A very worrying situation for Pakistan as Pakistan is on verge of bankruptcy … hmmm … well, is that 1998 or 2008? Sorry, it was 1998 … Please check 
Gosh, what a dire situation. Please read the situation of a country with $40 billion debt and reserve of $480 million, that also after defaulting, that is, after stopping all payment of debt servicing (interest on the debt) other than to preferred creditors, basically becoming defaulter. This was Pakistan at the end of 1998, and by end of 1999 when Musharraf took over, situation got much worse than situation in Dec 1998. If one thinks carefully and logically, one would realise that even though present crook and incompetent government of Zardari and Nawaz handled the economy badly, last 6 months of deterioration is not enough that one should give up complete hope, as even now Pakistan economy is 100 of time better than 1999. Though, if things do not change quickly, it is possible that these thugs could bring the miserable days of 90s back, when Pakistan use to live hand to mouth.
The given News report is big slap on the face of those who lie and do propaganda on behalf of corrupt politicians, that Musharraf government increased foreign debt. Foreign debt of Pakistan in 1999 was $40 billion or more, when GDP was $62 billion, reserve was few million dollars, and rupee was devaluing fast. … Pakistan foreign debt in 2007 was still $40 billion, but GDP was $175 billion, reserve was $16.5 billion and rupee was stable. Fact is that, Musharraf government maintained foreign debt to same level as it was in 1999 (rather reduced it a bit) while kept paying interest of around $4 billion a year on those debts Musharraf government inherited. Plus, on top of keeping the debt steady, Musharraf government worked to increase GDP as well as accumulate $16.5 billion reserve from few million they inherited in 1999. Most important is that, Pakistan external debt increased almost every year since 1947 and year between 1999 and 2007 was exceptional that foreign debt of Pakistan first time in Pakistan history did not increased.
As for rescheduling, many ignorant think that rescheduling means reduction in debt. Truth is that, there is no free lunch. Rescheduling only gives breathing space to a country without any loss to the creditors. Pakistan rescheduling of debt means Pakistan would start paying those debt in May 2017 and last payment would be in Nov 2037. Nevertheless, Pakistan still has to pay interest on those debts, so rescheduling would either increase the debt or would make it stay same if country keeps servicing it (keep paying interest on those debt). Benefit of that rescheduling is still there, as first payment is due in May 2017.
Pakistan denies report on foreign reserves depletion | Asian Economic News | Find Articles at BNET
Date: Dec 14, 1998
Pakistan denies report on foreign reserves depletion:
ISLAMABAD, Dec. 11 Kyodo
Pakistan on Friday denied reports that its foreign exchange reserves will be wiped out by Jan. 15, 1999 as a result of a repayment of its debt obligations due in two weeks. Finance Minister Ishaq Dar told a press conference that Pakistan has taken steps to meet its next repayment on its 40 billion dollar foreign debt without having to draw heavily on foreign exchange reserves, which currently stand at 480 million dollars. ‘‘All payments to preferred creditors will be paid within the grace period (ending Jan. 15, 1999),’’ he said, adding that the situation is not worrisome since a scheduled disbursement from a 1.3 billion dollar International Monetary Fund (IMF) package is due next month. Pakistan has been facing a foreign exchange crisis since August this year. Since then it has ceased servicing debts to bilateral donors and commercial creditors, only making repayments to the IMF, World Bank and Asian Development Fund, whom it calls ‘‘preferred creditors.’’ It attributes the foreign exchange crunch to sanctions imposed by western countries following its nuclear tests in May this year.
Reports in the local press have speculated that a delay in the next disbursement under a 1.3 billion dollar IMF package agreed to last month would wipe out Pakistan’s foreign exchange reserves by Jan. 15, 1999 in view of the repayments on its debt. Dar said that the 300 million dollars due to preferred creditors would be paid by Jan. 15 and that the government was chasing every dollar that was in the pipeline. Over the past few months, a large number of exporters have delayed remission of their foreign exchange earnings in view of the expected devaluation of the Pakistani rupee. Dar has said those who fail to remit their earnings by Dec. 31, 1998 will be declared defaulters and will not be eligible to benefit from export finance and other schemes. Dar ruled out the possibility of a devaluation and the introduction of a single exchange rate in place of the current multiple exchange rate.
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