Pakistan more capable of weathering Hormuz shock than 2022 oil crisis, Moody’s analyst says

Profit by Pakistan Today reported that Moody's Assistant Vice President Lim told a state media digital platform that Pakistan is now better placed to take the blow of the Strait of Hormuz closure than during 2022. In her view, two years of macroeconomic stabilisation have built larger cushions, backed by lower inflation, a steady exchange rate and bigger foreign exchange reserves.

The remarks follow Moody's upgrade of Pakistan's sovereign credit rating to B3 with a stable outlook, which came days earlier. Lim linked the upgrade to better governance, a stronger external position and improved fiscal metrics, and said the agency expects those gains to be sustained. She cautioned, however, that the B3 grade still reflects a fragile external position, a small export base and thin foreign direct investment, while debt affordability remains a constraint because interest payments absorb part of government revenue.

According to Lim, Moody's looks for sustained improvement across several indicators instead of one measure moving alone. Possible drivers of another upgrade are rebuilding reserves beyond the agency's current expectations, improved funding access from official and commercial sources, and fiscal reforms that ease debt burdens. She added that revenue reforms from the past two years, which lifted government revenue relative to GDP, are already reflected in the latest decision, so further progress on them would be needed to support another upgrade.