Pakistan steals global spotlight with record drop in default risk

June 28, 2025 (MLN): Pakistan has emerged as the most improved economy worldwide in terms of reducing sovereign default risk, topping global emerging market (EM) rankings, according to the latest data shared by Bloomberg Intelligence.

Khurram Schehzad, Advisor to the Finance Minister, highlighted the development today on X, noting that Pakistan recorded the sharpest drop in sovereign default probability among major emerging markets over the past 12 months.

“Pakistan stands out globally as the most improved economy in terms of reduction in sovereign default risk, as measured by CDS-implied probability,” Schehzad stated.

Bloomberg data show that Pakistan’s default probability declined from 59% to 47%, representing an 11 percentage point improvement over the last year.

This is the largest reduction among peer economies, surpassing improvements seen in Argentina (-7%), Tunisia (-4%), and Nigeria (-5%).

Meanwhile, countries such as Turkey, Ecuador, Egypt, and Gabon have witnessed increases in their sovereign risk.

The advisor attributed this significant turnaround to a mix of factors, including macroeconomic stabilization, structural reforms, successful engagement with the IMF, timely external debt repayments, and improved credit outlooks from global rating agencies such as S&P and Fitch.

“This is a resounding signal to global investors: Pakistan is not only back on the map, it is moving forward with stability, credibility, and reform at its core,” Schehzad emphasized.

The positive momentum is expected to bolster investor sentiment and support Pakistan’s efforts to sustain economic stability and attract foreign investment.

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