Global agency upgrades Pakistan’s credit rating to ‘B Minus’

The international credit rating agency Standard & Poor’s (S&P) Global has upgraded the Pakistan’s long-term credit rating from ‘Triple C’ to ‘B Minus’.

This positive revision reflects growing confidence in Pakistan’s economic recovery and the government’s efforts to stabilize key financial indicators.

In a statement, Standard & Poor’s Global indicated that the “stable outlook reflects our expectation that ongoing economic recovery and government efforts to increase revenue will stabilize fiscal and debt indicators.”

This suggests that the agency foresees continued improvement in Pakistan’s financial health, supported by prudent fiscal management.

The upgrade comes on the heels of several improved economic metrics. According to S&P’s report, Pakistan’s foreign exchange reserves have surged to $20.5 billion, signaling enhanced external stability. Inflation has also shown a remarkable decline, dropping to 4.5 per cent.

Furthermore, the report highlighted a significant easing in monetary policy by the State Bank of Pakistan (SBP), with the policy interest rate now standing at 11 percent.

S&P noted that the SBP has implemented substantial cuts totaling 1100 basis points from its peak, indicating a concerted effort to support economic activity.

Read more: Fitch upgrades Pakistan’s credit rating to ‘B-’

Looking ahead, S&P Global projects Pakistan’s economic growth rate to reach 2.7 percent for the current fiscal year, with an anticipated acceleration to 3.6 per cent in the coming year. While the agricultural sector reportedly remained weak, the industrial sector demonstrated improved performance.

The report also pointed to robust remittance inflows, which have exceeded $38 billion, providing crucial support to the country’s external account.

The agency acknowledged the approval of a $7 billion program by the International Monetary Fund (IMF) in October 2024, which has played a vital role in restoring macroeconomic stability.

Consequently, Pakistan’s fiscal deficit has reportedly narrowed to 5.6 percent this fiscal year.