Express Tribune Editorials 26th August 2026

Credit rating upgrade

Pakistan's credit rating continues to steadily improve, with Moody's Ratings upgrading the country's sovereign credit rating to B3 from Caa1, with a stable outlook. The upgrade - the latest in a series of positive signals following S&P Global Ratings' similar move last month - reflects growing international recognition that Pakistan's economic trajectory is finally turning a corner. The rating is also the highest Pakistan has received from Moody's since June 2022. The last time the rating was higher than B3 was in November 2007 - one month before Benazir Bhutto's assassination and at the tail end of a very violent and politically volatile year.

The rating agency cited tangible improvements such as higher foreign exchange reserves, currently standing at $17 billion, sufficient to cover nearly three months of imports. The External Vulnerability Indicator, which is based on short- and long-term maturing debt relative to reserves, has also improved from 230% to about 145%. The national debt has become somewhat more affordable, with interest payments falling to roughly 35% of government revenue in FY26, down from 49% the previous year. The painful austerity measures forced upon the country by the IMF-supported reform programme have clearly worked. While we are still a long way from being considered a 'safe' investment destination, Moody's describes us as now being in the "speculative" and "high credit risk", rather than "poor quality" and "very high credit risk."

Still, there is a long way to go before we cross the threshold for what is considered "investment grade", where risk is considered moderate and not particularly speculative. But as policymakers gain more wiggle room for decision-making, it will be important for them to keep putting out budgets that continue to improve economic indicators and increase investor and public trust in the economy. Moody's announcement cautioned that surveys still "point to weak rule of law and control of corruption, as well as limited government effectiveness". Without properly addressing these, the economy will continue to trudge along, but not much more.

Partnership with Google

Pakistan's partnership with Google could prove to be one of the more consequential developments in the country's technology sector in years to come. The MoU signed between the government and the global technology giant goes well beyond the usual language of investment and cooperation. It covers AI, digital skills, education, payments, startups and the use of technology to transform government. If implemented seriously, it could help Pakistan move from being a consumer of digital technology to becoming a more competitive producer of it.

The timing is important. Pakistan has set itself the ambitious target of taking its IT exports and wider digital economy to $30 billion by 2030. At the same time, the government has identified AI as a national priority and approved an AI policy aimed at building domestic capacity and improving competitiveness. The arrival of a major global technology company at precisely this juncture gives that ambition a degree of international credibility. Google plans to facilitate 150,000 Career Certificates in 2026, while Pakistani students are expected to receive access to its advanced AI tools for a year. An AI Centre of Excellence in Islamabad is also being explored. These initiatives matter because Pakistan's greatest advantage in the digital economy is not just its infrastructure but also its large and relatively young population. Better-trained developers and wider access to sophisticated AI tools could lower barriers for entrepreneurs and allow smaller Pakistani companies to compete with established players.

Google's decision to establish its first office in Pakistan, followed by this agreement, sends a useful signal to other international technology companies. Global companies do not ignore political and regulatory risks, and their physical presence can indicate that Pakistan is beginning to be taken more seriously as a technology market. Other companies may follow if they see a functioning ecosystem.

Joint opposition

The opposition alliance took a decisive turn by agreeing to act in unison on the parliament floor to address prevailing politico-economic challenges. A major leap forward was the formal entry of Maulana Fazalur Rehman's JUI-F, which, in league with the six-party TTAP, is poised to call the shots. In another significant gesture, the PTI welcomed the JUI-F to act as a vanguard force in leading the opposition.

During an hours-long session in the parliament chamber on Monday night, the joint opposition formulated a list of demands aimed at restoring stability, ending political repression, and tackling the economic crisis. The JUI-F's endorsement of the call for the release of all political prisoners and the implementation of the 18th constitutional amendment in letter and spirit is expected to serve as the glue holding this alliance together, despite the political parties holding differing views on other issues.

A striking outcome of the meeting was the decision to resist the creation of new provinces for the time being, leaving the matter for an opportune moment in the future. The alliance warned that hasty moves on delimitations would fuel mistrust among federating units. Likewise, the opposition urged a political solution to the unrest in Balochistan and Khyber-Pakhtunkhwa, advocating for an end to the reliance on kinetic operations.

This stance could be a game-changer on the political horizon, as the government is reportedly mulling a draft to create new administrative units to usher in better governance. This is where the PPP's role becomes crucial, given its history of campaigning against the division of Sindh province. The party has already hinted at its displeasure with its coalition partner at the Centre, the PML-N, over various legislative issues. However, whether the PPP will rock the boat to chart a new political course by strengthening opposition voices remains difficult to predict.