By Ali Imran
ISLAMABAD: Moody’s has raised Pakistan’s credit rating from Caa1 to B3, citing improvements in governance as a key factor behind the upgrade.
In its statement, Moody’s noted that foreign reserves have increased while domestic loan expenditures have declined.
Economic stability has shown continuity, and the rating agency has retained a stable outlook for Pakistan.
The improvements in governance will help Pakistan retain the benefits gained on the international front, while the higher rating will further enhance the country’s economic indicators.
Moody’s stated that Pakistan’s foreign reserves climbed to $17 billion by July 2026, marking an uptick of $3 billion in just one year.
The agency added that Pakistan’s capacity to service its debt has also substantially improved.
Pakistan’s interest expenditures in the fiscal year 2026 came to 35 percent of its earnings.
A decline in the policy rate has helped control loan expenditures, Moody’s noted.
Additionally, Moody’s mentioned that Pakistan issued a Eurobond worth $750 million in April of this year.
However, Pakistan still faces challenges, including a weak revenue base, low foreign direct investment (FDI), and external financial risks.
