Business Recorder Editorials 28th August 2026

The Moody’s upgrade

EDITORIAL: Moody’s has upgraded Pakistan’s sovereign credit rating to B3 from Caa1, a four-year high on the back of improved governance, stronger external buffers and sustained macroeconomic stabilisation. This prompted Prime Minister Shehbaz Sharif to congratulate the nation and to describe the upgrade as indicative of growing international confidence in the country’s economic policies.

He appreciated the efforts of Deputy Prime Minister Ishaq Dar, Field Marshal Asim Munir, Finance Minister Muhammad Aurangzeb and other ministers and relevant officials for their efforts. His appreciation is in line with his belief that recognition encourages cabinet members and their subordinates to make even greater efforts.

He followed this rationale in his nominations for the August 14 awards, though, as expected, critics have questioned the number of recipients.

The upgrade when compared with Pakistan’s existing rating by the other two international agencies of note, notably Standard and Poor and Fitch, brings the Moody’s upgrade at par with Fitch (an agency that had reaffirmed the B negative rating for Pakistan more than seven months prior i.e. in January this year) while it is one tier down from the S&P’s B rating announced on 22 July 2026.

The Moody’s upgrade implies that Pakistan has moved upward from the highly speculative non-investment category to speculative non-investment category while the S&P rating places Pakistan as a country which poses significant risk and remains in the non-investment category.

In other words, the rating does not indicate any change in Pakistan’s status as an attractive foreign investment destination, which may partly explain the decline in foreign direct investment inflows from 2477.3 million dollars in 2024-25 to 1636.8 million dollars in 2025-26 – a decline of 33.9 percent.

Be that as it may, ratings by these agencies are not only important for all countries in their ability to attract foreign direct investment but also to determine the capacity to borrow at reasonable rates from the market.

In recent months, Pakistan has been able to access loans from multilateral lenders, with ongoing International Monetary Fund (IMF) tranche releases not yet facing any major roadblocks — defined as the failure to implement agreed conditions, including the pledge to generate stipulated amounts bilaterally (over $10 billion in rollovers from China and Saudi Arabia continue to be extended), multilaterally, and/or from the commercial sector abroad under the ongoing programme.

However, the rate of interest charged on borrowings by the government from the commercial sector abroad remains prohibitively high.

The rating agencies’ focus is on assessing the capacity of the authorities to pay back loans, and it is therefore extremely relevant to note that Pakistan has never ever defaulted on any loan though it has often successfully re-negotiated conversion of a short repayment period into a longer term repayment period even though the resulting interest charged does rise as a consequence.

The Field Marshal-led critical role as a mediator between Iran and the US has undoubtedly strengthened the country’s international standing and may have accounted for additional support from regional countries – an element that challenges the Interior Minister’s end-July claim that the current governance system has completely collapsed and requires a major structural change. It is equally relevant to note that Pakistan has achieved stabilisation on the back of implementing the agreed IMF conditions even though the reserves are largely debt based while the current account deficit may come under threat as the trade deficit is showing signs of rising.

The upgrade must be hailed; however, it is not yet time for complacency and more effort is required to push the country towards investment-grade rating.

A test of Indian democracy

EDITORIAL: The reported excessive use of police force against recent youth-led protests in India calls into sharp focus the limits of state power and the protection of democratic freedoms.

According to a fresh Amnesty International report, police used pellet guns, tear gas, batons, grenades and electric shock devices during demonstrations sparked by irregularities in the national medical entrance examination.

What began as anger over an examination issue widened into a broader expression of frustration among young people over unemployment, limited opportunities and the pressures confronting them in an increasingly difficult economic and social environment.

In any democracy, public protest is a legitimate means of expressing grievances. Young people whose educational and professional futures may be affected by leaks or irregularities in a major entrance examination have every reason to demand answers and accountability. Their frustration should not, in itself, be regarded as a threat to public order.

At the same time, any violence or attacks on public property or security personnel has to be dealt with according to law. The more serious question, however, is whether the response of the authorities was proportionate. Police have a duty to maintain order and protect citizens, but that duty cannot amount to a licence for indiscriminate or excessive resort to force.

The reported deployment of pellet guns and other potentially dangerous weapons against crowds is particularly disturbing. The use of lethal force, even though no one was killed, warrants a thorough and impartial examination.

As is often the case after clashes between protesters and law enforcement, there are sharply conflicting accounts of what exactly happened.

The police maintain that force was used only after protesters turned violent and that security personnel suffered serious injuries. But Amnesty International says its assessment of witness testimony and visual evidence points to the use of force in ways that breached international standards as well as domestic policing guidelines. Neither account should simply be accepted or rejected on political grounds.

The facts need to be established through an investigation that is independent, credible and transparent. The Supreme Court’s decision to establish a panel to examine violence by both protesters and police should therefore be welcome. The officials found to have exceeded their authority should be held to account, so should the protesters proven to have committed violence. The rule of law cannot operate selectively.

There is also a larger lesson here. Governments ignore legitimate public grievances at their own peril. Concerns about examination integrity, unemployment and diminishing opportunities are not abstract political issues for India’s youth; they affect families and shape the prospects of an entire generation.

Use of force may disperse a crowd, but it cannot address the grievances that brought people onto the streets in the first place.

The strength of a democracy is reflected not in its ability to silence dissent, but in its capacity to tolerate criticism and respond to it with restraint. India as one of the world’s largest democracies – actually, an electoral autocracy under Prime Minister Narendra Modi – should have little to fear from peaceful youth protest. What is needed now is transparency, accountability and a serious effort to address the concerns that gave rise to the demonstrations.

Young citizens demanding a fairer future should be heard, not treated as adversaries.