Pakistan has secured a sovereign credit rating upgrade from S&P Global Ratings, which raised the country’s long-term foreign and local currency rating to ‘B’ from ‘B-‘ first time after 9 years, while assigning a stable outlook, citing stronger institutions, fiscal consolidation, and rebuilding of foreign exchange reserves.
Adviser to the Finance Minister Khurram Schehzad also shared this on X. “Pakistan has regained B Ratings after 9 years (last in 2016-17),” he added.
The agency said Pakistan has made significant progress in implementing reforms under the $7 billion IMF Extended Fund Facility (EFF), strengthening its institutional capacity and improving macroeconomic stability. It also upgraded Pakistan’s transfer and convertibility assessment to ‘B’ from ‘B-‘.
| Pakistan–Selected Indicators | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026bc | 2027bc | 2028bc | 2029bc | |
| Economic indicators (%) | ||||||||||
| Nominal GDP (tril. PKR) | 47.5 | 55.8 | 66.7 | 83.9 | 105.4 | 114.0 | 124.2 | 136.2 | 150.2 | 165.5 |
| Nominal GDP (bil. $) | 300.4 | 348.5 | 374.9 | 337.9 | 372.2 | 408.1 | 440.5 | 486.5 | 536.3 | 591.2 |
| GDP per capita (000s $) | 1.4 | 1.6 | 1.7 | 1.5 | 1.6 | 1.7 | 1.8 | 2.0 | 2.1 | 2.3 |
| Real GDP growth | (0.9) | 5.8 | 6.2 | (0.2) | 2.6 | 3.2 | 3.6 | 3.5 | 3.7 | 3.7 |
| Real GDP per capita growth | (2.8) | 3.4 | 4.3 | (2.0) | 0.9 | 1.4 | 1.9 | 1.8 | 2.0 | 2.0 |
| Real investment growth | (6.7) | 3.7 | 4.6 | (15.5) | (1.9) | 14.5 | 4.0 | 4.0 | 3.0 | 3.0 |
| Investment/GDP | 14.8 | 14.5 | 15.6 | 14.0 | 13.2 | 14.4 | 14.5 | 14.4 | 14.3 | 14.2 |
| Savings/GDP | 13.3 | 13.7 | 10.9 | 13.1 | 12.6 | 14.9 | 14.0 | 13.5 | 13.3 | 13.3 |
| Exports/GDP | 9.3 | 9.1 | 10.5 | 10.5 | 10.4 | 10.0 | 9.7 | 9.6 | 9.3 | 9.0 |
| Real exports growth | 1.5 | 6.5 | 5.9 | 3.2 | (1.6) | 0.9 | 2.0 | 2.8 | 2.8 | 2.8 |
| Unemployment rate | 7.0 | 6.3 | 7.5 | 7.0 | 7.0 | 7.0 | 7.0 | 7.0 | 7.0 | 7.0 |
| External indicators (%) | ||||||||||
| Current account balance/GDP | (1.5) | (0.8) | (4.7) | (1.0) | (0.6) | 0.5 | (0.5) | (1.0) | (1.0) | (0.9) |
| Current account balance/CARs | (8.2) | (4.3) | (23.9) | (5.1) | (2.9) | 2.2 | (2.3) | (5.1) | (5.5) | (5.0) |
| CARs/GDP | 18.1 | 18.7 | 19.5 | 19.2 | 19.4 | 20.3 | 19.4 | 18.7 | 18.1 | 17.7 |
| Trade balance/GDP | (7.0) | (8.2) | (10.4) | (7.4) | (6.0) | (6.6) | (6.8) | (6.7) | (6.6) | (6.5) |
| Net FDI/GDP | 0.9 | 0.5 | 0.5 | 0.2 | 0.6 | 0.6 | 0.5 | 0.4 | 0.4 | 0.4 |
| Net portfolio equity inflow/GDP | (0.1) | (0.1) | (0.1) | 0.0 | 0.0 | (0.1) | (0.1) | (0.1) | (0.1) | (0.1) |
| Gross external financing needs/CARs plus usable reserves | 137.8 | 116.7 | 124.7 | 123.6 | 128.2 | 112.0 | 104.7 | 104.9 | 104.2 | 103.5 |
| Narrow net external debt/CARs | 163.7 | 142.0 | 144.3 | 163.5 | 143.7 | 120.1 | 116.2 | 113.3 | 109.2 | 104.9 |
