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Moody’s Investors Service has upgraded Pakistan’s sovereign credit rating from Caa2 to Caa1 with a stable outlook, citing an improved external position and steady progress on reforms under the IMF’s Extended Fund Facility.

CWEIC’s Strategic Adviser for Pakistan, Imran Khalil Naseer, commented: “Moody’s upgrade of Pakistan’s credit rating to Caa1 signals renewed investor confidence and progress on economic reforms. The move marks a positive step in the country’s recovery, with potential to boost trade and investment across the Commonwealth.”

The decision marks a notable milestone in Pakistan’s recovery from the severe economic turbulence of 2022–2024, when surging energy costs, high external debt, and political instability pushed the country to the brink of default. A $7 billion IMF bailout in 2024 helped stabilise reserves and restore market confidence.

Following the upgrade, Pakistan’s international bonds rose to their highest levels since early 2022. Finance Minister Muhammad Aurangzeb welcomed the move as “a sign that the government’s policies are heading in the right direction” and expressed optimism that the central bank could soon lower its key policy rate, currently 11%, to support growth.

Moody’s cautioned that governance challenges and political uncertainty remain, limiting further upward movement for now. Nevertheless, the upgrade signals to investors a more stable macroeconomic environment and growing potential for trade and investment, positive news for Pakistan’s partners across the Commonwealth.

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