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What default means.?

Nefarious

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Default and nuke it... get it over and done with, you can have my rupees in Pakistani bank account.

Just no more living on life support with your arse constantly up for sale for pittance relief.
 

epebble

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Guys what is a default ... It means u didnt pay to your lenders on time and as a part of financing agreement then can take number of steps ...

These steps includes.

1. Freezing our assets.
Not likely. IMF, Paris Club, China, Arab States will not freeze any assets of Pakistan Government
2. FreeIng our lines of credit.
Line of Credit will be issued by banks only when foreign exchange is available. Otherwise, they will say "we can't give you credit". Banks are used to telling potential borrowers that they can't give credit. It is not new.
3. Our banks LC is no more acceptable.
Without adequate balance, LCs will not be issued. This problem should not happen, at least with good banks.
4. Extremely do buy goods from international market other than advance payment.
Maybe
5. Foreign government can take control of over pledged assets like islamabad airport.
Very unlikely. To date, only China has shown interest in taking over Hambantota port from Sri Lanka.
The overall result there will be extreme shortage of products imported in Pakistan. Products like petroleum, medicines, wheat and other necessary items will also be in severe shortage ...
These will likely continue to be available. Some shortages may occur.
So it is now about assets but about surviving ... There will be rationing and black market of every imported product ... To go office we have to get into lines to purchase petrol for the day ...
There will be black market and smuggling for prohibited imports like luxury goods.
 

The Accountant

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Not likely. IMF, Paris Club, China, Arab States will not freeze any assets of Pakistan Government

Line of Credit will be issued by banks only when foreign exchange is available. Otherwise, they will say "we can't give you credit". Banks are used to telling potential borrowers that they can't give credit. It is not new.

Without adequate balance, LCs will not be issued. This problem should not happen, at least with good banks.

Maybe

Very unlikely. To date, only China has shown interest in taking over Hambantota port from Sri Lanka.

These will likely continue to be available. Some shortages may occur.

There will be black market and smuggling for prohibited imports like luxury goods.
Have u even studied any contract of financing or have experience default of a company ?

All your statements are based on premise that Pakistan is too big to fall or too big to be arm twisted by lenders otherwise whatever i stated is legal position of the financial contracts ... Read history , if USSR can fall due to economic collapse then why cant Pakistan ? Give me legal arguments not your opinion ... Just study sirilanka where they didnt had petrol, medicines and food ...

In case of bank it is not about issuance of line of credit its about acceptability of LC by other banks ... In case of default our LC will not be acceptable by any bank and we have to pay in advance before dispatch of any goods ...

A similar situation PIA faced when on nonpayment of lease a plane was cpnfiscated in east asia and a hotel in a western was freezed ... And here u r claiming assets wouldnot be freezed ... In ehich world r u living my friend ?

I dont know why people behave so dumb that they have started defending default ... As per financing contracts lenders can even take charge of bank accounts of government of Pakistan for direct recovery through dollars ...
 

