Due to a recent Bloomberg research, Pakistan,which has South Asia’s poorest economy, ranks among the top three countries most likely to suffer a debt disaster.
An analysis of a pool of sixty countries, Bloomberg’s debt risk index places Pakistan third, behind Egypt and Ukraine.
To assess the nation’s degree of debt danger, the ranking stated each country’s level of public debt, rates of interest, and return on dollar bonds. More exposure to debt limitations is associated to a higher ranking, and more resilience is linked to reduced rankings.
The Government of Pakistan’s debt is 73.6 percent of GDP, which is less than that of Ukraine (98.3 percent) and Egypt (92.9 percent). The burdened South Asian nation pays 6.3% of its GDP on debt. The yields on bonds are now fourth-highest amongst the nations that are most susceptible to an approaching crisis in debt.
Particularly, the more dangerous nature of the bond leads with higher rates of interest the greater the bond yield.
These ratings deserve to be highlighted in light of the International Monetary Fund’s (IMF) shocking expectations that Pakistan’s foreign debt will increase to $130.850 billion (37.3 percent of GDP) in 2023–2024. For 2023–2024 and 2024–2025, accordingly, the expected levels of domestic debt are Rs. 43.574 trillion and Rs. 49.803 trillion.
Considering the absence of external investment and the substantial net financing requirements that will remain over the years to come, the dangers to the sustainability of debt, which were already considered high at the moment of the last IMF evaluations, have become worse, further blocking the route to durability.
The study additionally disclosed the country’s debt, which ranks 11th amongst debt-vulnerable countries & also among the highest at 124.7 percent of GDP.
Because of high bond yields, low borrowing costs, and low debt to GDP ratios, the nations of Turkey, Honduras, Mexico, and Iraq were selected as the best economies near the healthy end of the list.