Due to political unrest and uncertainty surrounding negotiations with the International Monetary Fund, the country’s default risk, as measured by five-year credit-default swaps (CDS), insurance contracts that protect investors against a default, increased sharply overnight (IMF).
Arif Habib Limited, the CDS increased to 75.5% on Wednesday from 56.2 percent the day before.
The calendar for talks between Pakistan and the IMF was readjusted last week, according to official sources in Washington, although the negotiations are still ongoing. But according to media reports, the negotiations that were supposed to start in early November have been moved to the third week of this month.
These sources claim that the negotiations would pick back up once Pakistan fulfilled its promise to modify the sales tax on petroleum items and took other necessary actions under a loan agreement revived earlier this year.
