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Pakistan has been urged to take a leading role in reforming the global financial system as mounting debt pressures threaten economic stability across developing countries. The countrys upcoming chairmanship of the IMF-World Bank Boards of Governors in 2027 presents an opportunity to push for meaningful changes, as reported by The Express Tribune.
According to the newspaper, the warning follows the United Nations Fourth Financing for Development Conference, held in Seville in July 2025, and the IMF and World Bank annual meetings in Bangkok last month. Planning Minister Ahsan Iqbal also stressed the need for a fundamental overhaul of the international financial architecture during the Sustainable Development Policy Institutes 29th Sustainable Development Conference. Global debt reached a record USD 348 trillion by the end of 2025, according to the Institute of International Finance. Meanwhile, nearly half of low-income countries are either experiencing debt distress or face a high risk of it. Developing economies remain particularly vulnerable because of limited government revenues, rising borrowing costs and exposure to external economic shocks. The situation presents serious concerns for Pakistan, which narrowly avoided default in 2023. Foreign exchange reserves had plunged to approximately USD 3 billion, covering less than three weeks of imports, while inflation reached 38 per cent in May that year. The State Bank of Pakistan subsequently raised its policy rate to 22 per cent, highlighting the country's economic vulnerabilities. The analysis argues that existing international debt-relief arrangements, including the G20 Common Framework, have failed to deliver timely and effective solutions. Prolonged negotiations and coordination difficulties among traditional lenders, private bondholders and emerging creditors have further complicated restructuring efforts, as cited by The Express Tribune. It proposes six major reforms, including a predictable sovereign debt restructuring mechanism, automatic debt repayment suspensions during natural disasters, stronger participation from private creditors, increased financing capacity for multilateral development banks, greater transparency in public borrowing and climate-sensitive debt sustainability assessments, as reported by The Express Tribune. (ANI)
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