pakistan’s foreign currency rating to ‘B-’ from ‘CCC+’ in April, citing progress in narrowing budget deficits. Together, these actions from the major agencies highlight a turning point for Pakistan’s fiscal management.
S&P’s decision underscores the tangible impact of IMF-supported reforms on Pakistan’s economic trajectory. With a stable outlook now in place, the country may find it easier to attract investment and reduce borrowing costs.
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