Strategy for Avoiding Default Chapter: 13 STRATEGY FOR AVOIDING DEFAULT: The Biggest Threat to Human Security Pakistan today faces the worst economic crisis in its 75-year history. The overall HSI has plummeted down to 0.440. This is even lower than the magnitude as far back as 2010-11 of 0.459. The worsening of conditions is most acutely manifest in the drop in the index of freedom from‘fear,’ which is down to 0.372, even below the level in 2001- 02. This is largely due to the cataclysmic drop in the index at the third level of external financial vulnerability, which now stands at 0.140. Therefore, the biggest short-run threat to human security is the risk of a default by Pakistan in its external debt repayments. The numbers in Chapter 6 have highlighted the extent of vulnerability to default in the following ways: i. The level of foreign exchange reserves as of end-February 2023 was$3.9 billion, not even enough to provide import cover for only one month. The‘safe’ level of cover is at least three months. ii. The reserves are equivalent to only 3.1% of the external debt of$126 billion. As such, they can only finance a minor part of the external financing requirements. On top of this, Pakistan’s relationship with the IMF remains effectively suspended. The completion of the 9 th Review of the IMF has been pending for almost two months now. Meanwhile, Pakistan’s credit rating with the major credit-rating agencies is down to near default level. 13.1 Implications of Default The implications of default on the level of human security in Pakistan are horrendous. This will come, if it happens, a few months after the colossal damage caused by the floods, especially to agricultural output. 105