What happened
S&P Global Ratings upgraded Pakistan’s long-term sovereign credit rating to ‘B’ from ‘B-’ on Wednesday, 22 July 2026, the highest level in seven years, saying stronger institutional capacity, reforms under an International Monetary Fund programme and a significant rebuilding of foreign exchange reserves had eased pressure on the country’s fiscal and external position, WE News English reported.
The agency affirmed Pakistan’s short-term sovereign rating at ‘B’ and assigned a stable outlook. It also raised the country’s transfer and convertibility assessment to ‘B’ from ‘B-’, a measure of how easily foreign investors can move funds in and out.
“We therefore raised our long-term sovereign rating on Pakistan to ‘B’. At the same time, we affirmed the ‘B’ short-term rating,” S&P Global said. “The stable outlook reflects our expectations that improved institutional settings will anchor economic reforms to bring about a sustained period of steady growth and fiscal consolidation.”
Why the agency moved
According to the ratings update, the government’s efforts to broaden the tax base improved revenue collection and accelerated fiscal consolidation, contributing to a gradual decline in the debt burden. S&P said sustained official financing was expected to help Pakistan meet its external obligations while allowing it to keep rolling over commercial credit lines over the next 12 months.
The agency added that tax reforms and continued foreign inflows had strengthened the country’s fiscal and external buffers against potential external shocks. It forecast that Pakistan’s economy would expand by 3.5 per cent in fiscal year 2027 and said it expected only marginal inflationary pressure from any energy price shock arising from the conflict in the Middle East.
The nine-year benchmark
S&P said Pakistan was last assigned a ‘B’ long-term sovereign rating between 31 October 2016 and 3 February 2019. Last year the agency upgraded the country to ‘B-’ from ‘CCC+’, citing progress on reforms and easing risks of sovereign default.
Reacting to the decision, Khurram Schehzad, an adviser to Pakistan’s finance minister, called the upgrade “another major vote of confidence in Pakistan’s economic turnaround.” In a post on X, he said Pakistan had regained its ‘B’ sovereign rating after nine years, attributing it to stronger institutional capacity, faster fiscal consolidation, stronger foreign exchange reserves and improved macroeconomic stability. “The Stable Outlook reflects confidence that continued reforms will support sustained growth and fiscal discipline,” he said.
The reporting said the upgrade was expected to attract greater foreign investment and to support future sovereign bond and privatisation initiatives.
What is still uncertain
The rating reflects S&P’s assessment as of its update; it does not by itself change the terms of Pakistan’s existing loans, and the agency cautioned that its outlook rests on continued reform. As with the recent Fitch affirmation of Pakistan’s ‘B-’ rating, the practical effect on borrowing costs will depend on how investors price the new rating and on whether reserve accumulation continues.
Sources & reporting notes
This is a summary of published reporting, not independent reporting. Details are as carried by the cited sources, which were reviewed on 22 July 2026.
- WE News English — "S&P Global Upgrades Pakistan's Credit Rating to Highest Level in Seven Years"22 July 2026 · The rating action, the agency's stated reasons, the nine-year benchmark and the government's reaction.
- Dawn — "S&P Global Ratings upgrades Pakistan's sovereign credit rating to 'B'"22 July 2026 · Independent confirmation of the upgrade, the stable outlook and the transfer and convertibility change.
