Moody's upgrades Pakistan's credit rating to Caa1 with stable outlook

Global rating agency Moody's Investor Service has upgraded Pakistan's sovereign credit rating by one notch, moving it from Caa2 to Caa1 with a stable outlook. This upgrade signals a marginal improvement in the South Asian nation's ability to meet its debt obligations. The decision reflects an expectation that Pakistan's fiscal and external position will remain manageable in the near term, supported by continued support from the IMF and an improvement in foreign currency reserves. While the upgrade could help Pakistan lower its borrowing costs and boost investor confidence, Moody's has cautioned that fiscal vulnerabilities, external financing needs, and reliance on multilateral support remain serious. Both ratings are still in the very high credit risk zone, meaning global investors will see Pakistan as a risky borrower.