Pakistan has made a major breakthrough on the economic front, emerging as the most improved emerging market in terms of sovereign credit risk, according to a new Bloomberg Intelligence report.

The analysis reveals that Pakistan has experienced the sharpest decline in sovereign default risk over the past year. This improvement reflects increasing investor confidence, driven by macroeconomic stabilization, structural reforms, and successful collaboration with the International Monetary Fund (IMF).

Khurram Schehzad, the Prime Minister’s aide on finance, shared the development on X (formerly Twitter), highlighting that Pakistan’s default probability, measured through Credit Default Swaps (CDS), dropped from 59% to 47% — the largest decrease among all tracked emerging markets.

“Pakistan has emerged as the top global performer in reducing sovereign default risk,” said Schehzad, calling it a sign of renewed investor trust backed by financial discipline and reforms.

CDSs are financial instruments used to hedge against the risk of a government defaulting. A decline in CDS-implied probability indicates lower perceived risk, boosting investor sentiment.

Other countries like Argentina, Nigeria, and Tunisia also saw improvements, but none matched the scale of Pakistan’s progress. Meanwhile, nations such as Turkey, Ecuador, Egypt, and Gabon witnessed a rise in default risk.

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Experts attribute Pakistan’s turnaround to effective fiscal management, timely debt repayments, and upgraded credit ratings from global agencies like S&P and Fitch.

This positive development comes after years of economic challenges including external debt, inflation, and currency volatility. Earlier this year, Fitch upgraded Pakistan’s long-term foreign currency rating from ‘CCC+’ to ‘B-’, citing enhanced fiscal policies and reform efforts under the IMF program.

Fitch highlighted key drivers behind the improved outlook:

• Rising remittances, projected at $38 billion by FY25

• Narrowing budget deficits

• Falling inflation

• Stronger foreign exchange reserves

• Expected GDP growth of 3% in FY25

The report is a strong indication of global confidence in Pakistan’s economic direction and the impact of ongoing reforms.