Moody’s upgrades Pakistan’s ratings to Caa2 citing improved macroeconomic conditions 

A sign for Moody's rating agency stands in front of the company headquarters in New York, September 18, 2012. (AFP/FILE)
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Updated 28 August 2024
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Moody’s upgrades Pakistan’s ratings to Caa2 citing improved macroeconomic conditions 

  • Ratings upgrade reflects Pakistan’s decreased default risk after $7 billion IMF bailout staff-level agreement in July
  • Despite doubling since June 2023, Pakistan’s foreign reserves remain insufficient for external financing needs, says Moody’s 

ISLAMABAD: International credit ratings agency Moody’s on Wednesday upgraded Pakistan’s ratings to Caa2 from Caa3 and changed the country’s outlook to “positive” citing improving macroeconomic conditions and better government liquidity and external position. 

The ratings upgrade reflects Pakistan’s decreased default risk after a $7 billion IMF bailout staff-level agreement in July.

However, despite doubling since June 2023, Pakistan’s foreign exchange reserves remain insufficient for its external financing needs, the agency said. 

“The upgrade to Caa2 reflects Pakistan’s improving macroeconomic conditions and moderately better government liquidity and external positions, from very weak levels,” the ratings agency said. “Accordingly, Pakistan’s default risk has reduced to a level consistent with a Caa2 rating.”

The agency said Pakistan’s Caa2 rating continues to reflect the country’s “very weak debt affordability,” saying that it drives high debt sustainability risk. Moody’s said it expects interest payments to continue absorbing about half of government revenue over the next two to three years.

“The Caa2 rating also incorporates the country’s weak governance and high political uncertainty,” it said. 

Moody’s said that sustained reform implementation, which includes revenue-raising measures, can increase the government revenue base and improve Pakistan’s debt affordability. 

It said completing IMF reviews in a timely manner would also allow Pakistan to continually unlock financing from official partners, sufficient to meet its external debt obligations and support further rebuilding of its foreign exchange reserves.

Moody’s said that while it expects Pakistan to cover its financing needs with funding from official partners, there remains “uncertainty” around the government’s ability to sustain reform implementation. 

It cautioned that a weak coalition government formed after the February election this year may not be able to take revenue-raising measures without stoking social tensions. 

“Slippages in reform implementation or results could lead to delays in or withdrawal of financing support from official partners,” Moody’s warned. 


Pakistani, Chinese firms sign 79 MoUs worth $4.5 billion at Islamabad agriculture summit — minister

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Pakistani, Chinese firms sign 79 MoUs worth $4.5 billion at Islamabad agriculture summit — minister

  • The summit saw participation from over 300 Pakistani, Chinese firms focusing on modern agricultural techniques and solutions
  • Food security minister says these investments will modernize Pakistan’s agricultural value chains and enhance productivity

KARACHI: The Pakistan–China Agriculture Investment Conference in Islamabad has resulted in 79 Memoranda of Understanding (MoUs) between Pakistani and Chinese companies with an approximate investment value of $4.5 billion, Pakistani Food Security Minister Rana Tanveer Hussain said on Tuesday, signaling confidence of Chinese investors in Pakistan’s agriculture and food sectors.

At least 119 Chinese companies and over 191 Pakistani firms participated in the event held on Monday, focusing on fertilizers, seed varieties, machinery, precision farming and smart irrigation systems, according to the organizers.

The conference was billed by Pakistan’s Ministry of National Food Security and Research as a platform for deepening bilateral agricultural ties and supporting broader economic engagement between the two countries.

Hussain said the scale and depth of investment commitments at the conference reflected a decisive shift from dialogue to on-ground, investment-led collaboration between the two countries.

“The conference was specifically structured to deliver tangible outcomes through direct B2B (business to business) matchmaking, targeted sectoral engagement and project-based investment facilitation, rather than conventional discussions,” he was quoted as saying by his ministry.

Pakistan and China have been expanding cooperation in agriculture under the China-Pakistan Economic Corridor (CPEC) framework, with a focus on mechanization, high-yield seeds, livestock development and value-added food processing. Officials say stronger agricultural ties could help Pakistan boost exports, ensure food security and create jobs, while offering Chinese companies access to a large farming market and new investment opportunities.

Pakistan’s exports to China reached approximately $2.38 billion in Fiscal Year 2024–25 that ended in June, while imports stood at $16.3 billion, reflecting growing demand on both sides despite global economic headwinds, according to the minister.

The food security ministry undertook extensive preparatory work prior to the conference, including structured engagements with Pakistani industry bodies and Chinese enterprises, to align investment proposals with market demand, technology requirements and national priorities, according to Hussain.

As a result, investment agreements were concluded across ten high-impact agricultural and allied sub-sectors, including food processing and value addition, agri-technology, seeds and plant protection, livestock and dairy, meat and poultry, fruits and vegetables, fisheries and aquaculture, animal feed, post-harvest infrastructure, and agricultural inputs.

“These investments will modernize Pakistan’s agricultural value chains, introduce advanced production and processing technologies, and significantly enhance productivity,” the minister said.

“The inflow of capital and technology is expected to generate large-scale employment, particularly in rural areas, strengthen farm-to-market linkages, and reduce post-harvest losses, thereby improving farmer incomes and rural livelihoods.”