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what would Happen to a Country if its Loan is Written off ?

If loan is written off then someone, somewhere looses money. He will not like loosing money. So, he will complain and then do something about it. The tenacity in his reaction will depend upon how much money he is loosing and his capabilities.
There is no question of loan being written off for Pakistan. It's just a hypothetical scenario we are taking about. If ever the loan could have been written off was the moment when WoT was at its peak and the Afghan refugees were rushing to enter Pakistan and the entire world needed our support to manage the mess caused by WoT
 
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In order to balance currency value, countries choose to "gold back" their currency. The system serves as a means to ensure that the currency value remains stable, sort of like retaining balance on a scale. If one side is lighter, you can remove some weight from the other side to equalize the balance in simpler terms.
Just like that, you can release some of your gold into the market in order to drive down prices and increase buying if your currency is at risk of taking a dip.

This WAS a currency system ... Now it is Not Existent Anymore ... Gold Continues to help Drive money value up & down but it is no more Backed Cent to Cent Anymore !
 
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There is no question of loan being written off for Pakistan. It's just a hypothetical scenario we are taking about. If ever the loan could have been written off was the moment when WoT was at its peak and the Afghan refugees were rushing to enter Pakistan and the entire world needed our support to manage the mess caused by WoT
Yeah, nowadays all the action is in middle east. It's their chance to get loans written off.
 
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You can check the latest stats from SBP. The state bank has the vast majority of the reserves. Commercial banks usually only have 1/4 of the total reserves or even less. Last time I checked commercial banks had like 3-4 Billion or so...

Gov. has setup policy to keep high reserves so it can borrow more and more from IMF. And these borrowings are being spent on questionable projects.

You say that major economies have large debts, but the thing is, what ever they borrow they spend wisely. Pakistan does not spend wisely.

We are a charsi economy (for lack of better word). We have spent all of our own money on chars, have run out of money and now borrow money to buy more useless chars. We don't like to work, we are lazy and we just like to sit there and consume chars all day (all those questionable "chars projects").

It's only by chance that remittances have shot up recently and oil prices plunged that we are now able to afford more loans than ever before.

Govt Cannot Keep Foreign Reserves and Expect that they can Borrow MORE loan .... IMF / World Bank are not stupid .... they know that Liquid Reserves are of no significant value in Long Term Loans ...

For Example this is the Latest composition of Foreign Reserves

According to a statement by the State Bank of Pakistan (SBP), the foreign reserves held by SBP was $14,918.3 million whereas the net foreign reserves held by banks was $4,900.4 million.
Pakistan’s liquid foreign reserves at $19,818mln -

Mean 15 Billion $ with State Bank & 5 Billion Dollar with commercial Banks ... Out of 15 Billion Dollars about half of them 7 Billion $ are from IMF & other Loan Tranche & Euro Bonds (Sukook) Open Market Loans ... (& Lenders knows a significant amount of this will go in Debt Servicing or Current Projects under going)

As for the Other Point Major Economy having large Debt & Using It wisely .. Yes Pakistan come way down in the list for proper spending but so does many other countries (Mainly Greece etc.) & yes we need to improve this scenario if we ever want to come out of this debt spiral .

& yes Oil Prices have helped securing better trade deficit & remittance are on the rise too All helping in increasing the Foreign Reserve & YES ... just the increase in this NUMBER is of no significant value ... thr needs to be alot more to be done ... otherwise if oil price go back to old rates we will be again looking down the hole with greater debt & less chance of coming out of it ..... NOW IS THE TIME if something needs to be done !

The Loan CAN be still Written Off .... If Pakistan Agrees to Dismantle it Nuclear Arsenal ... (written off mean America, Europe Buying it out) ... but it is not Likely that Pakistan would ever wants to do it ...

Instead of Loan Written Off ... A more Practical approach could be doing the lobbying to get the Corruption Money stored in Swiss & other Off Shore Accounts ... India have this issue too (may be a joint Lobbying) .... if we can even get half of it .. as per estimates it would be 80-100 Billion $ ...

OR someone grab hold of all Zaradris & Nawaz Sharifs, & the crime Partners & shake them well enough to give back the looted money which would surely be more than 20-30 Billion $

but i don't see any of the above happening ... so the only way forward is to improve economy (Making CPEC a Reality in letter & spirit, Better Planned Power Generation & Distribution Network, Improved Infrastructure would be a good start) to an extent where we can have Lesser Debt-to-GDP ratio and thn start Paying Loans without borrowing loans .... & thn Not Taking New Loans ... Only this way we can get rid of this menace !

