Moody’s upgrades Pakistan’s rating from Caa3 to Caa2

Moody’s Ratings (Moody’s) Wednesday upgraded the government of Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa2 from Caa3.

“We have also upgraded the rating for the senior unsecured MTN programme to (P)Caa2 from (P)Caa3. Concurrently, the outlook for Government of Pakistan is changed to positive from stable. Accordingly, Pakistan’s default risk has reduced to a level consistent with a Caa2 rating,” read the statement.

The global credit rating agency, which downgraded Pakistan in February 2023, said that “there is now greater certainty on Pakistan’s sources of external financing, following the sovereign’s staff-level agreement with the International Monetary Fund (IMF) on 12 July 2024 for a 37-month Extended Fund Facility (EFF) of $7 billion”.

“We expect the IMF Board to approve the EFF in the next few weeks. Pakistan’s foreign exchange reserves have about doubled since June 2023, although they remain below what is required to meet its external financing needs,” the statement reads.