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India Today
a day ago
- Business
- India Today
Pakistan's credit rating gets a lift from Moody's. Here's why
US-based credit rating agency Moody's has upgraded Pakistan's credit rating by one notch to Caa1 from Caa2 and assigned a 'stable' agency cited an improving external financial position and steady progress under the IMF Extended Fund Facility (EFF) programme as the main reasons for the upgrade. The $7 billion, 37-month IMF programme, approved in September 2024, has played a key role in stabilising Pakistan's macroeconomic PAKISTAN'S RATING UPGRADEBoth Caa1 and Caa2 are considered low credit ratings, indicating high credit risk. However, Caa1 is one level higher than Caa2, suggesting a slightly lower risk of default. Countries in the Caa category are still vulnerable to economic shocks and face challenges in meeting their debt obligations, but a move from Caa2 to Caa1 signals improved financial decision follows similar actions by other agencies. On July 24, S&P Global Ratings raised Pakistan's rating to B- from CCC+, while Fitch Ratings did the same in April. Both agencies currently have a stable outlook on the RECOVERY SIGNSThe upgrade came just hours after Finance Minister Mohammed Aurangzeb said there was more room for the central bank to cutPakistan's key policy rate from 11%, given the positive economic indicators. Pakistan's foreign exchange reserves have grown from $9.4 billion in August 2024 to $14.3 billion by July 2025. Inflation has also fallen, from a peak of 37.97% in May 2023 to 4.1% in July 2025, hitting a low of 0.3% in April this inflation has moved steadily down:Q1 2023: 29.7% during a severe crisisQ4 2023: 28.3% during IMF bailoutQ2 2024: 20.7% as recovery startedQ4 2024: 11.1% with notable improvementQ2 2025: 0.7% nearing zero inflationGDP growth has also improved, from a contraction of -0.2% in FY2023 to 2.5% in FY2024 and an estimated 2.7% in Minister Shehbaz Sharif said the improved credit rating shows that 'economic policies are heading in the right direction'. Following the announcement, Pakistan's international bonds rose as much as 1 cent to trade between 90 and 100 cents on the dollar, their highest since early 2022, when fears of a debt crisis had pushed them down to about 30 its statement, Moody's said, 'The upgrade to Caa1 reflects Pakistan's improving external position, supported by its progress in reform implementation under the IMF Extended Fund Facility.' However, it said that debt affordability remains one of the weakest among rated countries and highlighted ongoing governance and political STILL REMAINPakistan currently faces a debt burden totalling approximately $267 billion as of May 2025, representing the highest debt level in the country's history. This debt burden continues to pose significant challenges despite recent economic stabilization efforts and credit rating the upgrade, Pakistan's economy continues to face hurdles. The central bank kept interest rates at 11% on July 30, surprising analysts who had expected a cut of up to 100 basis points. The bank cited rising energy prices as a reason for a less favourable inflation outlook, with July inflation climbing to 4.1% next monetary policy announcement is set for September 15.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- EndsMust Watch
Khaleej Times
2 days ago
- Business
- Khaleej Times
Moody's upgrades Pakistan's credit rating to 'Caa1'
Moody's said on Wednesday it had raised Pakistan's credit rating by one notch to 'Caa1' from 'Caa2' due to an improving external financial position and it assigned the country a "stable" outlook. The announcement came within hours of Pakistan's Finance Minister Mohammed Aurangzeb saying there was more room for the central bank to cut the country's key policy rate from 11% on the back of positive economic indicators. "The credit rating's improvement is a sign that economic policies are heading toward the right direction," Prime Minister Shehbaz Sharif said in a statement. Pakistan's international bonds rose as much as 1 cent to between 90 and 100 cents on the dollar following the ratings upgrade. It lifted most of them to their highest since early 2022 when fears of a full-blown debt crisis sent them plunging to as little as 30 cents. Moody's decision to raise the rating by one notch after Fitch and SP did the same will help Pakistan's capability to raise external debt. Pakistan says its economy is on a recovery path after a $7 billion IMF bailout helped to stabilise it. "We changed the outlook for the Government of Pakistan to stable from positive," Moody's said in a statement. "The upgrade to Caa1 reflects Pakistan's improving external position, supported by its progress in reform implementation under the IMF Extended Fund Facility (EFF) program," it said. Pakistan's debt affordability has improved, but remains one of the weakest among rated sovereigns, Moody's said, adding that the Caa1 rating also reflected the country's weak governance and high degree of political uncertainty. Aurangzeb told a gathering of businessmen in Islamabad ahead of the Moody's announcement that he was expecting an improvement in Pakistan's credit rating by other agencies after Fitch and SP. "We are hopeful of progress in terms of the policy rate going south," he added. Aurangzeb said it was his personal view that there was more room for a rate cut towards the end of the year, adding that it was for the central bank to make the final call on the issue. The next policy rate announcement is due on September 15. The central bank left its key interest rate unchanged at 11% on July 30, going against analyst expectations. In a Reuters poll they had forecast a reduction of 50 to 100 basis points. The bank said the inflation outlook had deteriorated due to rising energy prices. Inflation accelerated to 4.1% year-on-year in July.
