Pakistan has received a lift from S&P Global, which upgraded the country’s sovereign credit rating and pointed to stronger institutions, better fiscal discipline, and steady progress under IMF-backed reforms.
S&P raised Pakistan’s long-term foreign-currency rating to B from B- and also improved its transfer and convertibility assessment to B from B-. The agency said the move reflects Pakistan’s stronger institutional capacity, improved fiscal performance, and a meaningful rebuilding of foreign exchange reserves, according to The Express Tribune.
The upgrade comes after years of financial strain, when Pakistan struggled with weak reserves, high debt, and pressure on its external payments. S&P said the government’s efforts to widen the revenue base have helped speed up fiscal consolidation and push down the country’s debt burden relative to GDP. The agency also said Pakistan’s political and institutional setting has improved over the past two years.
A key factor was the IMF’s Extended Fund Facility, approved in September 2024, which S&P described as critical in restoring macroeconomic stability and replenishing reserves. The agency noted that Pakistan has met most program targets, allowing timely IMF disbursements, while support from bilateral partners has further strengthened the country’s external position.
S&P said foreign reserves, including gold holdings, rose to US$25.3 billion by the end of June 2026 from US$6.7 billion in December 2022. It added that this is enough to cover Pakistan’s external principal payments of US$16.4 billion over the next 12 months.
The agency also pointed to Pakistan’s return to international capital markets in April 2026, when it issued a US$750 million Eurobond and its first panda bond worth 1.75 billion yuan. S&P said wider access to multilateral, bilateral, and commercial funding should help diversify the country’s financing options.
Still, the outlook is not without risk. S&P warned that ratings could fall again if fiscal or external performance weakens, or if interest rates rise sharply and deepen debt-servicing stress. On the other hand, further gains could come if deficits narrow, debt falls, and external indicators continue to improve.
Prime Minister Shehbaz Sharif welcomed the upgrade, calling it a sign of international confidence in Pakistan’s economic direction.
