Moody's upgrades Pakistan's rating to B3; maintains stable outlook

Business Recorder reported that Moody's Ratings lifted Pakistan's sovereign credit ratings to B3 from Caa1 on Monday, while keeping the outlook stable. The upgrade covers local and foreign currency issuer ratings and senior unsecured debt, and the MTN programme rating was raised to (P)B3. Moody's had moved the ratings up to Caa1 from Caa2 in August 2025.

Moody's linked the upgrade to its expectation that governance gains will help the government sustain recent progress in the external position and strengthen fiscal metrics. Foreign exchange reserves reached about $17 billion at the end of July 2026, up from $14 billion a year earlier, a level that covers close to three months of imports. The agency put the External Vulnerability Indicator at about 145% in 2026, compared with 230% in 2025.

Moody's said debt affordability has improved materially, with interest payments absorbing about 35% of government revenue in fiscal 2026, down from 49% in fiscal 2025. The agency still describes Pakistan's credit profile as vulnerable, pointing to a fragile external position, weak debt affordability and a narrow revenue base. The stable outlook weighs a potentially faster improvement against risks that could restrict access to foreign-currency financing.