ISLAMABAD/ KARACHI: Prime Minister Shehbaz Sharif has appreciated World Bank’s principled support for Pakistan’s legitimate position in the light of India’s unilateral and illegal actions that undermine important international agreements such as the Indus Waters Treaty.
Talking to World Bank’s Regional Vice President for the Middle East, North Africa, Afghanistan and Pakistan Ousmane Dione here on Thursday, the prime minister emphasized Pakistan’s determination to resolve issues through dialogue. He also reiterated Pakistan’s commitment to upholding international law, achieving prosperity and maintaining regional peace.
The prime minister was also appreciative of the strategic role of the Country Partnership Framework in supporting Pakistan’s development priorities, especially in the sectors of energy, human development, climate change and governance reforms. He expressed his gratitude for the World Bank’s timely and generous support during the devastating floods of 2022, which enabled Pakistan to initiate immediate relief efforts as well as reconstruction and rehabilitation activities.
The World Bank’s regional vice president reaffirmed commitment to strengthening and expanding longstanding partnership with Pakistan and supporting key sectors of the economy. He commended Pakistan’s ongoing macroeconomic recovery and lauded the government’s efforts to lead the country toward financial stability and sustainable development. The two sides also expressed a joint resolve to further strengthen their cooperation in the coming years to achieve long-term development goals and build a prosperous future for the people of Pakistan.
Meanwhile, S&P Global Ratings upgraded Pakistan’s credit rating, citing better financial conditions in a boost for the government’s efforts to bolster the South Asian country’s economy, according to Bloomberg. It upgraded Pakistan to ‘B-’ from ‘CCC+’, with a stable outlook on its long-term rating. Other countries that S&P rates similarly are Nigeria, Egypt, Kenya and Ecuador. Most dollar bonds extended gains. “Though debt-servicing costs remain hefty, the government’s efforts to expand revenue and more benign inflation are hastening the pace of fiscal consolidation,” the S&P said in a statement. The strengthening of its fiscal position will persist over the next 12 months to meet its considerable debt obligations, they added. The ratings action comes months after an upgrade by Fitch Ratings that sees Pakistan sustaining reforms undertaken as part of a loan programme with the International Monetary Fund.
In a related development, the Pakistani rupee gained due to a crackdown on the black market dollar trade, following a meeting between the head of an intelligence agency and a group of foreign exchange companies amid a sharp decline in the local currency, the head of the country’s forex association said. “We, the exchange firms, held a meeting with Major General Faisal Naseer, a senior officer in the Inter-Services Intelligence, on Tuesday. During this meeting, we briefed him on the situation in the currency market and the reasons behind the recent decline of the rupee,” said Malik Muhammad Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP).
“Following our discussions, the Federal Investigation Agency (FIA) began taking action against illegal currency dealers, many of whom eventually went underground,” Bostan added. As a result of these efforts, the rupee recovered and appreciated in both the interbank and open markets, rising by Rs1 to 287 per dollar in the open market as black market activities diminished due to the enforcement actions against illegal foreign exchange trading, according to Bostan. “We expect that the rupee will rise further, reaching 286 against the dollar in the open market tomorrow,” he said.
Bostan noted that the State Bank of Pakistan has built up its reserves by purchasing dollars from the interbank market. However, it has now ceased buying dollars from the market, having met its reserves target set by the International Monetary Fund. Additionally, exporters have started selling dollars in the market, all of which has contributed to improved supply.
Pakistan’s central bank forex reserves surged to over $14 billion in the fiscal year that ended in June 2025. According to SBP data, the rupee rose 0.19 percent to 284.22 against the dollar in the interbank market. In the open market, it closed at 287.60 per dollar, up from 288.30 in the previous session, as per the currency rate list released by ECAP. The local unit was losing value despite positive economic indicators, prompting military intervention to help stabilise the rupee. Similarly, in 2023, law enforcement agencies conducted raids on black market operators to recover the rupee from its sharp slide. The rupee has depreciated by two percent since January of this year, while it appreciated by 1.2 percent in 2024. “There’s everything going for the rupee -- highest reserves, rare CA [current account] surplus, better rating and a globally weak dollar,” said Faisal Mamsa, the CEO of Tresmark, a platform for live financial rates. “So rupee loosing value was counter intuitive and was based around lack of liquidity. If it was because of a leak, that should be corrected and rupee should gain by that,” Mamsa added.
The recent recovery of the rupee came as S&P Global Ratings upgraded Pakistan’s credit rating from ‘CCC+’ to ‘B-’ and placed it on a stable outlook. This upgrade reflects improved financial conditions and supports the government’s efforts to strengthen the country’s economy. “We expect the rupee to remain firm, supported by robust external inflows amid easing commodity prices and an improved likelihood of accessing international debt markets following the recent credit rating upgrade,” said Awais Ashraf, the director of research at AKD Securities Limited. “However, the outlook remains heavily dependent on governance—particularly the extent to which the government enforces strict oversight of exchange companies,” Ashraf added.
He noted that the exchange rate stability observed over the past two years is primarily a result of structural reforms and enhanced governance within the foreign exchange market. Pakistan’s foreign exchange reserves held by the central bank dropped by $69 million to $14.457 billion in the week ending July 18, the State Bank of Pakistan said. The SBP ascribed the decrease in its reserves to repayments of foreign loans. The country’s total liquid foreign reserves stood at $19.918 billion, reflecting a decline of $40 million from the prior week. However, the reserves of commercial banks rose by $29 million to $5.461 billion.