epebble

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Have u even studied any contract of financing or have experience default of a company ?
I have been a victim of a few corporate bankruptcies, large and small. But there is absolutely no relationship between corporate bankruptcy and sovereign default. Corporate bankruptcy has a very well-defined set of laws, precedents, courts etc., No such thing for sovereign default. Imagine the difference between a cricket match and a battle.
All your statements are based on premise that Pakistan is too big to fall
Yes, it is. A nation of 220 million people can't be just written off as some unfortunate island in South Pacific that gets inundated with a tsunami. Human suffering matters. Lenders are not some aliens on another planet who communicate using radio signals.
or too big to be arm twisted by lenders otherwise whatever i stated is legal position of the financial contracts ... Read history , if USSR can fall due to economic collapse then why cant Pakistan ? Give me legal arguments not your opinion ... Just study sirilanka where they didnt had petrol, medicines and food ...
While it certainly will cause difficulties, the main one being lack of access to new capital, a lot of fear mongering that creditors will come and seize property etc., is absurd. USSR problem was disintegration of a large nation. Economic collapse was caused by collapse of the nation. No one expects Pakistan to break into pieces because of default. Lenders do not benefit by arm twisting. They benefit if the economy can be revived so that repayment is possible. Everybody wants an injured horse to recover so that they can ride it, not allow it to die so that they can eat it. Sri Lanka had an extreme case of mismanagement where they did not impose Exchange Controls early enough. Finance minister Dar has already imposed Exchange control before reaching the point of no return.
In case of bank it is not about issuance of line of credit its about acceptability of LC by other banks ... In case of default our LC will not be acceptable by any bank and we have to pay in advance before dispatch of any goods ...
As long as Exchange controls can stave off actual default, LC's from reputed banks will be generally acceptable. Reputable banks will not issue a LC without guarantee of funds.
A similar situation PIA faced when on nonpayment of lease a plane was cpnfiscated in east asia and a hotel in a western was freezed ... And here u r claiming assets wouldnot be freezed ... In ehich world r u living my friend ?
PIA is a corporation. Different rules apply to corporate entities. Pakistan is a sovereign. Corporate laws don't apply.
I dont know why people behave so dumb that they have started defending default ... As per financing contracts lenders can even take charge of bank accounts of government of Pakistan for direct recovery through dollars ...
Nobody wants to defend default or say it is painless. But there is a difference between calling it a crisis and calling it a catastrophe. It will be painful. But it is like losing a job and not like getting shot in the head.
 

The Accountant

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I have been a victim of a few corporate bankruptcies, large and small. But there is absolutely no relationship between corporate bankruptcy and sovereign default. Corporate bankruptcy has a very well-defined set of laws, precedents, courts etc., No such thing for sovereign default. Imagine the difference between a cricket match and a battle.

Yes, it is. A nation of 220 million people can't be just written off as some unfortunate island in South Pacific that gets inundated with a tsunami. Human suffering matters. Lenders are not some aliens on another planet who communicate using radio signals.

While it certainly will cause difficulties, the main one being lack of access to new capital, a lot of fear mongering that creditors will come and seize property etc., is absurd. USSR problem was disintegration of a large nation. Economic collapse was caused by collapse of the nation. No one expects Pakistan to break into pieces because of default. Lenders do not benefit by arm twisting. They benefit if the economy can be revived so that repayment is possible. Everybody wants an injured horse to recover so that they can ride it, not allow it to die so that they can eat it. Sri Lanka had an extreme case of mismanagement where they did not impose Exchange Controls early enough. Finance minister Dar has already imposed Exchange control before reaching the point of no return.

As long as Exchange controls can stave off actual default, LC's from reputed banks will be generally acceptable. Reputable banks will not issue a LC without guarantee of funds.

PIA is a corporation. Different rules apply to corporate entities. Pakistan is a sovereign. Corporate laws don't apply.

Nobody wants to defend default or say it is painless. But there is a difference between calling it a crisis and calling it a catastrophe. It will be painful. But it is like losing a job and not like getting shot in the head.
Again the assumption too big to let fall ... We are not greece with backup from European union ... If u r right then why did paris club refused to reschedule the loan ? Why did ishaq dar cam back from IMF empty handed ...

You are also wrong about LCs, no bank will accept LC for a bank of defaulted country give me one such example ?

Regarding the difference between crisis and catastrophe if we have no crude oil, cooking oil and medicines which are our prime imports and consume most of our exports and remittances than we will have no petrols on petrol pump ... There will be long electricity shut downs ... Business will die down further ... It will be a domino impact ... If a person loose a job he will have no income but expenses will keep on coming so crisis will lead to catastrophe ...
 

Ssan

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I think Pakistans economy needs a reset. It will be good for the country not to take overseas Pakistanis as given. The previous formula was that we would have balanced current account if exports + remittances equaled the imports.

Now we should just have exports be equal to imports. This is the formula elsewhere in the world. The rest of the world doesn’t get subsidized commodities and then cry about mehengai. @ziaulislam is right- Pakistanis need chatrool.

Remittances should be seen as a strategic resource. Could use it to pay off our dollar debts and then make strategic investments.
 

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