The root of Pakistan's financial struggles can be traced back to the late 2000s, when the country experienced a significant balance of payments crisis. This was due in part to a reliance on foreign loans to fund development projects and a lack of exports to balance out the influx of foreign currency.
In recent years, Pakistan has turned to international lenders such as the International Monetary Fund (IMF) for financial assistance. In return, the IMF has required Pakistan to implement strict austerity measures, including cutting government spending and increasing taxes. These measures have been met with resistance, as they have led to economic hardships for many Pakistanis.
Despite these efforts, Pakistan's debt has continued to mount, reaching unsustainable levels. In 2020, the Pakistani government announced that it would seek a bailout package from the IMF, sparking concerns about the country's ability to repay its debts.
So, is bankruptcy a possibility for Pakistan? While it is difficult to predict the future, it is clear that Pakistan's financial situation is precarious. The country will need to make significant changes to its economic policies in order to avoid a potential bankruptcy. This may include further austerity measures, as well as efforts to boost exports and improve the business climate in order to attract foreign investment.
One positive sign is that Pakistan has a history of overcoming economic challenges and emerging stronger. With the right reforms and support from the international community, it is possible for Pakistan to overcome its current financial struggles and secure a stable economic future.