Moody’s Investors Service has raised Pakistan’s long-term foreign debt rating from Caa2 to Caa1, highlighting an improvement in the country’s external financial position. Alongside the upgrade, the agency revised Pakistan’s outlook from positive to stable, indicating a cautious but growing confidence in the nation’s economic path.
The rating revision signals that Pakistan is showing stronger potential to manage its external debt obligations and maintain foreign exchange reserves, which have been under pressure in recent years. Additionally, Moody’s acknowledged steps taken to expand the tax base, reflecting progress in fiscal management and revenue generation.
While the upgrade is a positive development, the agency noted that challenges remain, particularly around political uncertainty and governance weaknesses, which could influence economic performance if not addressed. Nevertheless, the move to a stable outlook suggests that Moody’s expects these risks to be manageable in the near term, with Pakistan demonstrating resilience in key financial and economic indicators.
Overall, the rating change reflects a balance of optimism and caution, recognizing Pakistan’s improvements in external finances and fiscal reforms, while also accounting for structural and political risks. It signals to investors and international markets that the country is gradually strengthening its economic fundamentals, which could enhance investor confidence and support future financial stability. This upgrade comes at a time when Pakistan is working to stabilize its economy, manage debt pressures, and build stronger institutional frameworks to ensure sustainable growth.
Few months ago, Moody’s Changed Pakistan Banking Sector Outlook
