Pakistan Ranked First in Global Emerging Markets for Risk Reduction

- Pakistan ranked first globally in sovereign risk reduction.
- CDS-implied default probability fell from 59% to 47%.
- Khurram Schehzad attributed improvements to macroeconomic reforms.
- Prime Minister Sharif welcomed the positive report on Pakistan’s economy.
- Pakistan has recovered from a near-sovereign default in 2023.
Pakistan Ranks First in Sovereign Risk Reduction
Pakistan has made a remarkable turnaround in the realm of sovereign risk reduction, emerging as the top country in global emerging markets as per a recent report from Bloomberg. Khurram Schehzad, who advises the Finance Minister, highlighted that Pakistan’s CDS-implied default probability has plummeted from 59% to 47%, illustrating a significant improvement of 1,100 basis points. This impressive decline is noted to be the most pronounced among all significant emerging economies, signaling a positive shift in investor perception.
Diverse Factors Driving Economic Confidence
Other nations such as Argentina, Tunisia, and Nigeria have also seen modest improvements in their default probabilities, with declines of 7%, 4%, and 5% respectively. However, some countries, including Turkiye and Gabon, experienced upward shifts in their risk metrics. This sharp divergence underlies Pakistan’s unique economic recovery narrative, which Schehzad believes could attract increased global investment. He attributed the favorable changes to several key factors, including macroeconomic reforms, consistent debt repayments, and constructive engagement with the International Monetary Fund (IMF). This confluence of efforts has bolstered Pakistan’s credit outlook significantly.
Government’s Vision for Future Growth
Prime Minister Shehbaz Sharif also expressed his satisfaction with the Bloomberg report, which underscores the strides Pakistan has made in institutional reforms and economic management. He emphasized that successful negotiations and timely repayments related to the IMF align with evidence of the government’s improving economic undertakings. The Prime Minister claimed that Pakistan’s resilience—particularly its bounce back from the brink of sovereign default in 2023—reflects a dedication to sustainable economic growth, even amid competing needs like military expenditure and investment.
In summary, Pakistan’s status as the leading improved economy regarding sovereign risk is a noteworthy achievement for the nation, showcasing a 1,100 basis point drop in its default probability. Factors like ongoing reforms, debt management, and international partnerships appear critical to this progress. As the government targets further growth while balancing complex national priorities, the global outlook for Pakistan remains cautiously optimistic.