Pakistan is at risk of default. Default risk will eventually go down with IMF loan renewal but still, it is high.
Sovereign debt vulnerability of countries to determine the highest default risk in 2022, Pakistan is in the fourth position.
Pakistan has a government bond yield standing at 16.8 percent, a 5Y credit default swap spread of 1492 Bps, an interest expense of 4.8 percent of GDP, and 71.3 percent of GDP is the government debt 2022.
Moreover, Sri Lanka was the first nation to stop paying its foreign bondholders this year, burdened by unwieldy food and fuel costs that stoked protests and political chaos. Russia followed in June after it was sanctioned over the war in Ukraine.
Now, the focus is turning to El Salvador, Ghana, Egypt, Tunisia, and Pakistan — nations that Bloomberg Economics sees as vulnerable to default.
There is a dire need to strengthen the export sector as it is a backbone of the economy through which stabilization can be achieved.
