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Moody’s Lifts Pakistan’s Rating to ‘Caa1’ on Stronger External Finances

Moody’s cited Pakistan’s economic reforms, IMF support, and rising foreign exchange reserves of $14.3 billion as key factors behind the credit rating upgrade to Caa1 with a stable outlook.

  • On Wednesday, Moody’s Ratings upgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa1 from Caa2, raising country ceilings to B2 and Caa1 from B3 and Caa2.
  • Recently, similar upgrades by S&P Global Ratings and Fitch Ratings paved the way, credited to reforms under the IMF Extended Fund Facility programme, Moody’s Ratings said on Wednesday.
  • On July 25, 2025, Pakistan’s foreign exchange reserves surged to $14.3 billion, covering around ten weeks of imports, supported by IMF reviews unlocking $1 billion in May and June, while debt servicing costs eased to 45%.
  • Alongside this, the Government of Pakistan’s outlook was revised to stable from positive, reflecting Moody’s cautious optimism on the country's economic trajectory.
  • Moody’s projects Pakistan’s fiscal deficit to narrow to about 4.5-5% of GDP in FY2026 but cautioned reform delays could jeopardize funding.
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Bloomberg broke the news in United States on Wednesday, August 13, 2025.
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