Credit ratings agency S&P Global raised Pakistan’s long-term sovereign credit rating to “B” from “B-” on Wednesday, citing stronger institutional stability and effective implementation of reforms under an IMF program. “The stable outlook reflects our view of Pakistan’s improved political and institutional settings. Entrenched economic reforms will bring about a sustained period of steady growth and fiscal consolidation,” said S&P. “We anticipate sustained official financing will support Pakistan in meeting its external obligations and that the country will continue to roll over its commercial credit lines over the next 12 months.” The agency said the government’s efforts to widen the tax base have improved revenue collection and accelerated fiscal consolidation, supporting a gradual decline in the country’s debt burden. Reforms backed by the IMF have helped restore macroeconomic stability, rebuild foreign exchange reserves and ease strains on Pakistan’s fiscal and external positions, S&P said. “The upgrade on Pakistan is predicated on improved institutional stability that has helped to implement critical IMF program reforms,” it said. S&P projected Pakistan’s GDP growth at 3.5% in fiscal 2027 “supported by IMF program reforms alongside marginal price pressures due to an energy shock in the wake of the Middle East conflict”. It noted that political uncertainties in Pakistan have somewhat subsided. “Since the February 2024 general elections, the coalition government has been able to advance reforms and meet IMF program targets without significant social pressure. “The progress on the implementation of the reforms suggests an enhanced capacity to maintain expenditure controls and expand the tax revenue base.” However, Pakistan remains subject to domestic and external security risks, it warned. “The country’s security situation has improved since the early 2010s, but the potential to deteriorate remains. Border tensions with India and Afghanistan, as apparent in the recent outbreak of hostilities over the past year, can raise the spectre of miscalculations and accidental clashes that could worsen credit risks,” the agency said. Prime Minister Shehbaz Sharif welcomed the decision of S&P Global Ratings, describing it as a significant milestone for the country’s economy. The prime minister said the upgrade reflected the international community’s confidence in the government’s effective economic policies, fiscal discipline, structural reforms, and sustained efforts to stabilize the national economy. He noted the improved rating served as evidence that the government’s measures to strengthen economic stability, reform the tax system, reduce the fiscal deficit, and build foreign exchange reserves were moving in the right direction, PM Office Media Wing said in a press release.
S&P upgrades Pakistan’s sovereign credit rating to ‘B’
Published on: July 23, 2026 3:56 AM