ISLAMABAD – Pakistan has recorded the world’s sharpest drop in sovereign default risk over the past year, according to Bloomberg Intelligence. The improvement is driven by macroeconomic reforms and successful collaboration with the International Monetary Fund (IMF).
Bloomberg’s data shows Pakistan’s default probability dropped from 59% to 47% in the last 12 months—an 11 percentage point decline, the highest among all major emerging markets. In comparison, countries like Argentina, Tunisia, and Nigeria showed much smaller gains, while others such as Turkey and Egypt saw their risks increase.
Khurram Schehzad, Advisor to Pakistan’s Finance Minister, shared the update on social media platform X. “Pakistan stands out globally as the most improved economy in terms of sovereign default risk,” he said, highlighting that the trend reflects renewed investor confidence.
The analysis links the improvement to consistent debt repayments, IMF programme performance, structural reforms, and positive outlook upgrades by agencies like S&P and Fitch. A lower Credit Default Swap (CDS) level, which measures investor concern about debt default, signals a healthier economic outlook.
Meanwhile, the government continues to work on curbing inflation, rebuilding foreign exchange reserves, and reducing fiscal and current account deficits. Negotiations are also underway with the IMF for a longer-term Extended Fund Facility to sustain the current economic momentum.
Although challenges such as debt sustainability and slow reforms remain, analysts say the market now views Pakistan as more stable. This shift in perception could pave the way for stronger investor interest and future economic recovery.