ISLAMABAD: Fitch Ratings on Wednesday affirmed Pakistan’s long-term sovereign debt rating at “B-,” keeping the country in high-risk territory but signaling no immediate default threat, and assigned a “RR4” recovery rating, a measure of how much investors might recover if the country were to default, following a review under its updated sovereign rating criteria.

Fitch is one of the world’s three major credit rating agencies and its sovereign ratings are closely watched by investors because they affect a country’s access to international capital markets and the cost of borrowing.

Pakistan’s rating was last upgraded in April 2025 to “B-” from “CCC+,” reflecting improved macroeconomic stability after a period of severe financial stress.

“Fitch Ratings has affirmed Pakistan’s long-term debt ratings at ‘B-’ and assigned a Recovery Rating of ‘RR4,’” the agency said in a statement.

It said the action reflects the application of its new Sovereign Rating Criteria, effective September 2025, and the inclusion of recovery assumptions in sovereign debt ratings for the first time.

A “B-” rating means the country remains vulnerable to economic shocks but is currently meeting its debt obligations. The “RR4” recovery rating suggests “average recovery prospects” for holders of Pakistan’s bonds and sukuk if the country were to default.

The agency warned Pakistan’s rating could be downgraded if public debt and debt-servicing costs fail to remain on “a firm downward path,” or if external liquidity weakens.

On the positive side, it said an upgrade could be supported by “significant declines in government debt and debt-servicing burdens,” structural improvements in tax revenue collection, and a “sustained recovery in foreign-currency reserves” beyond current forecasts.

Pakistan is implementing structural economic reforms under a $7 billion International Monetary Fund (IMF) loan program agreed after prolonged political and economic turmoil.
While the country has faced high inflation, currency pressure and weak growth in recent years, authorities say tighter fiscal policy and external support have helped improve key macroeconomic indicators.