Pakistan at a Tipping Point: Although Default is Highly Unlikely

Pakistan’s policy dilemma has exacerbated to the point of economic meltdown while socio-political tensions have also escalated. Current situation is not only challenging for the debt default risk but escalating tension on border and fears of weak sovereignty has raised national security concerns as well. Dwindling foreign reserves have fallen to record low of $8.54 billion, and it is exacerbating the effects of economic meltdown which has become a national security problem but rest assure, the narrative of doom and gloom is overly exaggerated. The implementation of conditions for completion of IMF program signifies resumption of the bailout package soon. It will only add to the deteriorating economic situation, but default risk will be eliminated though it requires holistic review and immediate structural reforms.

Economic meltdown is as much of a national security threat as terrorism. The deterioration in economic situation will erode state’s capacity and capability to effectively counter core security concerns. Add to that state’s inability to ensure basic commodities, lifesaving medicines, food and fuel and how it will impact society.

Pakistan is at a tipping point, facing an economic meltdown that is threatening its national security. The country is grappling with a number of economic challenges, including high inflation, mounting debt, low foreign reserves, and a widening trade deficit. The impact of these challenges on national security is becoming increasingly apparent, with rising poverty and unemployment leading to social unrest and violence, and the government’s inability to invest in its defense capabilities leaving it vulnerable to external threats.

The economic crisis in Pakistan is rooted in decades of mismanagement and corruption. The government has been unable to implement effective economic policies, and has relied on debt and inflation to finance its spending. This has led to a spiral of debt and inflation, which is undermining the country’s economic stability and making it increasingly difficult to implement reforms.

The impact of the economic crisis on national security is already being felt. Poverty and unemployment are on the rise, leading to social unrest and violence. The government is struggling to provide basic services, such as healthcare, education, and housing, which is exacerbating the sense of frustration and desperation among the population. This, in turn, is creating a breeding ground for criminal and extremist activities, which pose a threat to national security.

The economic crisis is also undermining the government’s ability to invest in the country’s defense capabilities. With low foreign reserves and mounting debt, the government is struggling to fund its military, which is essential for maintaining national security. The lack of investment in modern military equipment and training is making the country vulnerable to external threats, such as terrorism and cyber-attacks.

The economic crisis is also affecting the country’s ability to attract foreign investment. International investors are wary of the uncertain political and economic environment in the country, which is deterring them from investing in Pakistan. This is leading to a decline in foreign direct investment, which is essential for economic growth and job creation. The lack of investment is also impacting the country’s ability to develop key infrastructure projects, such as ports, airports, and highways, which are critical to economic development and regional security.

The economic crisis is affecting the country’s international standing and reputation as well. The country’s inability to meet its financial obligations and its growing debt burden are damaging its image on the international stage. This is leading to a loss of confidence in the government and its ability to manage the economy, which is affecting its ability to engage in international trade and investment. The loss of international credibility is also undermining the country’s ability to participate in regional and global security initiatives.

In conclusion, Pakistan is at a tipping point, facing an economic meltdown that is threatening its national security. The government must take decisive action to stabilize the economy, including implementing structural reforms, reducing inflation, and increasing foreign investment. In addition, it must prioritize investment in the country’s defense capabilities and ensure that its military is equipped to deal with emerging security threats. By taking these measures, the government can restore economic stability, secure the country’s national security, and restore its reputation on the international stage.

Of all the structural problems, corruption, outdated practices and outright incompetency; the current economic crisis is supplemented by massive natural calamity. The floods in summer caused economic losses of around $15.2 billion have directly threatened Pakistan food security. As Pakistan is facing acute foreign reserve shortage, there are not enough foreign reserve to import food to ensure food security. The situation is further worsened by the fact that IMF’s conditions such as higher energy tariffs and additional taxes will only create more problems economically and politically.

A special session of National Security Council is required to address the economic situation and its impact on national security. With the current security situation, the political, social, and economic ramifications of an economic meltdown should worry all but through deliberate and collective wisdom Pakistan can get of this mess.

Anum Iqbal
Anum Iqbal
The author is a Karachi based journalist and an independent researcher on socio-economic policy issues besides commentary on political economy. She has a Bachelor's in Social Sciences from University of London and an Master's in Development studies from PIDE and she can be reached at anumiqbal678[at]