STANDARD & Poor’s credit rating agency upgraded Pakistan by one notch to “B negative” on Thursday, an improvement from its previous standing, though still two positions below investment grade.
This move comes due to the implementation of reforms and the abating risks of sovereign default. The agency also assigned a stable outlook to Pakistan. The upgrade has improved Pakistan’s creditworthiness from “very high credit risk, vulnerable to non-payment” to “highly speculative.”
This improvement in the credit rating by one of the three largest credit rating firms substantiates claims of the incumbent government about a positive outlook of the economy due to prudent policies and measures that have started producing the desired results. Pakistan’s foreign exchange reserves have stabilized, remittances crossed the mark of $38 billion, stock exchange is booming and the current account posted a substantial surplus in 2025, the first surplus in fourteen years. However, the S&P has rightly pointed out that political stability and improvement in security conditions are critical for further upgrades. It expects political uncertainty to remain high due to a volatile political environment and this is confirmed by the ground realities as the opposition PTI is once again poised to launch an anti-government campaign, which can negatively affect the economic environment besides sending a wrong message to prospective investors. Similarly, the government will have to firm up a robust strategy to counter the fresh wave of terrorism and violence, especially in Balochistan. This assumes special significance as the authorities are trying their level best to exploit the mineral wealth of the province through foreign collaboration to fund developmental activities in the province and improve the national economy. Another grey area is the exchange rate, which witnessed upheavals in recent days, prompting urgent action by the FIA against illegal exchange companies. Devaluation of rupee must be checked as the rating agency has confirmed colossal loss to Pakistan’s economy due to past free-for-all devaluation. The authorities should also prepare a workable strategy to address the legitimate apprehensions of the credit agency about the problem of mounting debt burden as the country’s Pakistan’s interest-servicing-to-revenue ratio remains one of the highest globally among rated sovereigns.
