Looming economic default.

As of February 2023, Pakistan's Consumer Price Index (CPI) has risen to half a century's high of 35.1 percent, year on year, as stipulated by the Bureau of Statistics. This means that the price of a basket of consumer goods now costs 35.1 percent more than it did in the year 2015-2016. The Rupee has depreciated to a new high of 278.9 per dollar and foreign currency credit ratings like Fitch and Moody's have downgraded, causing it to lose investor confidence. Moody's for example has dropped the credit ratings from Caa1 to Caa3, hinting at a heightened probability of Pakistan's default and meager chances for revival. Furthermore, the country is due for repayment of net external debt of $7 billion this year which includes a $2 billion loan repayment to China.

Amid the struggle to repay its debt, the country is currently scarred by a rapid depreciation of the dollar, low investor confidence, soaring inflation, and plummeting foreign reserves, all of which dampen the possibility of generating any finances which could repay the external debt. Hence, it is being forecasted, based on the aforementioned macroeconomic markers that Pakistan is on the brink of a national economic default. To find out how the 23rd largest economy in the world by Purchasing Power Parity (PPP) got to this tipping point, it is crucial to look at the events and factors that have led to the present economic disaster.

To begin with, it is evident from the available macroeconomic data that the Covid-19 Pandemic has toppled the global economies. The damage, although has not been homogenous across nations, with some economies hitting the rock bottom while others undergoing a rapid decline in growth rates, there surely has been a considerable tilt in almost all of the world's economies. Not only did the pandemic give birth to high unemployment rates, wage cuts, supply chain bottlenecks, declined demand in many sectors like tourism, and soaring inflation rates, but it has also pushed many economies into recession. The recovery process, according to the World Development Report 2022 will not be homogenous, with developing nations like Pakistan needing much more time and effort to resuscitate their crippling economies.

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