Pakistan’s current debt situation is a bit more complicated than most people think.
On the surface, it seems like the country is about to default on its loans. The media has been full of stories about how the government is struggling to repay its debts, and there was even a default warning from credit rating agency Moody’s earlier this year.
But if you take a closer look at Pakistan’s debt, you’ll see that it’s not as bad as it seems. Most of the country’s debt is actually owed to China, and Pakistan has been able to repay its loans on time so far.
Pakistan’s Efforts to Secure Financing and Avoid Defaulting
The Pakistani government has been making efforts to secure financing in order to avoid defaulting. In January of 2019, Pakistan reached an agreement with the International Monetary Fund (IMF) for a $6 billion bailout.
This was not the first time that Pakistan had turned to the IMF for assistance. The country has received 18 IMF bailouts since 1988. In fact, Pakistan has become very good at securing bailout money. However, the terms of these bailouts have become increasingly harsher over time.
Pakistan’s current debt situation is a result of a number of factors, including: a lack of revenue due to low tax rates and a large informal economy; a high level of military spending; and frequent natural disasters.
The Role of the International Monetary Fund
The Pakistani rupee has been in a free fall in recent months, and now some experts are predicting that the country will default on its debt. So, what’s going on?
Well, to understand Pakistan’s current debt crisis, we first need to take a look at the role of the International Monetary Fund (IMF). The IMF is an international organization that helps countries with their financial troubles. It provides them with loans, which come with very strict conditions.
One of these conditions is usually that the country receiving the loan must agree to austerity measures. This usually means that the government has to cut back on spending and raise taxes. It’s unpopular, but it’s sometimes necessary in order to get a country’s finances back on track.
Pakistan has received a number of loans from the IMF over the years, and it’s likely that these loans are one of the reasons why the country is in such a bad financial state.
