Rescuing countries from disorderly defaults “hinges on increasing fiscal space by restructuring their debt”, Murtaza Syed, a former acting governor of the State Bank of Pakistan (SBP), wrote in the Economist this week, recalling his previous article where he said the International Monetary Fund (IMF) and Pakistani policymakers were “flirting with disaster by pretending that the country’s public debt was sustainable”.

Pakistan and the IMF signed a 37-month staff-level agreement in July for $7 billion with the approval of the new loan tied to firm commitments from China, Saudi Arabia, and the UAE that they would roll over their combined debt of $12bn.

Due to foreign exchange difficulties and an inability to repay its loans, Pakistan has been securing one-year extensions. However, it is now seeking rollovers for three to five years to access IMF credit, address uncertainty, and get sufficient time to fix structural flaws and regain its external sector sustainability.

“For........

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