The Finance Minister, Ishaq Dar, currently lacks the resources needed to address economic challenges as he has done in the past. He is seeking funding from a variety of sources, including the IMF, World Bank, ADB, China, the UAE, and Saudi Arabia. If he is able to obtain this funding, it is believed that he will attempt to appreciate the Pakistani rupee, which may lead to further economic instability within 24 hours.
What happens if Pakistan’s Economy defaults?
If Pakistan’s economy defaults, it would mean that the country is unable to meet its financial obligations and is unable to pay back its debts. This could have serious consequences, both for the Pakistani government and for the country’s citizens. It could lead to financial instability, a decline in the value of the Pakistani rupee, and difficulty obtaining loans in the future. It could also lead to social and political unrest, as people may become disillusioned with the government’s ability to manage the economy effectively. In the worst-case scenario, an economic default could lead to economic collapse, which could have far-reaching and devastating consequences for the country.
It is being said, that we always have collaterals like airports for their guarantee. The government should be responsible for providing necessary public services such as running courts, police stations, and air traffic control, but it is not necessary for the government to own and operate businesses in industries like oil and gas, transportation, and ports. Even if the lenders part take the stakes on defaults, it does not matter. Our airports already even earning us much.
I will cite the example of Sri Lanka, where people took things into their hands after huge inflation as they declared bankruptcy. Later on, Armed forces were deployed to take matters into their hands. Sri Lanka has faced economic challenges in the past, including a balance of payments crisis in 2018. This crisis was triggered by a number of factors, including high levels of debt, a large fiscal deficit, and a lack of foreign exchange reserves.
