In a promising development for Pakistan’s economy, global credit agencies have begun restoring confidence in the country’s financial outlook. Another major credit rating agency, S&P Global Ratings, has upgraded Pakistan’s credit rating from CCC+ to B-. Earlier, Fitch had also improved Pakistan’s rating.
According to the report, Pakistan’s foreign exchange reserves have surged to $20.5 billion, and inflation has dropped to 4.5%. The government’s efforts to boost revenue and control inflation have contributed to improved fiscal stability and a better balance of payments.
S&P notes that the interest rate has fallen to 11%, with the State Bank of Pakistan slashing the rate by 1,100 basis points. The country’s GDP growth is estimated at 2.7% this year, and 3.6% for next year. While the agriculture sector remained weak, the industrial sector showed improvement.
Remittances have also played a significant role, crossing $38 billion. In October 2024, the IMF approved a $7 billion loan program for Pakistan. The country’s fiscal deficit has narrowed to 5.6% this year.
S&P further noted that Pakistan received $16.8 billion in financial support from China, Saudi Arabia, UAE, and Kuwait. The country’s security situation has also improved, and the agency expressed hope that Pakistan will continue to receive support from international financial institutions.
