S&P upgrades Pakistan's credit rating to 'B' from 'B-', highest in eight years

Agency cites stronger institutional capacity, sustained implementation of IMF reforms for move

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Web Desk July 22, 2026 2 min read

S&P upgrades Pakistan's credit rating to 'B' from 'B-', highest in eight years

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Standard & Poor's (S&P) Global on Tuesday upgraded Pakistan's Long-Term Instruments Credit Rating to 'B' from 'B-'. The upgrade brings the country's rating status to an effective eight-year high. Pakistan was last placed in the B category from October 31, 2016 to February 3, 2019.

The rating was upgraded due to stronger institutional capacity, sustained implementation of reforms backed by the International Monetary Fund (IMF), improved fiscal performance, and a significant rebuilding of foreign exchange reserves.

According to an update by S&P Global, the agency noted that it believed "Pakistan has strengthened institutional capacity, demonstrated through the implementation of critical reforms." This, it said "has bolstered the country's foreign exchange reserves and alleviated pressure on external credit metrics."

Noting that the "government's efforts to expand its revenue base have hastened the pace of fiscal consolidation," S&P Global stated that this has facilitated "a steady decline in its net general government debt to GDP ratio."

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"We therefore raised our long-term sovereign rating on Pakistan to 'B'. At the same time, we affirmed the 'B' short-term rating," the update read. The stable outlook, it added, "reflects our expectations that improved institutional settings will anchor economic reforms to bring about a sustained period of steady growth and fiscal consolidation."

Further, the agency stated that it had also raised Pakistan's transfer and convertibility assessment to 'B' from 'B-'.

The progress, it said, reflected the agency's view of the country's improved political and institutional settings. Noting that entrenched economic reforms will bring about a sustained period of steady growth and fiscal consolidation, S&P Global stated that it anticipates "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."

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However, the agency noted that it may lower its ratings if "contrary to our expectations," the country's current external or fiscal indicators deteriorate as a result of a diminished commitment to fiscal consolidation. "This could erode financial support from key bilateral and multilateral partners, pressuring usable foreign exchange reserves," it added.

Last year, S&P's credit rating agency upgraded Pakistan's standing by one notch, to 'B-'. This was an improvement from the country's previous standing, though still two positions below investment grade.

The move came due to the implementation of reforms and the abating risks of sovereign default.

Meanwhile, Islamabad's long-term sovereign credit ratings were raised from 'CCC+' to 'B-' after a gap of two-and-a-half-years. S&P Global Ratings, one of the three largest credit rating firms, also assigned a stable outlook to Pakistan, improving its creditworthiness from “very high credit risk, vulnerable to non-payment” to “highly speculative.”