So people will have to learn to survive with less, that is for sure. But then, Pakistanis must learn to survive within the limits of what they can actually afford from their own resources, not what they can afford supported by more and more debt. That is good bitter medicine to take.
What you are saying is understandable. If an individual defaults, or a corporation defaults, what you have said actually applies.
Default impacts different countries differently. I am just thinking, what will be the sequence of events that will happen after Pakistan defaults on loans and declares bankruptcy.
First question is.. whether Pakistan will also default on its local currency loans or will it print more money to service the local loans? If it does, how much devaluation one can expect.
Whether the government will restrict people from drawing their own money from the banks? If it does, how does it plan to support the livelihoods in the short term?
Pakistan produces energy mostly with the imported oil and gas. Pakistan doesn't produce enough wheat and other crops that are key for people's survival. What is the government's plan to get these things?
If Pakistan is unable to import oil and hence cuts off the power of industries, the businesses will not be able to honor their agreements, and hence will close. This may lead the economy tailspinning into a lot of mess.
I am not saying that default is always bad. It has some positives as well. Things get so cheap in foreign currency terms that their is an influx of foreign investors into the country. But if that has happened in many other countries that have defaulted, it doesn't mean that Pakistan can attract the foreign investment and tourism in the same manner.
To attract a foreign investor or a tourist, three things are very important:
1 - Political stability
2 - Security
3 - Justice system
We all know how strong we are in these departments so lets not go into that detail.
Again, I know that Pakistan will definitely survive this, but what is the impact that you foresee on people's lives.. and how much chaos you expect.. is it like Sri Lanka or the French revolution type?