Moody's lifts Pakistan sovereign rating to B3 from Caa1, cites governance improvement and easing of external risk

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Moody’s has upgraded Pakistan’s sovereign rating from Caa1 to B3 due to improvements in governance and reduced external vulnerabilities. The rating outlook remains stable as the country pursues sustained macroeconomic stability.

Global ratings agency Moody’s lifted Pakistan’s sovereign rating to ‘B3’ from ‘Caa1’ on Monday, citing improvements in governance and easing external vulnerability risks. The agency maintained the country’s outlook at ‘stable’. “We expect the recent improvement in Pakistan’s debt affordability to be durable, underpinned by sustained macroeconomic stability,” the agency said in a statement. The development comes only a month after S&P Global Ratings upgraded Pakistan’s long-term sovereign credit rating to ‘B’ from ‘B-’, citing an improving external position and gradual macroeconomic stabilisation, while also assigning a stable outlook. A country’s sovereign credit rating serves as an indicator of its financial health for foreign investors. It assesses creditworthiness — the risk involved in lending money to the country, evaluated by its ability to repay its debts. Upgrading this rating gives global lenders greater confidence in the economy, helping the country attract foreign investment and borrow funds on better terms. More to follow.