Pakistan 47% Less Likely to Default on Its Debt, Best in the World

Pakistan has recorded the steepest decline in sovereign default risk among emerging markets over the past year, according to the latest data published by Bloomberg Intelligence. The country’s credit default swap (CDS)-implied default probability has dropped from 59 percent to 47 percent, reflecting an 11-percentage point improvement—the most significant reduction globally. This places Pakistan at the top of Bloomberg’s global rankings for default risk improvement among emerging economies. In comparison, Argentina saw a 7-point reduction, Tunisia 4 points, and Nigeria 5 points. Meanwhile, several other emerging markets, including Turkey, Ecuador, Egypt, and Gabon, experienced increases in their sovereign risk levels. The improvement in Pakistan’s risk profile is attributed to a combination of macroeconomic stabilization, structural reforms, successful engagement with the International Monetary Fund (IMF), timely debt repayments, and positive outlooks from international credit rating agencies such as S&P and Fitch.