Pakistan, Ukraine, Kazakhstan and Argentina may be the first countries to bankrupt as a fall out from US led financial meltdown
Media Release
Oct. 12, 2008

Pakistan is bleeding in foreign reserves at an alarming rate, leading to fears that it could default on its loans. There are mounting fears that Ukraine, Kazakhstan and Argentina could now slide into a downward spiral towards bankruptcy, while western banks exposed to the property bubble across Eastern Europe have seen their share price crushed.

Many countries have lost in financial system led by the Americans and the Europeans.

The trigger for the latest round of hand-wringing has been the lightning implosion of Iceland. Analysts have warned that the island is heading for “sovereign default” with contagion risks for other economies that have been living beyond their means on foreign credit.

In Pakistan, the rupee has fallen to an all-time low. Standard & Poor’s downgraded the country’s sovereign debt to near write-off levels of CCC-plus. The central bank’s foreign reserves have fallen to $4.7 billion.

“The danger of default is hovering,” said Kaisar Bengali, a professor in Karachi University. “Pakistan may not be able to repay its debt or import anything,” he said, adding that the country could not assume that it would be bailed out for strategic reasons.

The grave warning came as the Group of Seven agreed to a coordinated plan to rescue the financial industry, but fell short of offering concrete steps.

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