Business

List of countries with highest default risk 2022

Published

3 years ago

Farwa

The South Asian nation Sri Lanka defaulted in May 2022 for the first time on its debt. Its government was given an ultimatum of 30 days to cover $78 million in unpaid interest, however, it failed to do so.

This raises an important question: Which other countries are at risk of default in 2022?

According to Visual Capitalist via Bloomberg, here are countries with a higher risk of default this year. Pakistan is also included in the list.

List of countries with highest default risk 2022

The Sovereign Debt Vulnerability Ranking — a composite measure of a country’s default risk — by Bloomberg is based on four metrics; government bond yields (the weighted-average yield of the country’s dollar bonds), five-year credit default swap (CDS) spread, interest expense as a percentage of gross domestic product (GDP), and government debt as a percentage of GDP.

In order to have a better understanding, let’s take a look at Ukraine and El Salvador.

Ukraine’s Bond Yields

Due to the ongoing conflict between Ukraine and Russia, the former has a higher risk of default. If Russia takes control of the country, Ukraine might not be able to repay its existing debt obligations.

This has caused a sell-off of Ukrainian government bonds, resulting in a decrease in their value to 30 cents on the dollar. This means that a bond could be purchased for $30, having a face value of $100.

The average yield on these bonds has increased to 60.4% as it moves in the opposite direction of the price. “As a point of comparison, the yield on a US 10-year government bond is currently 2.9%,” according to Visual Capitalist.

CDS Spread

In the case of a default, a lender can get insurance with the help of credit default swaps (CDS), which are a type of financial contract.

A CDS seller represents a third party between the lender (investors) and borrower (in this case, governments).

The buyer pays a fee, which is also known as spread in return. It is expressed in basis points (bps). The investor has to pay $3 per year if a CDS has a spread of 300 bps (3%) to insure $100 in debt.

If this is applied to Ukraine’s five-year CDS spread of 10,856 bps (108.56%), the investor would have to pay $108.56 yearly to insure $100 in debt, suggesting the market’s less faith in Ukraine to prevent itself from being defaulted.

El Salvador’s higher ranking

As compared to Ukraine, El Salvador has a higher ranking due to its “larger interest expense and total government debt.”

The data shows that El Salvador’s annual interest payments are equal to 4.9% of its GDP, making it higher. Meanwhile, the US has a federal interest cost of about 1.6% of GDP in 2020.

El Salvador has outstanding debts of about 82.6% of GDP when totalled which is high by historical standards.

“The next date to watch will be January 2023, as this is when the country’s $800 million sovereign bond reaches maturity,” per the Visual Capitalist.

Research says that El Salvador would face significant but temporary negative effects if it defaults.

Business

The total amount of Pakistan’s liquid foreign reserves is $15.95 billion.

Published

3 days ago

Farwa

As of February 14, Pakistan’s total liquid foreign reserves were $15,947.9 million, with the State Bank of Pakistan’s (SBP) holdings being $11,201.5 million.

Official figures for the week ending February 14, 2025, show that the central bank’s liquid foreign exchange reserves rose by $35 million to $11,201.5 million.

Commercial banks maintained net foreign reserves of $4,746.4 million during the period under review, according to the breakdown of foreign reserves.

The nation’s total liquid foreign reserves as of the week ending February 07, 2025, were $15,862.6 million.

Of these, the central bank held $11,166.6 million in foreign reserves, while commercial banks kept $4,696 million in net reserves.

Business

In January 2025, RDA inflows reach 9.564 billion USD.

Published

2 weeks ago

Farwa

Remittances under the Roshan Digital Account (RDA) increased from US $9.342 billion at the end of 2024 to US $9.564 billion by the end of January 2025.

The most recent data issued by the State Bank of Pakistan (SBP) revealed that remittance inflows in January totaled US$222 million, compared to US$203 million in December and US$186 million in November 2024.

Millions of Non-Resident Pakistanis (NRPs), including those who own a Non-Resident Pakistan Origin Card (POC), desire to engage in banking, payment, and investing activities in Pakistan using these accounts, which offer cutting-edge banking options.

Nearly 778,697 accounts were registered under the scheme by the end of January 2025, according to the data.

By the end of January, foreign-born Pakistanis had contributed US $59 million to Roshan Equity Investment, US $479 million to Naya Pakistan Certificates, and US $799 to Naya Pakistan Islamic Certificates.

Business

FBR lowers Karachi’s built-up structure property valuation rates

Published

2 weeks ago

Farwa

A year-by-year breakdown of the depreciation value of residential and commercial built-up properties is included in the updated property valuation rates for Karachi that the FBR has announced.

The notification said that built-up structural values on residential property will be gradually reduced.

A residential home’s built-up structure, which is five to ten years old, will lose five percent of its worth.

In a similar vein, constructions between the ages of 10 and 15 will lose 7.5% of their value, while those between the ages of 15 and 25 would lose 10%. Built-up structures that are more than 25 years old will be valued similarly to an open plot.

Furthermore, age will also be used to lower the valuation of built-up properties, such as apartments and flats.

Structures that are five to ten years old will depreciate by ten percent, while those that are ten to twenty years old will depreciate by twenty percent. A 30% depreciation will be applied to properties that are 20 to 30 years old, while a 50% reduction will be applied to those that are above 30 years old.

In terms of commercial built-up properties, buildings that are 10 to 15 years old will lose 5% of their value, while those that are 15 to 25 years old will lose 8%. The value of properties that are more than 25 years old will drop by 10%.

In contrast, there would be a 15% boost in the value of commercial properties in the Defence Housing Authority (DHA) that face any Khayaban.