S&P Global Ratings on Wednesday upgraded Pakistan's long-term sovereign credit rating to 'B' from 'B-', saying IMF-backed reforms and stronger institutional stability have improved the country's credit profile.
Pakistan's rating outlook was held at "stable" as sustained official financing is expected to help the country meet its external obligations while allowing it to continue rolling over commercial credit lines over the next 12 months.
The agency said the government's efforts to widen the tax base have improved revenue collection and accelerated fiscal consolidation, supporting a gradual decline in the country's debt burden.
Reforms backed by the IMF have helped restore macroeconomic stability, rebuild foreign exchange reserves and ease strains on Pakistan's fiscal and external positions, S&P said.
Tax reforms and continued foreign inflows have also strengthened the country's fiscal and external buffers against potential external shocks, the rating agency said.
The upgrade comes as Pakistan seeks additional external financing, including a proposed $10 billion exchange stabilisation facility from the United States, Reuters reported earlier on Wednesday, citing a source.
If agreed on, the facility would bolster Pakistan's foreign exchange reserves, ease pressure on the currency and reduce its reliance on multilateral financing, even as Islamabad pursues tighter fiscal and monetary policies in line with its IMF program.
S&P forecasts Pakistan's economy would grow 3.5% in fiscal year 2027 and expects only marginal price pressures from an energy price shock stemming from the conflict in the Middle East.
