Pakistan is facing a severe economic crisis. Prices of staples like food and fuel are skyrocketing. The country must repay billions in external debt, but its foreign reserves are so low it can barely afford to buy a few weeks’ worth of imports. As the government tries to revive stalled talks with the International Monetary Fund to unlock much-needed assistance, Sarah Zaman looks at how delaying reforms has brought Pakistan to the brink of economic disaster.
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The Treasury Department said Monday it plans to increase its borrowing during the first three months of 2023, even as the federal government is bumping up against a $31.4 trillion limit on its legal borrowing authority. 

The U.S. plans to borrow $932 billion during the January-to-March quarter. That’s $353 billion more than projected last October, due to a lower beginning-of-quarter cash balance and projections of lower-than-expected income tax receipts and higher spending. 

The increased borrowing will take place as Democrats and the White House push for Congress to increase the federal debt limit. President Joe Biden wants the cap raised without any preconditions. The new House Republican majority is seeking to secure spending cuts in exchange for a debt limit increase. 

Treasury officials say the debate over the debt ceiling poses a risk to the U.S. financial position. 

“Even just the threat that the U.S. government might fail to meet its obligations may cause severe harm to the economy by eroding household and business confidence, injecting volatility into financial markets, and raising the cost of capital — among other negative impacts,” Ben Harris, Treasury’s assistant secretary for economic policy, said in a statement. 

Treasury Secretary Janet Yellen, in a letter to congressional leaders earlier this month, said the department had begun resorting to “extraordinary measures” to avoid a federal government default. She said it’s “critical that Congress act in a timely manner” to raise or suspend the debt limit. 

In a letter to House and Senate leaders, Yellen said her actions will buy time until Congress can pass legislation that will either raise the nation’s borrowing authority or suspend the limit for a period of time. She said it is unlikely that cash and extraordinary measures will be exhausted before early June. 

New House Speaker Kevin McCarthy will meet with Biden at the White House this week to discuss the debt limit. 

McCarthy told CBS’ “Face the Nation” on Sunday: “I want to sit down together, work out an agreement that we can move forward to put us on a path to balance — and at the same time not put any of our debt in jeopardy at the same time.” 
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India’s population is set to surpass China’s sometime this year according to the United Nations. Experts say while this represents an opportunity to reap a demographic dividend, much will depend on how India leverages its numbers, especially its massive population of young people. Anjana Pasricha has a report from New Delhi.
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U.S. House Speaker Kevin McCarthy promised Sunday the United States would not default on its national debts as the country approaches its $31.4 trillion spending limit in June but said the government cannot continue to annually spend more than it collects in taxes.

McCarthy, leader of the Republican-controlled House of Representatives, told CBS’s “Face the Nation” show that he will meet with Democratic President Joe Biden on Wednesday, the first discussions in what could be protracted debt ceiling talks over several months.

The U.S. must raise its debt ceiling before it runs out of money to pay bills it has already incurred. Biden and Democrats want a “clean” approval to raise the debt ceiling not tied to future spending, while Republicans have called for limits on new spending to curb yearly deficits, chronic overspending that often totals more than $1 trillion annually.

“We’re not going to default,” McCarthy said.

The U.S. has never defaulted on its debts, such as on Treasury notes sold to China, Japan and individual Americans, but its credit rating was downgraded in 2011 when Democratic President Barack Obama and congressional Republicans sparred at length over the country’s spending before eventually reaching a 10-year agreement.

Now, McCarthy said, the country’s debt totals 120% of its national economic output, with the debt significantly added to in recent years for two main reasons, the national tax cuts Republicans approved under former President Donald Trump and unfunded coronavirus aid relief approved under both Trump and Biden.

“We haven’t been in this place to debt since World War II,” McCarthy said. “So, we can’t continue down this path. And I don’t think there’s anyone in America who doesn’t agree that there’s some wasteful Washington spending that we can eliminate.”

“So, I want to sit down together, work out an agreement that we can move forward, to put us on a path to balance — at the same time, not put any — any of our debt in jeopardy at the same time,” he said. “We shouldn’t just print more money; we should balance our budget. So, I want to look at every single department. Where can we become more efficient, more effective, and more accountable?”

McCarthy, like Biden, ruled out cuts to two of the most popular government programs, pensions and health care for older Americans, respectively known as Social Security and Medicare.

But he added, “I want to look at every single dollar we’re spending, no matter where it’s being spent. I want to eliminate waste wherever it is.”

He compared government spending to an American family’s budget, saying, “Every family does this. What is – what has happened with the debt limit is you reached your credit card limit. Should we just continue to raise the limit? Or should we look at what we’re spending?”
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