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ISLAMABAD: Pakistan achieved consecutive positive credit ratings from Fitch Ratings for the first time in years on Monday. This development comes as the country&#39;s foreign exchange reserves have nearly doubled, inflation has declined, and borrowing costs have reached their lowest levels in recent memory. These significant improvements would have been hard to predict when the nation was on the brink of default in 2023. Fitch upgraded Pakistan from &#39;CCC+&#39; to &#39;B-&#39; in April 2025. This year, it affirmed that rating with a &quot;Stable Outlook,&quot; a result that shows that last year&#39;s gains were not a one-off. The reserve picture alone marks a transformation. Gross foreign exchange reserves stood at less than $8 billion in early 2023. By March 2025, they had recovered to just under $18 billion. By February, they reached $28.4 billion, with non-gold reserves rising $5.1 billion year-on-year to $17.5 billion. Inflation has undergone an equally steep reversal. Consumer prices averaged above 23% in FY24. Fitch projected 5% for FY25. The FY26 forecast of 7.9% is higher, driven by global energy pressures, but it remains a fraction of where Pakistan stood two years ago. The State Bank of Pakistan cut its policy rate from 22% in May 2024 to 12% by early 2025, then to 10.5% by the end of 2025. Market rates fell in tandem, easing costs across the economy and helping push GDP growth from 3% in FY25 to a projected 3.1% in FY26. Fiscal gains have compounded. Pakistan&#39;s primary surplus more than doubled in FY25, exceeding 2% of GDP. It is projected at 2.1% in FY26. Government debt as a share of GDP is forecast to fall to 68.9% in FY26 from 70.7% in FY25. Provincial governments have legislated increases in agricultural income tax, a structural benchmark that was unresolved at the time of the 2025 upgrade. Pakistan has also deepened its relationship with the IMF considerably. One program review had been completed when Fitch issued last year&#39;s upgrade. Three have now been completed, and a March staff-level agreement is set to unlock a combined $1.2 billion pending board approval. Risks remain real. Pakistan sources up to 90% of its oil from the Gulf, leaving it exposed to the Middle East conflict and potential disruptions in the Strait of Hormuz. External debt amortizations are expected to rise to $12.8 billion in FY26 from roughly $8 billion in FY25. Fitch said a downgrade would follow a sharp drawdown in reserves or fiscal slippage. An upgrade requires sustained reserve gains and structural improvements in tax revenue.

Pakistanis shop at a market for the Eid al-Fitr celebrations during the last week of the Islamic holy fasting month of Ramadan in Karachi on March 17, 2026. (AFP)

Economy

Fitch maintained Pakistan’s B- rating with a 'Stable Outlook' as reserves rose to $28.4 billion, inflation eased, interest rates fell, and fiscal balances improved.

Pakistan posts back-to-back credit wins as economy improves

ISLAMABAD: Global credit rating agency Fitch Ratings on Wednesday reaffirmed Pakistan&rsquo;s long-term foreign-currency credit rating at B-, signaling continued economic stability. <a href="https://www.pakistantv.com/article/fitch-downgrades-frances-credit-rating-in-new-debt-battle-blow" target="_blank" style="color: rgb(0, 0, 0);" rel="noopener noreferrer" class="fr-green">Fitch</a> also assigned Pakistan a Recovery Rating of RR4, indicating average recovery for investors in the event of a default. Previously, Pakistan had been placed in the &ldquo;Under Criteria Observation&rdquo; category, a temporary status used when agencies reassess ratings under revised rules. It has now been removed. Improved financing conditionsThe rating agency had upgraded Pakistan&rsquo;s foreign-currency rating to B- with a stable outlook in April last year, reflecting improved external financing conditions and policy support under the International Monetary Fund program.&nbsp;Fitch warned that Pakistan&rsquo;s rating could come under pressure if fiscal reforms slow, debt levels rise, or external liquidity weakens, particularly due to delays in IMF program reviews.&nbsp;It said the rating could improve if Pakistan achieves sustained reductions in government debt, strengthens tax collection, and builds foreign exchange reserves beyond current forecasts.&nbsp;The decision was seen by market observers as a positive signal, as Pakistan retained its rating after a review under stricter criteria.

Also assigns Pakistan a Recovery Rating of RR4, which indicates an average level of recovery for investors in the event of a default.

Articles tagged with "Fitch Ratings"

Pakistan posts back-to-back credit wins as economy improves

Fitch reaffirms Pakistan’s B- credit rating, removes review status