Moody’s Upgrades Pakistan’s Sovereign Credit Rating to B3

The B3 rating remains within the speculative category and indicates a relatively high level of credit risk.

By News Desk On Aug 24, 2026

Islamabad: (Finance Reporter) – Global ratings agency Moody’s has upgraded Pakistan’s sovereign credit rating to B3 from Caa1, citing improvements in governance, the country’s external position and fiscal metrics. The outlook has been maintained as stable.

Moody’s said Pakistan’s external vulnerability risks had eased since its previous rating action in August 2025. The agency noted that foreign exchange reserves had been steadily increasing amid continued macroeconomic stabilisation.

The ratings agency also highlighted lower domestic financing costs following monetary easing and an improved fiscal position, which have strengthened Pakistan’s debt affordability.

Moody’s further upgraded Pakistan’s senior unsecured debt ratings and senior unsecured medium-term note programme rating to (P)B3 from (P)Caa1.
The latest upgrade comes after S&P Global Ratings upgraded Pakistan’s long-term sovereign credit rating to B from B- in July, also maintaining a stable outlook.
However, Moody’s continued to flag vulnerabilities in Pakistan’s credit profile, particularly its structurally fragile external position. The B3 rating remains within the speculative category and indicates a relatively high level of credit risk.

Meanwhile, Prime Minister Shehbaz Sharif welcomed Moody’s decision, saying the upgrade reflected growing international confidence in Pakistan’s economic policies and reforms.
The prime minister congratulated the nation and praised Deputy Prime Minister and Foreign Minister Ishaq Dar, Finance Minister Muhammad Aurangzeb, Chief of Defence Forces Field Marshal Syed Asim Munir and other officials for their contributions to economic stabilisation.

Shehbaz Sharif said the government would accelerate the reform process to put Pakistan’s economy on sustainable foundations, with the goal of building a strong, self-reliant and sustainable economy.

The upgrade is expected to improve investor confidence and potentially support Pakistan’s efforts to secure external financing at more favourable terms.