| Narrow net external debt/CAPs | 151.3 | 136.1 | 116.5 | 155.7 | 139.7 | 122.8 | 113.6 | 107.9 | 103.5 | 99.9 |
| Net external liabilities/CARs | 208.9 | 184.2 | 175.5 | 189.8 | 174.5 | 151.8 | 148.6 | 145.5 | 140.9 | 136.1 |
| Net external liabilities/CAPs | 193.1 | 176.5 | 141.7 | 180.6 | 169.6 | 155.2 | 145.3 | 138.5 | 133.5 | 129.6 |
| Short-term external debt by remaining maturity/CARs | 35.7 | 30.8 | 28.5 | 36.9 | 32.7 | 29.6 | 28.1 | 26.1 | 24.2 | 23.1 |
| Usable reserves/CAPs (months) | 0.5 | 1.8 | 2.2 | 1.7 | 0.7 | 1.7 | 2.9 | 2.9 | 2.8 | 2.7 |
| Usable reserves (Mil. $) | 10,303.2 | 16,230.6 | 9,607.9 | 4,194.8 | 11,403.0 | 20,994.1 | 22,780.2 | 23,850.6 | 24,869.6 | 25,992.8 |
| Fiscal indicators (general government %) | ||||||||||
| Balance/GDP | (7.1) | (6.1) | (7.9) | (7.8) | (6.8) | (5.4) | (4.0) | (4.0) | (4.5) | (4.5) |
| Change in net debt/GDP | 7.1 | 5.2 | 13.5 | 16.5 | 7.3 | 7.0 | 4.0 | 4.0 | 4.5 | 4.5 |
| Primary balance/GDP | (1.6) | (1.2) | (3.1) | (1.0) | 0.9 | 2.4 | 2.7 | 2.0 | 1.2 | 1.1 |
| Revenue/GDP | 13.2 | 12.4 | 12.1 | 11.5 | 12.6 | 15.8 | 15.8 | 15.3 | 15.2 | 15.2 |
| Expenditures/GDP | 20.3 | 18.5 | 20.0 | 19.2 | 19.4 | 21.2 | 19.8 | 19.3 | 19.7 | 19.7 |
| Interest/revenues | 41.8 | 39.8 | 39.6 | 59.1 | 61.5 | 49.4 | 42.1 | 39.5 | 37.6 | 36.6 |
| Debt/GDP | 77.6 | 73.2 | 75.9 | 77.1 | 69.8 | 72.5 | 70.5 | 68.3 | 66.4 | 64.8 |
| Debt/revenues | 588.2 | 591.7 | 629.9 | 672.0 | 554.6 | 459.3 | 446.3 | 446.2 | 437.1 | 426.1 |
| Net debt/GDP | 70.8 | 65.5 | 68.4 | 70.8 | 63.7 | 65.9 | 64.5 | 62.8 | 61.5 | 60.3 |
| Liquid assets/GDP | 6.8 | 7.7 | 7.5 | 6.3 | 6.1 | 6.6 | 6.0 | 5.5 | 5.0 | 4.5 |
| Monetary indicators (%) | ||||||||||
| CPI growth | 11.7 | 8.9 | 12.2 | 29.2 | 23.4 | 4.5 | 7.2 | 8.4 | 6.6 | 6.5 |
| GDP deflator growth | 9.6 | 11.0 | 12.4 | 26.2 | 22.3 | 4.9 | 5.1 | 6.0 | 6.3 | 6.3 |
| Exchange rate, year-end (PKR/$) | 168.2 | 157.3 | 204.4 | 286.4 | 278.4 | 283.8 | 280.0 | 280.0 | 280.0 | 280.0 |
| Banks’ claims on resident non-gov’t sector growth | 3.5 | 7.4 | 18.9 | 7.7 | 5.5 | 6.7 | 7.0 | 8.0 | 9.0 | 10.0 |
| Banks’ claims on resident non-gov’t sector/GDP | 17.9 | 16.4 | 16.3 | 13.9 | 11.7 | 11.5 | 11.3 | 11.2 | 11.0 | 11.0 |
| Foreign currency share of claims by banks on residents | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Foreign currency share of residents’ bank deposits | 7.4 | 6.0 | 6.3 | 7.2 | 5.9 | 5.5 | 5.48 | 5.48 | 5.48 | 5.48 |
| Real effective exchange rate growth | 0.2 | 7.1 | (7.6) | (8.9) | 17.4 | (2.7) | N/A | N/A | N/A | N/A |
According to S&P, the stable outlook reflects expectations that improved political and institutional conditions will help sustain economic reforms, support steady growth, and continue fiscal consolidation over the coming years. The agency also expects Pakistan to maintain access to official financing and roll over commercial credit lines to meet its external obligations.
