NEW YORK (Dunya News) - S&P Global Ratings on Wednesday upgraded Pakistan's long-term sovereign credit rating from 'B-' to 'B', while revising the country's outlook to stable, reflecting improving macroeconomic conditions and stronger external financing.
According to the global ratings agency, Pakistan has made notable progress over the past two years through enhanced institutional stability, effective implementation of the International Monetary Fund (IMF) reform programme and improved fiscal discipline.
The agency said these measures have strengthened the country's economic fundamentals, boosted foreign exchange reserves and eased external financing pressures.
S&P noted that government efforts to broaden the tax base and increase revenue collection had helped narrow the fiscal deficit, which is expected to gradually reduce the country's debt burden.
The report highlighted a significant improvement in Pakistan's external position, with foreign exchange reserves reaching $25.3 billion by the end of June 2026, compared with a low of $6.7 billion in December 2022.
It added that current reserve levels are sufficient to meet the country's external payment obligations over the next 12 months. The agency also credited the $7 billion IMF Extended Fund Facility (EFF) and financial support from bilateral partners for reinforcing Pakistan's economic stability.
According to S&P, Pakistan has successfully met most of the IMF programme's key targets, ensuring timely disbursement of funds and supporting investor confidence.
The ratings agency projected Pakistan's economy to grow by 3.5% in fiscal year 2027, saying continued structural reforms are expected to support economic activity.
However, S&P cautioned that rising energy prices linked to the ongoing conflict in the Middle East could exert limited pressure on the economy.
The agency also warned that Pakistan's credit rating could face downward pressure if fiscal discipline weakens, external financial support declines, or debt servicing costs rise significantly again.