Little to celebrate

BY now it has become almost tedious to read the same assessment from every global credit rating agency and lender — Pakistan’s economy has stabilised, but risks remain. Moody’s commentary on the country’s economy accompanying its latest upgrade is simply a repetition of this review dressed up in a new number. And that tedium is itself the story: an economy that keeps producing the same verdict year after year is hardly holding steady; in fact, it is stuck. Macroeconomic indicators may not be falling, but nothing underneath them is moving either. Standing still while the rest of the world advances is nothing but a quiet form of decline. Moody’s new rating, still highly speculative and seven notches below investment grade, is not a vote of confidence. It is merely an acknowledgment that the country is marginally less likely to default than before. And yet it was an occasion for the prime minister to congratulate the nation as though we had turned the corner. This is the peculiar place Pakistani policymaking has settled into, where even minor technical adjustments are treated as milestones. The picture Moody’s has painted is unflattering. It points to a narrow export base, negligible FDI, heavy reliance on remittances, and a government that still leans on official and commercial borrowing to meet its external obligations. None of this describes an economy capable of standing on its own feet. It is being propped up by the IMF and rolled over bilateral deposits. The governance language deserves more attention. The agency is blunt: weak rule of law, poor control of corruption, limited government effectiveness. These are not casual observations. These are the reasons investors continue to look elsewhere. Even the improvement in debt affordability that Moody’s highlights comes with a caveat. Interest payments have reduced substantially over the previous year. Yet the figure is so high that practically nothing is left for the social and infrastructure investment the country needs. This improvement is a function of falling inflation and rate cuts, not any structural change. What all of these add up to is an economy that has been stabilised in the technical sense but the deeper conditions for real growth remain elusive. Real recovery would have looked different. Moody’s upgrade is not a turning point; it is just a slightly better seat in the same waiting room. Published in Dawn, August 26th, 2026

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