ISLAMABAD – Global credit rating agency S&P Global Ratings has upgraded Pakistan’s long-term sovereign credit rating from ‘B-‘ to ‘B’, while assigning the country a stable outlook, citing improvements in economic stability and fiscal management.
According to S&P’s latest report, Pakistan has made significant progress over the past two years through stronger institutional stability, effective implementation of the International Monetary Fund (IMF) reform programme, and improved fiscal discipline.
The agency said these measures have led to a substantial increase in foreign exchange reserves and eased external financing pressures.
The report noted that the government’s efforts to broaden the tax base and boost revenue collection have helped reduce the fiscal deficit, which is expected to gradually lower the country’s debt burden.
S&P said the upgrade reflects improvements in Pakistan’s economic and financial indicators. The country’s foreign exchange reserves reached $25.3 billion by the end of June 2026, up sharply from $6.7 billion in December 2022, when reserves had fallen to a record low.
The agency added that the current level of reserves is sufficient to meet Pakistan’s external financing needs over the next 12 months. It also credited the $7 billion IMF Extended Fund Facility (EFF) programme and financial support from bilateral partners for playing a key role in stabilising the economy.
According to the report, Pakistan has successfully met most of the IMF programme’s targets, enabling the timely disbursement of funds.
S&P forecasts Pakistan’s economy to grow by 3.5% in fiscal year 2027, saying continued structural reforms are expected to support stronger economic activity. However, it warned that higher energy prices resulting from ongoing tensions in the Middle East could exert limited pressure on the economy.
The agency also cautioned that Pakistan’s credit rating could come under renewed pressure if the government fails to maintain fiscal discipline, external financial support weakens, or debt servicing costs rise significantly again.