Arab News
2 days ago
- Business
- Arab News
Moody's upgrades Pakistan's credit rating to ‘Caa1', finance minister hopes for rate cut
Moody's said on Wednesday it had raised Pakistan's credit rating by one notch to 'Caa1' from 'Caa2' due to an improving external financial position and it assigned the country a 'stable' outlook. The announcement came within hours of Pakistan's Finance Minister Mohammed Aurangzeb saying there was more room for the central bank to cut the country's key policy rate from 11 percent on the back of positive economic indicators. 'The credit rating's improvement is a sign that economic policies are heading toward the right direction,' Prime Minister Shehbaz Sharif said in a statement. Pakistan's international bonds rose as much as 1 cent to between 90 and 100 cents on the dollar following the ratings upgrade. It lifted most of them to their highest since early 2022 when fears of a full-blown debt crisis sent them plunging to as little as 30 cents. Moody's decision to raise the rating by one notch after Fitch and S&P did the same will help Pakistan's capability to raise external debt. Pakistan says its economy is on a recovery path after a $7 billion IMF bailout helped to stabilize it. 'We changed the outlook for the Government of Pakistan to stable from positive,' Moody's said in a statement. 'The upgrade to Caa1 reflects Pakistan's improving external position, supported by its progress in reform implementation under the IMF Extended Fund Facility (EFF) program,' it said. Pakistan's debt affordability has improved, but remains one of the weakest among rated sovereigns, Moody's said, adding that the Caa1 rating also reflected the country's weak governance and high degree of political uncertainty. Aurangzeb told a gathering of businessmen in Islamabad ahead of the Moody's announcement that he was expecting an improvement in Pakistan's credit rating by other agencies after Fitch and S&P. 'We are hopeful of progress in terms of the policy rate going south,' he added. Aurangzeb said it was his personal view that there was more room for a rate cut toward the end of the year, adding that it was for the central bank to make the final call on the issue. The next policy rate announcement is due on September 15. The central bank left its key interest rate unchanged at 11 percent on July 30, going against analyst expectations. In a Reuters poll they had forecast a reduction of 50 to 100 basis points. The bank said the inflation outlook had deteriorated due to rising energy prices. Inflation accelerated to 4.1 percent year-on-year in July.
