Default risk soars amid political turmoil, delay in IMF talks

The country’s default risk as measured by five-year credit-default swaps (CDS) — insurance contracts that protect an investor against a default — rose sharply overnight amid political turmoil and uncertainty about talks with the International Monetary Fund (IMF). The CDS soared to 75.5 per cent on Wednesday from 56.2pc a day ago, according to data provided by research firm Arif Habib Limited. Official sources in Washington said last week the schedule for talks between Pakistan and the IMF had been readjusted, but the negotiations are continuing. Media reports, however, claimed that the talks that were scheduled to begin in early November had been postponed until the third week of this month. According to these reports, the talks would resume after Pakistan fulfilled its pledge to adjust sales tax on petroleum products and took other measures required under a loan agreement revived earlier this year.