Pakistan Ranks 3rd Among Countries Most High Risk to Debt Crisis

[vc_row][vc_column][vc_column_text dp_text_size=”size-4″]According to a recent survey by Bloomberg, Pakistan, often considered the weakest economy in South Asia, is currently ranked among the top three countries most susceptible to a potential debt crisis.

Bloomberg’s debt vulnerability index, which assesses 60 countries, has placed Pakistan in the third position, with Egypt ranking second and Ukraine leading the list.

This ranking is determined by evaluating each country’s exposure to public debt, interest expenses, and yields on dollar bonds, providing an indication of their susceptibility to debt-related pressures. A higher ranking signifies a greater vulnerability, while lower values suggest a stronger ability to withstand such pressures.

Also Read: Pakistan Ranks 99th in Global Hunger Index

Comparatively, Pakistan’s government debt stands at 73.6 percent of its GDP, lower than Ukraine (98.3 percent) and Egypt (92.9 percent). The nation’s interest expenses, as a percentage of GDP, amount to 6.3 percent. Furthermore, Pakistan’s bond yields are the fourth-highest among countries most at risk of a debt crisis. It’s essential to note that higher bond yields imply higher interest rates due to the increased risk of bond default.

These findings align with the International Monetary Fund’s (IMF) concerning projections for Pakistan, where external debt is expected to reach $130.850 billion in 2023-24, equivalent to 37.3 percent of its GDP. Domestic debt is projected at Rs. 43.574 trillion for 2023-24 and Rs. 49.803 trillion for 2024-25. The risks to debt sustainability have grown more acute, especially given the limited access to external financing and the substantial gross financing needs expected in the coming years.

The data also reveals that Bahrain’s debt, at 124.7 percent of its GDP, is the highest among countries vulnerable to debt-related issues. On a more positive note, Turkey, Honduras, Mexico, and Iraq are positioned favorably in the rankings, showcasing strong economic resilience in terms of bond yields, interest expenses, and debt as a percentage of GDP.[/vc_column_text][/vc_column][/vc_row]