Credit ratings agency S&P Global raised Pakistan’s long-term sovereign credit rating to “B” from “B-” on Wednesday, citing stronger institutional stability and effective implementation of reforms under an IMF programme.
Pakistan’s rating outlook was held at “stable” as sustained official financing is expected to help the country meet its external obligations while allowing it to continue rolling over commercial credit lines over the next 12 months.
The agency said the govt’s efforts to widen the tax base have improved revenue collection and accelerated fiscal consolidation, supporting a gradual decline in the country’s debt burden.
Reforms backed by the IMF have helped restore macroeconomic stability, rebuild foreign exchange reserves and ease strains on Pakistan’s fiscal and external positions, S&P said.
Tax reforms and continued foreign inflows have also strengthened the country’s fiscal and external buffers against potential external shocks, the rating agency said.
The upgrade comes as Pakistan seeks additional external financing, including a proposed $10 billion exchange stabilisation facility from the United States, Reuters reported earlier on Wednesday, citing a source.
If agreed on, the facility would bolster Pakistan’s foreign exchange reserves, ease pressure on the currency and reduce its reliance on multilateral financing, even as Islamabad pursues tighter fiscal and monetary policies in line with its IMF program.
S&P forecasts Pakistan’s economy would grow 3.5% in fiscal year 2027 and expects only marginal price pressures from an energy price shock stemming from the conflict in the Middle East.
‘Significant milestone’
Reacting to the development, Prime Minister Shehbaz Sharif welcomed the decision of S&P Global Ratings to upgrade Pakistan’s sovereign credit rating from ‘B-” to “B’, describing it as a significant milestone for the country’s economy.
The prime minister said the upgrade reflected the international community’s confidence in the government’s effective economic policies, fiscal discipline, structural reforms, and sustained efforts to stabilise the national economy.
He noted the improved rating served as evidence that the government’s measures to strengthen economic stability, reform the tax system, reduce the fiscal deficit, and build foreign exchange reserves were moving in the right direction, the PM Office Media Wing said in a press release.
The prime minister further said the government had taken difficult but necessary economic decisions, the positive outcomes of which were now being acknowledged internationally.
He expressed confidence that the upgrade would boost the confidence of international investors, create new investment opportunities and further accelerate Pakistan’s economic growth.
The prime minister also commended Deputy Prime Minister and Foreign Minister Senator Ishaq Dar, Field Marshal Syed Asim Munir, Finance Minister Muhammad Aurangzeb, the government’s economic team, and all relevant institutions for their contributions to this achievement. –Agencies
