Moody’s raises Pakistan’s credit rating to Caa1 with stable outlook. Finance Minister sees potential for rate cuts, while international bonds surge, reflecting improved investor sentiment and economic recovery.

Pakistan’s credit rating has been raised by Moody’s to Caa1 from Caa2 with a stable outlook, reflecting an improving external financial position and progress under the IMF Extended Fund Facility (EFF) program. The upgrade comes after Fitch and S&P also raised Pakistan’s rating in recent months, boosting investor confidence in the country’s sovereign debt.

Prime Minister Shehbaz Sharif said the improvement signals that Pakistan’s economic policies are moving in the right direction. Following the announcement, Pakistan’s international bonds rose by up to 1 cent, trading between 90 and 100 cents on the dollar, marking the highest levels since early 2022 when fears of a debt crisis had pushed prices to as low as 30 cents.

Also Read: Trump’s Double Standards: Tariffs for India, Tariff Cuts for Pakistan?

Finance Minister Mohammed Aurangzeb expressed optimism about the potential for the central bank to cut the key policy rate from 11%, citing positive economic indicators. He suggested that there may be room for a rate reduction toward the end of the year, although the central bank will make the final decision. The next policy rate review is scheduled for September 15, 2025.

Moody’s noted that Pakistan’s debt affordability has improved but remains weaker than many rated sovereigns, with the rating reflecting ongoing governance challenges and high political uncertainty. Inflation accelerated to 4.1% year-on-year in July, driven largely by rising energy prices, which has so far prevented the central bank from lowering interest rates.

Analysts say the upgrade enhances Pakistan’s capacity to raise external debt and supports economic recovery following the $7 billion IMF bailout. The stable outlook indicates Moody’s expectation that reforms and policy measures will continue to strengthen Pakistan’s external position.

READ MORE ON

Read the full article here: Moody’s Lifts Pakistan Rating as Economy Shows Signs of Recovery — For more updates, visit Wittiya – Top Business News, Stock Market Insights & Financial Updates (Wittiya).