One Day May be , Hopefully , InshAllah , Ameen !
 
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USA can't just keep on printing dollars indefinitely. The more money they print, the more they offset the market and global demand for the dollar decreases.

Sir, what is your evidence for claiming that global demand for USD decreases with increased supply? The world has taken up all the dollars it can be supplied with, thus far.

Back to the topic, Pakistan can always default on its loan repayments, but that decision will come with its own costs.
 
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Sir, what is your evidence for claiming that global demand for USD decreases with increased supply? The world has taken up all the dollars it can be supplied with, thus far.

Back to the topic, Pakistan can always default on its loan repayments, but that decision will come with its own costs.

Other currency would rise or fall in comparison with USD. USD will always have a buyer at certain price point - to say the demand decreases means USD has decreased liquidity which is laughable. As it is the base and median currency and transaction volume of USD dwarfs any other currency by an Everest sized magnitude. Infact so much so that for conversion between two currency USD acts like middle currency. Very few currencies are directly convertible to third currency like YEN, EURO, AUS $, Reminbi
 
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Other currency would rise or fall in comparison with USD. USD will always have a buyer at certain price point - to say the demand decreases means USD has decreased liquidity which is laughable. As it is the base and median currency and transaction volume of USD dwarfs any other currency by an Everest sized magnitude. Infact so much so that for conversion between two currency USD acts like middle currency. Very few currencies are directly convertible to third currency like YEN, EURO, AUS $, Reminbi

The topic in this thread is not the USD, but Pakistan's loans and whether they could be written off or defaulted upon, and what could the consequences be in either case.
 
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The topic in this thread is not the USD, but Pakistan's loans and whether they could be written off or defaulted upon, and what could the consequences be in either case.

Bugs out in a undignified manner.

P.S. Won't happen, the best is they would restructure by provisioning for interest and hold the principle component as leverage.
 
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I am not that good at understanding these economic matters, So just wanted to know from guys here who understand these things.
So my question is what effect will it have on Pakistan economy if all of its debt is written off(Which i think is round about $90 billion)?
so now you dont want to pay back your loans .... right :azn:

but question is why would the bank wave off your loan what can you give in return :azn:

man this it getting hillarious :sarcastic:
 
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Bugs out in a undignified manner.

P.S. Won't happen, the best is they would restructure by provisioning for interest and hold the principle component as leverage.

That has been the strategy for quite some time now. Take more loans to keep paying off the previous loans and their interest as the hole grows deeper and deeper.
 
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Sir, what is your evidence for claiming that global demand for USD decreases with increased supply? The world has taken up all the dollars it can be supplied with, thus far.

Back to the topic, Pakistan can always default on its loan repayments, but that decision will come with its own costs.

It is simple economic my friend, every currency has a saturation point, the dollar has the greatest of all since it is the defacto currency for all international transactions and a number of currencies are still pegged to it however, even the dollar has limits. Its supply cannot exceed the volume of trade that uses the dollar as the legal tender.
 
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I am not that good at understanding these economic matters, So just wanted to know from guys here who understand these things.
So my question is what effect will it have on Pakistan economy if all of its debt is written off(Which i think is round about $90 billion)?

There is only one real way where debt is written off, that is when a country defaults its interest payment and market decides that the debt given to Pakistan valued at the market price is less than that written in books.

And the effects...the value of real assets of Pakistan will go down and it will be hard for Pakistan to raise new debt in the market as rating agencies will put Pakistan's rating at junk status. Overall very bad for Pakistan.
 
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It is simple economic my friend, every currency has a saturation point, the dollar has the greatest of all since it is the defacto currency for all international transactions and a number of currencies are still pegged to it however, even the dollar has limits. Its supply cannot exceed the volume of trade that uses the dollar as the legal tender.

You may find this article interesting Sir. There a few more good articles in the same issue, if you are interested.

http://www.economist.com/econ2015
 
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Pakistan is the NEXT greece

Government can fix anything , so they subsidize food and water products by taking loans

Just like Greece , the people (Upper class have villas , swimming pools , golf course ) and tones of free benefits


Pension (Khatam)
Corporations (Khatam)

Once the Default happens

Do teen power plant to lag nahi sake 8 sal main


80% of economy is running on Loan money
 
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