Business

List of countries with highest default risk 2022

Published

2 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

An investigation was “launched” into PTA’s inability to get Rs. 78 billion back from Telcos

Published

19 hours ago

Farwa

The PTA has reportedly been instructed to reply to NAB by July 29. According to the enquiry, the national exchequer has suffered losses as a result of the delay in collecting dues.

The PTA has been asked to provide NAB with information about any pertinent records, court proceedings, and overdue bills. The NAB Karachi has summoned the PTA officials to appear with all pertinent documentation.

All of the principle sum has to be paid by the LDI firms, according to sources. But due to judicial stay orders, the collection of dues has been impeded.

These sources further state that a steering group has been established by the Ministry of IT to supervise the issue of dues recovery.

In a previous event, the tariffs levied on importing cell phones from outside were clarified by the Pakistan Telecommunication Authority (PTA).

Contrary to what some internet reports claim, PTA clarified in response to recent news regarding the tariffs on mobile phone imports that there hasn’t been a formal decision to remove these levies in Pakistan.

the PTA.Pakistanis living abroad will be the only ones free from these levies, according to the PTA. A SIM card can be inserted and the phone restarted to temporarily register a device for non-PTA mobile subscribers.

Business

Weekly inflation in Pakistan increased by 0.17 percent.

Published

19 hours ago

Farwa

The SPI for the week under review in the aforementioned group was reported at 321.95 points, as opposed to 321.40 points during the previous week, according to the PBS statistics.

The SPI for the combined consumption group saw a 20.09 percent increase in the week under review compared to the same week the previous year.

The weekly SPI includes 51 necessary items for every spending group and 17 urban areas, with a base year of 2015–16 = 100.

The SPI for the lowest consumption category, which is up to Rs 17,732, grew by 0.08 percent from 311.97 points to 312.22 points this past week.

0.18 percent,The index of consumption for the lowest consumption groups, which are Rs 17,732-22,888, Rs 22,889-29,517, Rs 29,518-44,175 and above Rs 44,175; increased by 0.13 percent, 0.15 percent, 0.18 and 0.19 percent, respectively.

Nineteen (37.25%) of the fifty-one commodities had price increases over the week, eight (15.69%) had price decreases, and twenty-four (47.06%) had unchanged pricing.

On a weekly basis, the following commodities saw significant price decreases: tomatoes (9.19%), onions (2.14%), LPG (1.04%), bananas (0.53%), wheat flour (0.35%), potatoes (0.17%), pulse masoor (0.16%), and bread (0.05%).

Chicken (4.80%), garlic (2.01%), pulse gramme (1.87%), eggs (1.71%), beef (0.93%), gur (0.89%), pulse moong (0.84%), fresh milk (0.45%), firewood (0.23%), and cigarettes (0.12%) were among the items whose average prices increased significantly week over week.

The commodities that saw a year-over-year decline were: wheat flour (31.75%); cooking oil (13.44%); vegetable ghee 2.5 kg (10.42%); vegetable ghee 1 kg (9.85%); mustard oil (8.33%); eggs (5.82%); rice basmati broken (4.15%); and tea package (2.52%).

Gas prices for Q1 (570.00%), onions (96.01%), pulse gramme (40.39%), powered milk (39.11%), garlic (34.61%), pulse moong (29.77%), men’s sandals (25.01%), beef (23.52%), salt powder (23.28%), pulse mash (22.50%), and energy saver (17.96%) were among the commodities whose average prices increased year over year.

Business

The price of gold has drastically dropped in Pakistan.

Published

2 days ago

Farwa

As per the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the cost of 24-karat gold per tola decreased by Rs 2,300, standing at Rs 250,500.

A kilogramme of 24-karat gold costing Rs1,972 less at the local market, making it worth Rs2114,763. Ten grammes of 22-karat gold had a price decrease to Rs196,866 as well.

After losing a significant $43 during the day, the rate per ounce of gold on the international market also decreased. It currently stands at $2,370.

On Thursday, the price of 24-karat silver also experienced a decline, falling by Rs60 to settle at Rs2,860 petal.