Moody’s has upgraded Pakistan’s credit rating from Caa3 to Caa2, signaling an improvement in the country’s financial outlook, which has shifted from stable to positive. This upgrade affects both local and foreign currency debt ratings and is largely due to the increased confidence in Pakistan’s ability to secure external financing. This confidence stems from a recent staff-level agreement with the International Monetary Fund (IMF) for a $7 billion Extended Fund Facility.
Moody’s expects that the IMF will soon approve this bailout package, which is seen as a critical step for Pakistan’s economic recovery. Additionally, the country’s foreign exchange reserves have nearly doubled since June 2023, further contributing to the improved credit rating. This upgrade by Moody’s reflects growing optimism about Pakistan’s economic future and its ability to manage its financial obligations.
