Pakistan Economic Crisis: If Pakistan goes bankrupt then Jinnah’s country will be in trouble, there will be inflation and hunger everywhere, understand – pakistan economic crisis what will happen if country defaults what will be the situation
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How big is the threat to the country
New York-based global rating agency Fitch has further downgraded Pakistan’s default rating on Tuesday. Now because of this the political danger on the country has increased. Liquidity has also come under stress due to rating downgrades. Funding is also at risk due to a rating downgrade. Fitch says that foreign exchange reserves are at a very critical level.
In the statement issued by Fitch, it is said, ‘We expect that this foreign exchange reserve is going to remain low. Although there is scope for some improvement in the financial year 2023. Fitch has said that Pakistan has successfully completed the ninth review of the IMF’s programme. But a downgrade in ratings also reflects a crisis over continued funding and elections. The agency believes that bankruptcy or debt restructuring is a real reality.
Pakistan under the burden of debt
Pakistan is currently buried under the burden of debt. In such a situation, if he becomes pauper or bankrupt, then he will be unable to repay this loan. According to a report in Pakistan’s newspaper Dawn, in general terms, poverty of any country like Pakistan means non-payment of commercial debt with risk.
Bilateral debt can be refinanced, whereas multilateral debt takes a long time to mature. This makes commercial debt the first determinant of a country’s poverty. If Pakistan’s foreign exchange reserves reach a level where it becomes insolvent on its own debt, then the central bank may refuse to service the debt and pay for services.
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won’t be able to buy anything
There is a shortage of dollars in Pakistan and if the dollar runs out then no goods will be able to be imported. In such a situation, the economy will come to a standstill and the inflation in the country will be at that level where it will be difficult for the common man to live. If the economy shrinks, then industries will suffer. Because of this, people will lose their jobs and some will not even have money to spend.
Economists call such a situation an inflationary recession. Apart from slow growth and unemployment, these conditions arise due to inflation. According to Islamabad-based economist Asad Ejaz, avoiding being destitute by even a small margin is actually very different from defaulting because when organizations like the IMF provide some cash, then everything can go on.
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