Business, Finance & Economics

Pakistan's economic trouble

SC says Pakistan's finances are in very bad shape: Pakistan needs $3-4 billion dollars to avert a default on its international payments. Also the fuel prices are rising, food costs are rising, everything is showing to a sign that Pakistan is going to default for any of its payments overseas. (Why is Pakistan facing this crisis right now?) Pkaistan was scheduled to get a $300 million loan from the World Bank and they've now decided to not give that loan. Also the policies of the previous government are now bearing fruit and a lot of money that Pakistan was given by the U.S. has not been used in a proper manner�it's been used for defense and not the economy. On the macro level there are problems because Pakistan is unable to pay its loans. (If this situation spirals out of control, what could happen to the country?) I don't think the world would like to imagine what would happen. Pakistan needs money to fight the war on terrorism. Having said that, there needs to be stipulations on how the money is spent in Pakistan. Given there's a new government in power, these rules should be in place because Pakistan hasn't always spent its money wisely. (Would the new government be willing to work under rules placed on it?) I think Pakistan is not in the position to say no. it also knows many countries that have helped Pakistan in the past will not give it money because of the global recession. (Why isn't the U.S. more forthcoming with aid now?) One reason is the financial crisis in the U.S., but there's also a general feeling that the U.S. has given a lot of money and Pakistan doesn't have much to show for that. But the U.S. also knows the importance of Pakistan�but more than anything, the presidential election may be distracting the U.S. from matters like Pakistan.

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