S&P noted that Pakistan’s foreign exchange reserves, including the State Bank’s gold holdings, rose to $25.3 billion by the end of June 2026, compared with $6.7 billion in December 2022, providing sufficient coverage for the government’s $16.4 billion in external principal repayments over the next year.
The report also highlighted Pakistan’s return to international capital markets in April 2026 through a $750 million Eurobond and its inaugural CNY 1.75 billion Panda bond, saying these transactions broadened the country’s external funding sources.
On the fiscal front, S&P credited tax reforms and expenditure controls for accelerating fiscal consolidation. It forecasts the general government deficit at around 4 percent of GDP in fiscal 2027, down sharply from nearly 8 percent during the economic crisis of fiscal years 2022 and 2023. The agency also expects Pakistan’s net government debt-to-GDP ratio to decline gradually, although it will remain above 60 percent over the forecast period.
S&P projects Pakistan’s economy to grow 3.5 percent in fiscal 2027 after expanding 3.6 percent in fiscal 2026, supported by continued IMF-backed reforms despite higher energy prices linked to the Middle East conflict. Inflation is expected to ease gradually to 6.5 percent by fiscal 2029, while GDP per capita is forecast to approach $2,000 in fiscal 2027.
| Pakistan–Rating Component Scores | ||
|---|---|---|
| Key rating factors | Score | Explanation |
| Institutional assessment | 5 | Weak political institutions have in the past undermined support for sustainable public finances and balanced economic growth. But policy direction has stabilized of late under the auspice of the IMF program. Evolving checks and balances. Perceived corruption levels are high, and the country ranks poorly in key World Bank Governance Indicators, including rule of law. |
| Economic assessment | 5 | Based on GDP per capita (US$) and growth trends as per Selected Indicators in table 1. |
| External assessment | 6 | Based on narrow net external debt/CAR and gross external financing needs/(CAR + usable reserves) as per Selected Indicators in table 1.Pakistan is subject to elevated external financing risks. |
| Fiscal assessment: flexibility and performance | 5 | Based on the change in net general government debt (% of GDP) as per Selected Indicators in table 1.The sovereign has a significant shortfall in basic services and infrastructure, as reflected, for instance, by its low ranking on the UNDP’s human development index. |
| Fiscal assessment: debt burden | 6 | Based on net general government debt (% of GDP) and general government interest expenditures (% of general government revenues) as per Selected Indicators in table 1.The banking sector’s exposure to the government is more than 20% of its assets. |
| Monetary assessment | 4 | The exchange rate regime is “other managed float” with a short track record. The central bank (State Bank of Pakistan; SBP) intervenes intermittently in foreign exchange markets. In 2019, the SBP adopted a more market-determined, flexible exchange rate regime. Independence of the central bank is limited in practice, with a short history of improvement. CPI as per Selected Indicators in table 1. |
| Indicative rating | b | As per table 1 of “Sovereign Rating Methodology.” |
| Notches of supplemental adjustments and flexibility | 0 | None. |
| Final rating | ||
| Foreign currency | B | |
| Notches of uplift | 0 | Default risks do not apply differently to foreign- and local-currency debt. |
| Local currency | B | |
The ratings agency cautioned that the country’s interest burden remains among the highest for rated sovereigns and warned that any weakening of fiscal discipline or deterioration in external indicators could lead to a downgrade. Conversely, further structural improvements in fiscal and external metrics could support another upgrade in the future.
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