The Pakistani economic meltdown has metastasized into a full-blown payments emergency. After 75 years Pakistan’s economy is in a sagging position. Here the proposed prospects to discuss are the concerns about the default of Pakistan in 2023.
Pakistan is a sandwich state which is the hallmark of global convulsions. The convergence of all global stakeholders is at the core of this state. The Pakistani economy is at a critical juncture because of imbalances and many other factors like more consumption and inadequate savings, deficit of balance of payments, poor social indicators, and loss incurring state-owned enterprises. The economic insecurity is directly linked to insurgency and terrorism which is again at the surface in the state of affairs. Pakistan will not default in any circumstances due to many reasons.
Pakistan has a prime position geographically and globally in the region. Pakistan is the favorite state of the global community to manage and never flunk in the 21st Century. If Pakistan flunks, the jihadist and terrorist factions will be empowered to intrude in the domestic setup of the country. This will cause social discontent and social anarchy in Pakistan. If these social anomalies exist in Pakistan they will not stop here. The will spread like a contingent pandemic across the globe.
We are living in the neoliberal economic setup where the depression of one state causes the depletion of other states due to the interconnectivity and interdependence of the social and economic stakeholders. Terrorism, immigration, migration, and unemployment will vertically rise in case of the economic collapse in Pakistan. That will also cause a burden on the Western and Middle Eastern states. States in the international system are very calculated to avert the risks. Realists’ perspectives on International hierarchy propel states to curb the rising threats to their stability. Codependency even for security concerns is the central question of existence for any state. The issues in the world’s fifth largest country can be a tipping point to export social schism, polarization, an extension of extremism, and mass depression into the other recipient states in the Middle East, China, and even some states of the Western world.
The anarchy in Pakistan can upset China and its flagswhip projects in Pakistan. For instance, the threat to Pakistani internal economic infrastructure is also vulnerable to Chinese investment. Chinese investment is at a challenge if Pakistan defaults and becomes a client of any imperial power of the Western world. For example, the resurfacing of TTP in Pakistan can herald a double crisis— economic and security— which can spread to other states. Due to the connectivity of a large flux of stakeholders and internationalist agendas, the decline of Pakistan is directly linked to the decline of many countries. On these bases, they will never let down the economic collapse but they will shoulder the Pakistani economy to survive on ventilator.
At this critical juncture of the Pakistani economic meltdown, the USA should push the Pakistani government toward a debt-restructuring procedure. China should give credit for debt repayment. If Pakistan is stuck in debt stress, then it is inevitable that we will stumble into an economic slowdown and become more barren.
As for solutions, Pakistan’s economy is in a challenging position just like the Indian economy at the end of the 20th century. Pakistan must learn some lessons from the Indian strategies at that time to combat the malice of economic discontinuity. The macroeconomic imbalances can be dealt with through the mature digitization of the economy, boosting credit growth, and GDP growth over the medium term.
Opening the market and creating digital ventures in commerce will open the global markets for the smallest of businesses. The road to the boom in the Pakistani economy and the health of economic expansion can be ensured through the privatization of government entities, new reforms, prioritization of infrastructure spending, deregulation, and considering prospects to increase the net FDI-to-GDP ratio.
At this critical juncture of the Pakistani economic meltdown, the USA should push the Pakistani government toward a debt-restructuring procedure. China should give credit for debt repayment. If Pakistan is stuck in debt stress, then it is inevitable that we will stumble into an economic slowdown and become more barren.
