Pakistan ranks second after Turkiye among emerging markets: finance adviser

Pakistan has recorded one of the sharpest declines in default risks globally, emerging as the only country to show consistent improvement over the past 15 months, according to the Adviser to the Finance Minister, Khurram Schehzad.

“Pakistan is no longer viewed through the lens of default risk,” Schehzad said. “It is emerging as a stable, reform-driven, and resilient economy,” Khurram Schehzad made the remarks on Sunday in a post on X, citing a report by Bloomberg.

He said Pakistan ranked second among emerging economies showing the strongest reduction in sovereign default probabilities — only behind Turkiye.

Between June 2024 and September 2025, Pakistan’s default risk improved by 2,200 basis points, reflecting what Schehzad described as “a sign of sustained economic recovery and growing investor confidence.”

“This is clear evidence of Pakistan’s durable economic improvement,” he said, adding “The country is the only economy to have demonstrated continuous quarterly improvement.”

Schehzad said, the trend demonstrates that investors’ trust in Pakistan is being restored, driven by macroeconomic stability, structural reforms, timely debt repayments, adherence to the IMF programme, and positive ratings from international agencies such as S&P, Fitch, and Moody’s.

He added that while countries such as South Africa and El Salvador saw limited improvement — and risks rose in Egypt, Nigeria, and Argentina — Pakistan’s steady progress reflects the success of ongoing fiscal and structural reforms.

Pakistan’s economy to stay afloat despite floods

The International Monetary Fund (IMF) does not foresee any major setback to Pakistan's economic growth or revenue collection this fiscal year due to the recent floods. Except for Punjab, provinces have also not reported significant economic losses, minimizing the chances of a downward revision in targets.

According to government sources, Pakistani authorities have assessed flood-related losses in three rivers, but the evaluation of destroyed or damaged infrastructure in Punjab is still ongoing.

Government sources said that an IMF delegation shared its views about the economic impacts of the floods during a kick-off meeting with Finance Minister Muhammad Aurangzeb. The governments of Balochistan, Sindh and Khyber-Pakhtunkhwa (K-P) shared their initial assessments of the flood losses with the IMF team during separate meetings.

The sources said that during the kick-off meeting, the IMF team observed that based on initial input there were no significant economic losses. However, the IMF said that it would wait for the damage assessment report, the sources added.

The global lender also saw no impact of the floods on the tax revenues. It underscored that the Federal Board of Revenue (FBR) should share the visible outcome of the transformation plan. Prime Minister Shehbaz Sharif had approved the transformation plan last year to revitalise the tax machinery and also gave over Rs55 billion for various initiatives under the plan.

The IMF's observations about the impact of the floods came on the heel of the prime minister's request to the IMF managing director to factor in the impacts of the floods during the review meetings. The IMF was apprised that the government could meet the flood-related spending from the contingency pool and it might not need additional resources, said the sources.

Pakistan-IMF review talks began on September 25, which are scheduled to continue until October 8. The successful culmination of these talks would pave the way for the release of two tranches, totalling over $1.2 billion under two different loan programmes.