Pakistan’s reduced default risk has catapulted it to a top emerging economy globally, significantly enhancing investor confidence and international reputation.
Over the last 12 months, Pakistan’s probability of default has decreased from 59% to 47%, a significant improvement of 1100 basis points, according to a recent report by the internationally recognized financial data agency Bloomberg.
The improvement is attributed in large part to Pakistan’s successful financial reforms and increasing economic stability, according to the report.
Increased efforts to increase revenue through domestic reforms, successful negotiations with the International Monetary Fund (IMF), improved foreign exchange reserves, and increased investor confidence are all credited by Bloomberg with the positive shift.
The fact that Pakistan is ranked first among emerging economies by Bloomberg indicates that the government’s recent economic policies are highly regarded.
According to the report, improved ties with international financial institutions and credit rating upgrades have helped create a more stable outlook, which has attracted international investors to reinvest in Pakistan.
According to the report, “Pakistan’s substantial decrease in default risk sends a powerful message to the global financial community.” “It is a significant turning point in the nation’s economic recovery.”
Additionally, Bloomberg’s data contrasted Pakistan’s performance with that of other developing nations. Turkiye, Ecuador, Egypt, and Gabon are still considered high-risk countries, while countries like Argentina, Tunisia, and Nigeria saw only slight improvements in their default risk (dropping by -7%, -4%, and -5%, respectively).
A steady increase in exports and remittances, two important facets of Pakistan’s external financial health, has also contributed to the country’s improved economic outlook.
