Is Pakistan is one of 54 countries with severe debt issues.

Pakistan is one of 54 nations that are in severe need of debt relief after recent floods that ravaged a third of the nation and destroyed its crops caused over $30 billion in losses.

In its study "Avoiding 'Too Little Too Late' on International Debt Relief," the United Nations (UN) cautioned that the implications of delay were grave and that dozens of developing nations were currently experiencing a fast increasing debt crisis.

The necessity of prompt action was highlighted in the study, which was made public prior to meetings of the finance ministers of the G20, the World Bank, and the International Monetary Fund in Washington.

Achim Steiner, chief of the United Nations Development Program (UNDP), told reporters in Geneva that while little has transpired thus far, the risks have been increasing. He stated, "That problem is deepening and poses a risk of becoming a global development disaster affecting dozens of nations."

According to the research, Pakistan's gross public debt is 74 percent of GDP, its average credit rating is 6 (classified as "very speculative"), and its interest rate spread is greater than 10 percentage points. In 2020, the nation had PPGE debt worth US$78.9 billion, of which 86.6 percent was owing to official creditors, 27.3 percent was owed to China, and 14.7 percent was owed to the Paris Club. The remaining debt was split between the Paris Club and China. Pakistan ranks 147 (out of 182) in terms of climate change vulnerability, with an estimated 6% of the population living in extreme poverty.

More information reveals that by 2020, the total public debt in 46 of the 54 countries was $782 billion. More over a third of the sum is made up of Argentina, Ukraine, and Venezuela.

With 19 developing countries effectively blocked from the lending market—ten more than at the beginning of the year—the situation is rapidly getting worse. A third of all debt issued by developing nations has been labelled as having a high risk of default or being extremely speculative. The nations most at risk in this regard are Sri Lanka, Pakistan, Tunisia, Chad, and Zambia.

Private creditors, according to UNDP Chief Economist Gray Molina, have been the biggest barrier to implementing the necessary restructuring. But given the state of the market right now, which has seen private creditors' holdings lose up to 60% of their value, there may be room for a debt settlement.