ISLAMABAD – Pakistan has turned the tables on economic front, as the country has been ranked as the most improved emerging market in terms of sovereign credit risk, according to the latest analysis by Bloomberg Intelligence.
The report shows Pakistan witnessing sharpest drop in its sovereign default risk over the past year as the progress reflects growing investor confidence, driven by macroeconomic stabilization, structural reforms, and successful cooperation with the International Monetary Fund (IMF).
PM’s aide on Finance Khurram Schehzad shared development on social media platform X, saying Pakistan’s default probability measured through Credit Default Swaps (CDS) moved down from 59% to 47%. The 11 percentage point decline is the largest among tracked emerging markets.
“Pakistan has emerged as the top global performer in reducing sovereign default risk, according to Bloomberg Intelligence,” Schehzad noted. “This signals renewed investor trust and reflects the country’s ongoing reforms and financial discipline.”
CDSs are financial tools that allow investors to hedge against the risk of a government defaulting on its debt. A declining CDS-implied probability suggests a lower perceived risk of default, translating into improved investor sentiment.
Among other emerging markets, Argentina, Nigeria, and Tunisia also saw reductions in default risk, but none matched the scale of Pakistan’s improvement. In contrast, countries like Turkey, Ecuador, Egypt, and Gabon experienced rising credit risks during the same period.
Experts say Pakistan’s turnaround is linked to prudent fiscal management, timely debt repayments, and strengthened credit ratings from international agencies such as S&P and Fitch. “Pakistan is not just stabilizing—it is steadily moving forward with credibility and reform at its core,” Schehzad added.
The development marks a rare piece of positive news for the country’s economy, which has faced significant challenges in recent years due to external debt pressure, inflation, and currency volatility.
Earlier this year, Global credit agency Fitch upgraded Pakistan’s long-term foreign currency rating from ‘CCC+’ to ‘B-‘, amid improved fiscal management and reform progress under the IMF programme. The agency cited growing confidence in Pakistan’s ability to reduce budget deficits and maintain macroeconomic stability.
Experts call it sign of international confidence in Pakistan’s economic direction as High remittances, projected at $38 billion by FY25, and recent structural reforms were highlighted as key contributors to the improved outlook. Fitch noted a narrowing budget deficit, declining inflation, stronger foreign reserves, and a projected 3% GDP growth for FY25.
