S&P Global Elevates Pakistan’s Credit Rating to ‘B-‘ amid Financial Stabilization
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Ratings agency S&P Global has elevated Pakistan’s sovereign credit rating to ‘B-‘ from ‘CCC+’, citing the stabilization of the country’s finances and reserves, bolstered by International Monetary Fund (IMF) support. The agency also assigned a ‘stable’ outlook, reflecting expectations of continued economic recovery and government efforts to improve revenue collection.
The stable outlook suggests that S&P anticipates sustained official financing will assist Pakistan in meeting its external obligations. Furthermore, the agency expects Pakistan to continue rolling over its commercial credit lines over the next twelve months. This positive assessment has led to a rally in Pakistan’s longer-dated international bonds, with the 2051 maturity, for instance, gaining 1.6 cents to trade at 84.85 cents on the dollar.
Did you Know? Pakistan’s Finance Minister Muhammad Aurangzeb had previously urged rating agencies, including Moody’s, to improve the country’s credit rating to facilitate a return to international capital markets on favorable terms.
The recent upgrade by S&P Global follows similar positive movements from other major rating agencies. In August 2024, Moody’s upgraded Pakistan’s credit rating by one notch to Caa2 from Caa3, changing its outlook to positive from stable. This followed an earlier downgrade in February 2023 due to the suspension of an IMF program. Prior to that, in April, Global ratings agency Fitch had upgraded Pakistan’s foreign currency credit rating to ‘B-‘ from ‘CCC+’, citing increased confidence in the nation’s progress in narrowing its budget deficits.
| Rating Agency | Previous Rating | Current Rating | Outlook | date of Action |
|---|---|---|---|---|
| S&P Global | CCC+ | B- | Stable | July 2025 |
| Fitch | CCC+ | B- | N/A | April 2025 |
| Moody’s | Caa3 | Caa2 | Positive | August 2024 |
Pro Tip: Understanding credit ratings is crucial for investors looking to assess the risk associated with a country’s debt.
pakistan’s Economic Trajectory and International Finance
Pakistan’s economic performance and its relationship with international financial institutions like the IMF have been central to its financial stability. Historically, the country has navigated periods of economic challenge, often seeking external support to manage its balance of payments and fiscal deficits. The IMF program provides a critical lifeline, offering financial assistance coupled with policy reforms aimed at macroeconomic stabilization.
The consistent efforts by Pakistan’s government to improve fiscal discipline and enhance revenue generation are key to sustaining these positive rating trends. A higher credit rating generally translates to lower borrowing costs for the government and increased investor confidence, which can attract foreign direct investment and facilitate access to international capital markets for both public and private sectors.
The interplay between domestic economic policies and international financial support is a recurring theme in Pakistan’s economic history. Each upgrade signifies a step towards greater financial resilience and a more favorable position in the global financial landscape.
Frequently Asked Questions About Pakistan’s Credit Rating
What is Pakistan’s new sovereign credit rating from S&P Global?
S&P Global has raised Pakistan’s sovereign credit rating to ‘B-‘ from ‘CCC+’.
What is the outlook for Pakistan’s credit rating according to S&P?
The outlook for Pakistan’s credit rating has been placed on ‘stable’ by S&P Global.
What factors contributed to Pakistan’s credit rating upgrade?
The upgrade is attributed to the stabilization of Pakistan’s finances and reserves, largely due to International Monetary fund (IMF) support.
How did Pakistan’s international bonds react to the S&P upgrade?
Pakistan’s longer-dated international bonds rallied following the upgrade, with specific maturities seeing gains.
Which other rating agencies have recently upgraded Pakistan’s credit rating?
Fitch upgraded Pakistan’s foreign currency credit rating to ‘B-‘ from ‘CCC+’ in April, and Moody’s had upgraded its rating to Caa2 from Caa3 in August 2024.
What is the significance of the ‘stable’ outlook from S&P global?
The stable outlook signifies S&P’s expectation that continued economic recovery and revenue enhancement efforts will stabilize fiscal and debt metrics.
What are your thoughts on Pakistan’s improved credit rating? Share your insights in the comments below!
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