S&P upgrades Pakistan's sovereign credit rating to 'B'

S&P Global Ratings on Wednesday upgraded Pakistan's long-term sovereign credit rating to 'B' from 'B-', citing stronger institutional stability and the effective implementation of reforms under the International Monetary Fund (IMF) programme.

The global ratings agency maintained Pakistan's outlook at stable, saying sustained official financing is expected to help the country meet its external obligations while allowing it to continue rolling over commercial credit lines over the next 12 months.

S&P said the government's efforts to broaden the tax base had improved revenue collection and accelerated fiscal consolidation, supporting a gradual decline in the country's debt burden.

According to the agency, IMF-backed reforms have helped restore macroeconomic stability, rebuild foreign exchange reserves and ease pressure on Pakistan's fiscal and external positions. It added that tax reforms and continued foreign inflows had strengthened the country's fiscal and external buffers against potential external shocks.

The upgrade comes as Pakistan seeks additional external financing, including a proposed $10 billion exchange stabilisation facility from the United States, Reuters reported, citing a source.

S&P forecast Pakistan's economy would grow 3.5% in fiscal year 2027 and said it expected only limited inflationary pressure from energy price shocks linked to the conflict in the Middle East.