S&P Global raises Pakistan's credit score from 'CCC+' to 'B-', maintaining a steady outlook.
Pakistan's Sovereign Credit Rating Upgraded by S&P Global
Pakistan's economy has received a significant boost with the upgrade of its sovereign credit rating by S&P Global Ratings. The rating has been elevated from 'CCC+' to 'B-', marking a significant step towards international recognition for the country's economic policies.
Prime Minister Shehbaz Sharif expressed his satisfaction over the upgrade, commending the efforts of the government's economic team. He highlighted that this positive momentum is being acknowledged by global financial institutions and credit rating agencies, and praised the government's economic policies as they receive international recognition.
The upgrade is a reflection of Pakistan's economic stabilization, with S&P expecting sustained official financing and the continuation of rolling over commercial credit lines over the next 12 months. S&P also expects continued economic recovery and government efforts to enhance revenue to stabilize Pakistan's fiscal and debt metrics.
The upgrade is attributed to several key economic policies and reforms implemented by the Pakistani government. These include the implementation of an IMF-supported economic program, inflation control and monetary policy, real GDP growth and economic resilience, and fiscal reforms and tax enhancements.
Under the IMF program, Pakistan has been navigating a fragile recovery, implementing fiscal consolidation measures such as increased taxation and higher electricity tariffs. The government, together with the State Bank of Pakistan (SBP), has managed to keep inflation relatively low by adopting tight monetary policies, and then gradually cut interest rates as inflation stabilized.
Pakistan achieved a real GDP growth rate of 2.68% in FY 2025, driven by a rebound in industrial output. This sustained growth even under challenging conditions reflects underlying economic resilience and improved growth prospects. The government has also enforced better tax compliance and broadened the tax base, including measures on rental income taxation and withholding taxes, which aim to increase government revenues and reduce fiscal deficits.
The upgrade is expected to help restore investor confidence in the Pakistani economy, reduce pressure on external debt repayments, and enhance Pakistan's access to international capital markets. In fact, Pakistan's longer-dated international bonds, specifically the 2051 maturity, rallied after the upgrade, being bid at 84.85 cents on the dollar. The 2031 and 2036 maturities also gained around 1 cent, while short-dated maturities posted smaller gains.
In conclusion, Pakistan's main economic policy actions underpinning the S&P sovereign credit rating upgrade include implementing IMF conditional reforms, controlling inflation through tight monetary policy, achieving positive GDP growth, and enhancing fiscal discipline through tax and tariff adjustments. These policies have significantly improved Pakistan's economic outlook, leading S&P Global to view the sovereign creditworthiness more favorably and upgrade the rating.
[1] IMF Executive Board Approves US$7 Billion Extended Arrangement Under the Extended Fund Facility for Pakistan, International Monetary Fund, 2022. [2] Pakistan's GDP growth rate for FY 2025, World Bank, 2025. [3] SBP raises policy rate to 22% to curb inflation, Dawn, 2023. [4] Pakistan's Inflation Remains Stable, Dawn, 2024. [5] Pakistan Budget 2025: Tax Measures Announced, Dawn, 2025.
The upgrade in Pakistan's sovereign credit rating by S&P Global is a testament to the effectiveness of the country's economic policies, stemming from the implementation of IMF-supported reforms, monetary policy adjustments, fiscal discipline, and tax enhancements. This improvement in the rating will contribute to a positive shift in business and finance sectors, potentially leading to increased investor confidence and easier access to international capital markets for Pakistan.
