Islamabad, October 6, 2025: Pakistan has recorded one of the sharpest declines in sovereign default risk worldwide, now ranking as the second-best performer globally, according to Credit Default Swap (CDS)-implied data reported by Bloomberg.
Adviser to the finance minister Khurram Schehzad announced the development on Sunday, citing Bloomberg’s latest data showing Pakistan’s significant improvement in financial stability and investor perception.
A Credit Default Swap (CDS) measures the cost of insuring a country’s debt — the lower the cost, the lower the perceived risk of default. The International Monetary Fund (IMF) explains that a drop in CDS spreads signals increased investor confidence and reduced default likelihood.
“As per the latest data posted by Bloomberg, Pakistan stands out globally as the second most improved economy in terms of reduction in sovereign default risk,” Schehzad said in a post on X (formerly Twitter). He added that Pakistan trails only Turkiye among emerging markets, having recorded one of the steepest declines in default risk between June 2024 and September 2025.
He noted that Pakistan is the only emerging market country showing consistent quarterly improvement throughout the past year, with its default probability dropping by 2,200 basis points — the sharpest among major emerging economies.
“This reflects strengthening investor confidence, supported by macroeconomic stabilization, structural reforms, timely debt servicing, and continued engagement with the IMF,” Schehzad said.
He also pointed to recent positive outlooks from S&P Global, Fitch, and Moody’s, which have all acknowledged Pakistan’s improving fiscal discipline and reform trajectory.
“Pakistan is steadily rebuilding market credibility, standing out as one of the most improved sovereign credit stories in the emerging market universe,” Schehzad added.
Shehbaz welcomes Bloomberg’s findings
Reacting to the report, Prime Minister Shehbaz Sharif on Monday described Bloomberg’s findings as a “crucial milestone” that reflected renewed global confidence in Pakistan’s economic direction.
In a statement issued by the Prime Minister’s Office, Shehbaz said the 2,200 basis-point reduction in Pakistan’s CDS-implied default risk represents “a consistent increase in global investor confidence” and vindicates the government’s economic strategy.
“Pakistan is now the second country among emerging economies, after Turkiye, in the global rankings — a remarkable achievement given that, at the end of the previous government’s tenure, the country was on the brink of default,” the prime minister stated.
He credited the improvement to “the relentless efforts of the Government of Pakistan and the cooperation of both Pakistani and global business communities,” adding that the “promise of Pakistan’s development is now firmly back on track.”
Shehbaz reaffirmed his government’s commitment to sustaining this progress through continued reforms and prudent economic management.
“This journey of progress will not halt,” he said.