Express Tribune
2 days ago
- Business
- Express Tribune
Moody's lifts Pakistan's rating to ‘Caa1' on stronger external finances
Moody's said on Wednesday it had raised Pakistan's credit rating by one notch to 'Caa1' from 'Caa2' due to an improving external financial position and it assigned the country a "stable" outlook. The announcement came within hours of Pakistan's Finance Minister Mohammed Aurangzeb saying there was more room for the central bank to cut the country's key policy rate from 11% on the back of positive economic indicators. "The credit rating's improvement is a sign that economic policies are heading toward the right direction," Prime Minister Shehbaz Sharif said in a statement. Also Read: Aurangzeb vows to close tax loopholes, boost investor confidence Pakistan's international bonds rose as much as 1 cent to between 90 and 100 cents on the dollar following the ratings upgrade. It lifted most of them to their highest since early 2022 when fears of a full-blown debt crisis sent them plunging to as little as 30 cents. Moody's decision to raise the rating by one notch after Fitch and S&P did the same will help Pakistan's capability to raise external debt. Pakistan says its economy is on a recovery path after a $7 billion IMF bailout helped to stabilise it. "We changed the outlook for the Government of Pakistan to stable from positive," Moody's said in a statement. "The upgrade to Caa1 reflects Pakistan's improving external position, supported by its progress in reform implementation under the IMF Extended Fund Facility (EFF) program," it said. Pakistan's debt affordability has improved, but remains one of the weakest among rated sovereigns, Moody's said, adding that the Caa1 rating also reflected the country's weak governance and high degree of political uncertainty. Read: New Pak-US front against terror trains sights on BLA, TTP Aurangzeb told a gathering of businessmen in Islamabad ahead of the Moody's announcement that he was expecting an improvement in Pakistan's credit rating by other agencies after Fitch and S&P. "We are hopeful of progress in terms of the policy rate going south," he added. Aurangzeb said it was his personal view that there was more room for a rate cut towards the end of the year, adding that it was for the central bank to make the final call on the issue. The next policy rate announcement is due on September 15. The central bank left its key interest rate unchanged at 11% on July 30, going against analyst expectations. In a Reuters poll they had forecast a reduction of 50 to 100 basis points. The bank said the inflation outlook had deteriorated due to rising energy prices. Inflation accelerated to 4.1% year-on-year in July.
Reuters
2 days ago
- Business
- Reuters
Moody's upgrades Pakistan's credit rating to 'Caa1', finance minister hopes for rate cut
ISLAMABAD, Aug 13 (Reuters) - Moody's said on Wednesday it had raised Pakistan's credit rating by one notch to 'Caa1' from 'Caa2' due to an improving external financial position and it assigned the country a "stable" outlook. The announcement came within hours of Pakistan's Finance Minister Mohammed Aurangzeb saying there was more room for the central bank to cut the country's key policy rate from 11% on the back of positive economic indicators. "The credit rating's improvement is a sign that economic policies are heading toward the right direction," Prime Minister Shehbaz Sharif said in a statement. Pakistan's international bonds rose as much as 1 cent to between 90 and 100 cents on the dollar following the ratings upgrade. It lifted most of them to their highest since early 2022 when fears of a full-blown debt crisis sent them plunging to as little as 30 cents. Moody's decision to raise the rating by one notch after Fitch and S&P did the same will help Pakistan's capability to raise external debt. Pakistan says its economy is on a recovery path after a $7 billion IMF bailout helped to stabilise it. "We changed the outlook for the Government of Pakistan to stable from positive," Moody's said in a statement. "The upgrade to Caa1 reflects Pakistan's improving external position, supported by its progress in reform implementation under the IMF Extended Fund Facility (EFF) program," it said. Pakistan's debt affordability has improved, but remains one of the weakest among rated sovereigns, Moody's said, adding that the Caa1 rating also reflected the country's weak governance and high degree of political uncertainty. Aurangzeb told a gathering of businessmen in Islamabad ahead of the Moody's announcement that he was expecting an improvement in Pakistan's credit rating by other agencies after Fitch and S&P. "We are hopeful of progress in terms of the policy rate going south," he added. Aurangzeb said it was his personal view that there was more room for a rate cut towards the end of the year, adding that it was for the central bank to make the final call on the issue. The next policy rate announcement is due on September 15. The central bank left its key interest rate unchanged at 11% on July 30, going against analyst expectations. In a Reuters poll they had forecast a reduction of 50 to 100 basis points. The bank said the inflation outlook had deteriorated due to rising energy prices. Inflation accelerated to 4.1% year-on-year in July.
