Pakistan’s Default Risk Falls, Ranks Second Globally

Pakistan has just recorded one of the most dramatic falls in sovereign default risk, leaping to become the second-most improved nation globally in Credit Default Swap (CDS) implied metrics. Finance Minister’s adviser Khurram Schehzad revealed that Bloomberg data shows Pakistan trailing only Turkiye over the June 2024–September 2025 period, in decline of default probability by 2,200 basis points.

Analysts point to macro stabilization, structural reforms, timely debt servicing, and adherence to the International Monetary Fund programme as the key drivers of renewed investor confidence. Upgrades from global rating agencies S&P Global, Fitch Ratings, and Moody’s have reinforced this optimism.

Meanwhile, countries like South Africa and El Salvador posted relatively smaller gains, while Argentina, Egypt, and Nigeria have seen rising default risk. Pakistan’s fragile economic state a few years ago, with low foreign exchange reserves and severe balance-of-payments stress, started to stabilize once the IMF disbursed a crucial tranche and external support flowed in from China, UAE, and Saudi Arabia.

The turnaround underlines Pakistan’s resurgence in market credibility and investor interest, making it one of the most improved credit stories among emerging markets today.