The international credit rating agency Fitch has maintained Pakistan’s long-term foreign currency debt rating at B-, according to Bloomberg. The agency has also assigned a Recovery Rating of RR4 for the country’s debt obligations.
Previously, Pakistan’s ratings were under special observation, but they have now been moved to standard monitoring status. The evaluation reflects Fitch’s recently revised framework for assessing sovereign creditworthiness, which was introduced in September 2025.
The updated methodology includes specific provisions for estimating potential recovery scenarios in debt situations. This approach allows Fitch to better assess the likelihood of debt repayment under varying economic conditions and has been factored into Pakistan’s current rating designation.
By maintaining the B- rating and assigning the RR4 recovery rating, Fitch signals that while Pakistan faces challenges in its external debt obligations, there is a moderate likelihood of recovery for creditors in the event of default. The ratings take into account macroeconomic conditions, fiscal policy, external financing capacity, and structural reforms affecting the country’s financial stability.
Fitch’s affirmation of Pakistan’s ratings provides insight into how international investors may perceive the risk associated with the country’s foreign currency debt. It also serves as a benchmark for financial institutions, policymakers, and international creditors in evaluating Pakistan’s creditworthiness and debt management capacity.
The move from special observation to standard monitoring indicates that Fitch has gained greater clarity on Pakistan’s debt and economic trajectory, reflecting the effects of recent policy measures and financial sector developments. While the long-term rating remains speculative-grade, the stable monitoring suggests that the agency considers the current outlook manageable under the revised assessment framework.
Fitch’s Recovery Rating framework is designed to complement traditional credit ratings by estimating potential recovery rates in the event of default, providing a more nuanced view of sovereign debt risks. For Pakistan, the RR4 designation indicates moderate recovery prospects, giving investors additional context regarding expected outcomes in adverse scenarios.
The reaffirmation of the rating comes amid ongoing economic challenges, including external financing pressures and fiscal constraints, while highlighting the country’s efforts to implement reforms and stabilize its macroeconomic environment. Fitch’s rating underscores the importance of continued policy implementation, structural reforms, and engagement with international partners to maintain financial stability and investor confidence.
Overall, Fitch’s assessment signals that Pakistan remains under careful observation by global credit agencies but retains a level of creditworthiness that allows it to manage its foreign currency obligations while pursuing economic reform and growth initiatives.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.