Pakistan is not facing the same economic situation as Sri Lanka, but fears of default or bankruptcy by political leaders have been adorning the media for the past few months, on which economists need to sit together.
Speaking on a TV program 2 days ago, former Chairman FBR Shabbar Zaidi said that the IMF report has made it clear that Pakistan needs an investment of 10 to 12 billion dollars. If this does not happen, Pakistan may default despite the IMF program.
Former chairman FBR said “Pakistan does not have the ability to pay back loans; we are slaves of America because we cannot repay the loans, if someone says that we are not slaves, then he does not know about the economy.”
Renowned economist Shahid Hasan Siddiqui and other experts believe that the indicators of the country’s economy are still a reflection of our bad economic situation, but there is currently no fear of the country going bankrupt or defaulting.
Technically, when a country cannot pay its external debt installments and the interest on them, it can be declared bankrupt. Sri Lanka is the latest example of bankruptcy but Argentina has gone bankrupt at least 2 times in 10 years.
If a country approaches bankruptcy, it has to issue bonds at a higher interest rate in order to borrow in the international market, the country is obliged to give higher returns to those who invest in bonds, and the international credit rating agencies of the country reduces its rating.
With the passage of time, due to the fall in the country’s credit rating in the global market, international institutions and other countries also do not provide more credit facilities to this country and due to bankruptcy, this country has to suffer severe consequences.
For example, goods going to foreign trade from that country can be seized, ships and aircraft can be seized by international organizations or countries in other countries. The value of the currency depreciates rapidly on a daily basis and then there is no difference between the ordinary paper and the currency of that country.
Of course, Pakistan has no real fear of default at this point, but the interest-based IMF loan is becoming a shackle on Pakistan’s feet and the country’s sovereignty is at stake.
Some economic analysts say that Pakistan has no choice but to accept the IMF conditions. There is a need for the government as well as the opposition parties including the PTI to understand the importance of this and formulate a joint strategy to get the country out of a possible default.
