On August 13, 2025, Moody's Ratings upgraded Pakistan's local and foreign currency issuer ratings, as well as its senior unsecured debt ratings, from Caa2 to Caa1, maintaining a stable outlook. The upgrade was attributed to an improved financial position supported by an International Monetary Fund (IMF) loan. Earlier this year, S&P Global Ratings and Fitch Ratings upgraded Pakistan's rating, reflecting Prime Minister Shehbaz Sharif's commitment to implementing fiscal reforms. Moody's has acknowledged Pakistan's progress under the IMF Extended Fund Facility (EFF), particularly its improved foreign exchange reserves. However, the country still depends heavily on timely external financing. The agency also recognised fiscal improvements resulting from an expanded tax base, despite ongoing challenges related to debt affordability and governance.