Pakistan Sees Sharp Decline in Default Risk: Finance Adviser

Pakistan has posted one of the most significant declines in sovereign default risk among Emerging Markets (EM), second only to Turkiye, according to Khurram Schehzad, Adviser to the Finance Minister.

In a post shared on X (formerly Twitter), Schehzad cited a Bloomberg report, noting that Pakistan’s CDS-implied default probability dropped by 22% between June 2024 and September 2025.

He stated that this decline is the steepest among major EM economies, contrasting with a rising risk of default in countries such as Argentina, Egypt, and Nigeria.

Schehzad attributed the reduction in risk to growing investor confidence in Pakistan’s economy, saying it reflects positive momentum from structural reforms, consistent debt servicing, adherence to the International Monetary Fund (IMF) programme, and encouraging outlooks from international rating agencies.

“Pakistan is steadily rebuilding market credibility,” he noted, adding that the country is now considered one of the most improved sovereign credit stories in the EM space.

This positive development comes as Pakistan continues negotiations with the IMF. Earlier this month, Finance Minister Muhammad Aurangzeb expressed optimism about the progress of these talks, describing them as heading in the “right direction.”

The finance minister also reiterated the government’s commitment to improving fiscal indicators, particularly by increasing the tax-to-GDP ratio to 11%.